Colleges and universities hold billions in endowments, but strict rules limit their flexibility, according to The Conversation. These investment pools, largely made up of donor gifts, are designed to support institutions permanently, with only a small percentage typically spent each year.
While nearly 40% of higher education endowments are permanently restricted, others are temporarily limited or designated for specific uses. Schools like Harvard manage thousands of individual funds, each tied to a donor’s original intent, meaning most money can’t just be used to cover budget shortfalls.
Endowment decisions are handled by governing boards under cautious policies and state laws like the Uniform Prudent Management of Institutional Funds Act, making the funds better suited for long-term stability than emergency spending.
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