Public Policy
Endowments

Endowments are permanent funds from charitable gifts that offer colleges and universities the enduring stability to empower generations of students and shape our world's future. 

Endowments are:

  • charitable funds that offer a source of stability. 
  • critical to the financial health of colleges and universities. 
  • essential to support institutions as they work to offer high-quality, affordable, accessible education.

Learn here about what endowments are (and aren't) and U.S. legislation and policy issues around endowments.

Key Facts

Latest Legislation and Policy Issues

CASE's Position

Resources for Lawmakers

Resources for Higher Education Professionals

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Key Facts on Endowments 
  • An institution's "endowment" is a collection of hundreds to thousands of funds set up through the generous charitable gifts. 
  • Donors typically give endowed gifts for specific educational purposes: creating scholarships, undertaking life-saving research, supporting professorships, starting new programs or building new facilities.
  • Endowments provide colleges and universities financial stability and certainty. Institutions spend a portion of their endowments each year to meet current teaching and learning needs, and they invest the rest to meet the needs of future generations.
  • Endowments vary in size. Most institutions do not have large endowments.

Legislation and Policy Issues on Endowments

Concerned about the rising cost of college, some U.S. lawmakers have proposed legislation on endowment spending and investment.

Proposed Legislation and Background

  • Lawmakers Sens. Charles Grassley (R-IA), Rep. Peter Welch (D-VT) and Rep. Tom Reed (R-NY) have introduced or considered introducing legislation requiring institutions to annually payout 5 percent of the market rate of their endowed assets towards scholarships and student financial aid.
  • In his tax reform discussion draft, former House Ways and Means Chairman Dave Camp (R-MI) proposed a 1 percent excise tax on private institution endowments with a value exceeding $100,000 per student.
  • In 2018, Rep. Reed introduced another bill which would have required certain colleges and universities to direct 25% of their endowment investment gains to support working class families or face tax penalties.
  • The Tax Cuts and Jobs Act passed in 2017 and included an excise tax on certain endowments of private colleges and universities.
  • In 2018, Reps. John Delaney (D-MD) and Bradley Byrne (R-AL) introduced the Don't Tax Higher Education Act which would have repealed the new 1.4 percent endowment excise tax.

Impact

  • Attempts to tax endowments are a tax on generosity.
  • These endowment payout requirements impede institutions' ability to effectively manage endowment funds. 
  • Such misguided tax policies will result in fewer funds for scholarships, research, and academic programs.
  • Instead of bringing down college costs, this tax does the opposite. College and university endowment funds are an important source of revenue which support student financial aid, teaching, research, and public service missions. The new law redirectd charitable funds away from these purposes and discourages donor generosity.

CASE Position

Education transforms lives and society. Endowments offer colleges and universities the enduring stability to empower generations of students and shape our world's future. Attempts to tax endowments are a tax on generosity.

We support a repeal of the 1.4 percent endowment tax and oppose any tax on endowed funds.


Resources for Lawmakers and Government Relations Professionals

Resources for Higher Education Professionals

Updated Jan. 16, 2019