RUTHFULLY YOURS

The Ivies added $44 billion to their endowments this year, and new estimates show their collective endowment could exceed $1 trillion by 2048.

Organized as charitable non-profits, the Ivy League is a cash generation machine. Their collective endowment now stands at approximately $188.2 billion, which is up from $144 billion in 2020.

Now, critics are questioning whether the Ivies have gamed the federal, state, and local tax systems to operate as educational charities. These schools pay little or no taxes on their investments, endowment gains, and property.

Here are the new endowments by school: Harvard ($53.2 billion), Yale ($42.3 billion), Columbia ($13.5 billion), Brown ($6.9 billion), Dartmouth ($8.5 billion), UPENN ($20.5 billion), and Cornell ($10 billion). (Princeton is the only school not yet reported; however, we forecast their endowment at $33.3 billion, up 25 percent from $26.6 billion in 2020.)

Harvard’s endowment now stands at over $10 million per undergraduate student. Yale is just shy of this number at $9 million. Brown, far behind its colleagues, boasts just over $1 million in endowment assets per undergrad student.

However, the Ivies billion-dollar optics problem is soon to become a trillion-dollar optics problem. The size of their endowments is set grow substantially over the next couple of decades.

Our auditors at OpenTheBooks.com forecast that the collective endowment of the Ivy League could surpass $1 trillion by 2049. This buildup of wealth for supposedly charitable educational purposes will trigger a host of public policy, legislative, and legal arguments. For example, Harvard alone could have $300 billion, or nearly $60 million per undergraduate student in endowment assets, by 2049.

With such a largess, why is Harvard charging a sticker price of $80,000 for undergraduate student tuition, room, and board? Yale and Princeton charge about the same. As the Ivies push the upper bound of tuition prices, other universities are emboldened to raise rates. All of this makes college more unaffordable for everyone and adds to the massive amount of student loan debt.

Our estimates of the forthcoming $1 trillion endowment use a reasonable set of historic assumptions.

First, we assume that the Ivy portfolio managers will match their own collective long-term market returns, which has been 10.5-percent.

Second, we note that the Ivies annually spend five percent of their endowments (outgoing).

Third, we assume annual gifts of $2.2 billion (incoming) and assume those donor gifts will increase at five-percent each year going forward.

Therefore, between years 26-27, under our assumptions, the collective endowment has a forecasted value of $1 trillion. Furthermore, the Ivy endowments were able to provide another $810 billion on behalf of the universities during this period (the five-percent annual spend).

You can use our interactive Excel spreadsheet here, and create your own forecast by tweaking our assumptions.

Recently, The Atlantic questioned the need for the Ivy League at all. The headline of the September article read, “Should Princeton Exist? Each year, top universities shower resources on a privileged few.”

In 2017, our Ivy League report found that in a previous six-year period, the eight colleges reaped a $42 billion benefit from U.S. taxpayer subsidies, special tax treatment, and direct payment on contracts and grants. In other words, on top of everything else, the Ivy League is taxing you.

Now, with our new research and analysis showing that the Ivies’ collective endowment is set to soar to $1 trillion over the next few decades, the calls for reform in Congress and beyond will only get louder.

Note: Only Dartmouth responded to our request for comment and the background on their endowment is linked in full here. Harvard chose not to respond, but provided this link. None of the other Ivies responded by our publishing deadline.