Excessive endowment draws lead to a competitive disadvantage

Name: Excessive endowment draws lead to a competitive disadvantage
Uploaded: 2025-03-19T18:11:41+00:00
Duration: 40 s
Channel: Gary Stocker
Description: Universities that drain endowments faster than peers fall behind competitively, unable to match tuition cuts or program investments. Heavy withdrawals…

19 Mar 2025 · 1 min

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Universities that drain endowments faster than peers fall behind competitively, unable to match tuition cuts or program investments. Heavy withdrawals for operating costs create disadvantages that compound over decades without board oversight.

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But what happens when your endowment's shrinking relative to all of your competitors? You see where this leads, right? Your competitors can now undercut you and you can't, you can't compete with those schools anymore. So it's a sad story that will just basically make things more difficult for these schools in the future. And so it's really critical that they fix their budgets and stop drawing so much off the endowments as soon as possible. Unfortunately, though, we've seen many cases where this just goes on for decades, right? And it's not fixed. It's really on the board to make sure that happens, right? Make sure they're on top of that.
And Matt, we've seen that happen before. And I'm going to reinforce what you just said. Excessive draws on the endowment just to keep the lights on, just to meet payroll, just to meet operating expenses is a distinct short-term, medium-term, and long-term competitive disadvantage for any college that does that. That's kind of what you're saying.
Yeah, that's exactly what I'm saying.