What is a University Endowment?

A university endowment is a gift of money, property, or other assets made to a college or university. Endowments are frequently made by school alumni, though some wealthy benefactors or organizations may simply choose to make an endowment to a university they appreciate. In general, a university endowment is either restricted to a specific purpose, such as the creation of a scholarship, or left unrestricted to be used as the school decides. Making a university endowment gift can be a great way to help improve education for students, or simply to thank an educational institution for its hard work and important place in a community.

A restricted endowment allows the benefactor to specify how the gift is used by the university. Two of the most common forms of restricted endowments include the creation of professorships and scholarships. Endowed professorships guarantee the income for a specific teaching job at the university, and may provide other benefits, such as housing or additional grants for the endowed professor. Many endowed professorships have long and famous histories, including a Cambridge University mathematics professorship created in the 17th century and held by such luminaries as Isaac Newton, Charles Babbage, and Steven Hawking.

Scholarship endowments create a perpetual fund for tuition or living expenses granted to qualifying students. This type of university endowment is an excellent way to help ensure a college education for some students who might not otherwise be able to afford tuition. Endowed scholarships often have very specific requirements for applicants, including financial need, racial or national history, interest or demonstrated talent in a specific discipline, or personal merit. It is not unusual for endowment benefactors to help scholarship winners make contacts and find work after graduation.

Endowments can also be used to ensure continuing education in a topic or area of research that is of interest to the donor. A university endowment that sponsors educational programs, such as a lecture series, can help put a gift to a specific educational purpose. Research endowments may be specified to fund the research into a particular scientific area, such as cures for certain diseases, the search for extraterrestrial life, or the improvement of alternative energy.

Unlimited endowments allow the school to determine the best use of the fund. While a certain portion of the endowment is typically invested in order to ensure a perpetual fund, the regulations regarding how much is invested and how much used for the benefit of the school and students is quite vague and variable. In the 21st century, many well-known private universities have been accused of hoarding unrestricted endowments instead of using them to benefit the students of the school. Stanford University made headlines in 2008 by reducing and even eliminating tuition for some students through a greater distribution of its large endowment fund, leading to calls for similar programs at other prestigious universities.