Stephanie Strom at the New York Times has an incisive piece titled Nonprofits Paying Price for Gamble on Finances (September 23, 2009). Go there for the full nonprofit scoop and then return here for some stats on university endowments.
We have always thought that the term “non-profit” was a misnomer because it implicitly conveys the vision of eleemosynary people and institutions working for the common good, oblivious to the greedy mammon of money and to the serendipity temptations of the omnipresent evil that accompanies financial motivation.
But, of course, the proverbial truth is far removed from the widely held Utopian vision that nonprofits lead a charitable life. Quite the contrary, many nonprofits over the years have amassed such vast quantities of cash – via United States Internal Revenue Code (26 U.S.C. § 501(c)) tax-exempt income – that they wield substantial economic power and are strong players in the monetary state of the nation and the world.
A good example of the profits of the non-profits are the top U.S. universities, where the academic rank of a university tends to bear a very distinct direct correlation to the size of its “endowment” – that’s “smart speak” for the total value of an institution’s investments. The more money you have, the more you can do as an institution. Money talks.
The chart below gives the endowments of the top U.S. universities as of the year 2008, but those endowments have plummeted in the last 12 months due to the financial credit crisis. The values of Harvard, Yale and Stanford endowments are all down by about 25% from those given below.
Harvard led the 2008 endowment pack with a ca. $36+ billion in 2008, followed by Yale at $22+ billion, Stanford at $17+ billion, Princeton at $16+ billion, and the University of Texas system at $16+ billion, to round out the top 5.
MIT then followed at a fairly distant 6th at $10+ billion, followed by the University of Michigan at $7+ billion, Northwestern at $7+ billion, Columbia University at $7+ billion, the Texas A&M University System at $6+ billion, the University of Chicago at $6+ billion, the University of Pennsylvania at $6+ billion, Notre Dame at $6+ billion, the University of California system at $6+ billion, and Duke at $6+ billion, to round out the top 15, with Emory, Cornell, Washington University in St. Louis, Rice and the University of Virginia rounded out the top 20.