"A higher rate of return on the endowment fund is directly and obviously connected to higher spending on the university's academic aims."

Well yes, but where do you draw the line? At what point does an endowment become a safe, constant feed from the ROI on donations from students past, and turn into a wealth fund for its own sake? In my opinion, by the time you are paying the university's money managers far, far in excess of what its own academics could ever hope to earn, you have crossed that line.

I see parallels here between the Harvard example and, say, the Singapore Government's Temasek Holdings, noted for its aggresive investment strategies with public money.

"You don't seem to understand the basic idea behind an endowment. "

Sorry. I should have written "at replenishment rates" or similar. I wasn't thinking.

"not seeking a competitive return on their endowment would be grossly irresponsible"

Yeah well, who's irresponsible now? What do they say to someone who reached deep and gave a hundred K or so to express their thanks and hope to guarantee the university's future academic service? Oops, we just lost 80,000 times your donation through irresponsible speculation, can we have some more please?

I understand your points, and can agree to some extent, but I can't help but think they went way too far. I must admit my thinking is probably shaped by coming from a country where universities are considered public institutions and these endowments are almost unheard-of, so my comments probably lack nuance in the American context.

In fact, I find the whole thing vaguely obscene. Harvard sounds like a huge, voracious hedge fund with a small side business of maybe running a university with some of the profits. How can such a thing be? What is their charter? What if they bought up smaller universities and closed them down? Isn't that within their interest, too? Should we allow them this kind of power? Is it wise to allow academic institutions to focus on wealth creation first, actual education second? Does the success of failure of a university now come down to how well they manage their investments, not the quality of their tuition?

I am reminded of some of my qualms with other non-profit groups. World Vision, for example, behaves in what I would say is a similar manner - the vast majority of donations they receive get ploughed straight into fundraising and advertising, in the hope of increasing the next round of donations. While this does make sense in a perverse, narrowly-focused way - they are only trying to get even more money for the children, after all! - the fact remains that their chief activity seems to be hiring ever more people and undertaking ever more overhead to increase their cashflow, and the starving children, etc, are merely the general theme of the never-ending story. I have a deep distrust of these institutions, especially non-profits, whose behavioural aims first and foremost appear to be self-perpetuation and endless growth, while their stated goals upon which their non-profit charter is hitched take a distant second place.

Ah well, probably comes down to philosophical differences, like everything seems to. Not really trying to vastly increase the scope of the discussion, just thinking out loud.