Prospective students tour Georgetown University’s campus in Washington in 2013. AP Photo/Jacquelyn MartinTodd L. Ely, University of Colorado DenverWith the Trump administration seeking to cut federal funding for colleges and universities, you might be wondering whether the endowments of these institutions of higher education might be able to fill those gaps. Todd L. Ely, a professor of public administration at the University of Colorado Denver, explains what endowments are and the constraints placed on them.
What’s an endowment?
Endowments are pools of financial investments that belong to a nonprofit. These assets produce a revenue stream, typically from dividends, interest and realized capital gains. The funds endowments hold usually originate as charitable donations made to support an institution’s mission. In most cases with higher education endowments, this wealth, which helps buoy a nonprofit’s budget, is supposed to last forever. Contributions to endowments are tax-deductible for donors who itemize their tax returns. Once these funds are invested, they grow generally tax-free. But beginning in 2018, the federal government imposed a 1.4% excise tax on dozens of higher education institutions with relatively large endowments. Few colleges or universities have a single endowment fund. That’s because the donors who provide gifts large and small to the school over the years direct their donations to different funds reserved for specific purposes. Harvard University’s endowment, worth $53.2 billion at the end of its 2024 fiscal year, for example, consists of roughly 14,600 distinct funds. All told, money distributed from endowments covered more than 15%, on average, of college and university operating expenses in 2024. Some of America’s institutions of higher education, however, lean much more heavily than that on their endowments to pay their bills.People pose for photos in front of the iconic Tommy Trojan statue on the campus of the University of Southern California in Los Angeles in 2019.AP Photo/Reed Saxon
How do endowments influence higher education?
Endowments can serve multiple purposes. In 2024, nearly half of all higher education spending paid for with endowment revenue funded scholarships and other kinds of aid for students, while almost 18% supported academic programs. Just under 11% paid for professors’ compensation, and almost 7% helped pay for running and maintaining campus facilities. More broadly, endowments can help shield schools from financial hardships and maintain their long-term reputations. When they’re set up to carry on in perpetuity, endowments must benefit both current and future generations. So when donors give to an endowment, they are arguably investing in the long-term viability of the institution. This long-term focus suggests that endowments aren’t just rainy-day funds or financial reserves.
Why can’t endowment funds be spent freely?
At the end of the 2023 fiscal year, U.S. higher education endowments held a total of more than $907 billion. That is a lot of money, but it’s still less than the combined wealth of America’s five richest people. Like individual wealth, endowment assets are heavily concentrated in the U.S. Many colleges and universities have small or no endowments. Nearly 60% of them total less than $50 million. The top 25, which includes several public universities in states such as Michigan and Texas, account for more than half of all endowment assets. And even when schools have large endowments, the individual funds that compose them are bound by a wide array of restrictions. Some of that money can be spent however the school would like. Other funds are dedicated to a clearly defined purpose. When endowment funds are restricted, the school gets little discretion in how to spend them. At Harvard, for example, there’s a Hollis Professorship of Divinity at Harvard University. It was established in 1721 through a gift from a London merchant. Based on the terms of that long-ago donation, the earnings and growth of the donated funds continue to honor the donor’s intent by supporting the position, regardless of what the university needs. Alternatively, endowments may receive donations that are temporarily restricted. Known as “term” endowments, the assets they hold can be used once donor-imposed conditions are fulfilled. Institutions frequently designate some of their unrestricted funds as “quasi” endowments, usually earmarked for specific strategic purposes. This board-designated quasi-endowment does not carry legal restrictions and can be spent more freely. About 40% of higher education endowment assets are subject to permanent restrictions, 30% are temporarily restricted, and 29% are reserved for quasi-endowment use.People walk past the Ray and Maria Stata Center on the campus of the Massachusetts Institute of Technology in 2019.AP Photo/Steven Senne
How are decisions over endowment funds made?
The decision-making authority over endowments typically rests with a college or university’s governing board. Those boards establish endowment payout policies that guide how much of the endowment and its earnings can be spent each year, while attempting to preserve the purchasing power of the investments over the long term. The policies take expectations regarding investment earnings and inflation into account, while smoothing annual payouts by using a percentage of the value of the endowment over multiple years as opposed to a single point in time. This payout tends to amount to about 5% of all assets. That share averaged 4.8% in 2024. U.S. institutions of higher education spent nearly $35.5 billion derived from their endowments in the 2023 fiscal year. Colleges and universities that depend more heavily on their endowment funds to cover their current obligations may choose to invest more conservatively. In recent years, many higher education endowments have obtained more complex investments, such as private equity, real assets and stakes in hedge funds. Endowments of nonprofit colleges and universities are also governed in most states by a state law known as the Uniform Prudent Management of Institutional Funds Act. This law encourages cautious investments and restrained spending. These restrictions mean that annual payouts are generally modest. That leaves endowments ill-equipped to respond to abrupt and large shifts in their funding needs. The John F. Kennedy School of Government, commonly referred to as Harvard Kennedy School, is a member of The Conversation U.S.Todd L. Ely, Associate Professor of Public Administration; Director, Center for Local Government, University of Colorado Denver This article is republished from The Conversation under a Creative Commons license. Read the original article.
This question fascinates me because I am a business professor who studies why society abandons and then sometimes returns to certain technologies, such as vinyl records, landline phones and metal coins. The demise of electric streetcars in Los Angeles and attempts to bring them back today vividly demonstrate the costs and challenges of such revivals. https://www.youtube.com/embed/9X78ZqGyc5o?wmode=transparent&start=0 The 2028 Olympic Games will be held in existing sports venues around Los Angeles and are expected to host 15,000 athletes and over 1 million spectators.
Riding the Red and Yellow Cars
Transportation is a critical priority in any city, but especially so in Los Angeles, which has been a sprawling metropolis from the start.
In the early 1900s, railroad magnate Henry Huntington, who owned vast tracts of land around LA, started subdividing his holdings into small plots and building homes. In order to attract buyers, he also built a trolley system that whisked residents from outlying areas to jobs and shopping downtown.
By the 1930s, Los Angeles had a vibrant public transportation network, with over 1,000 miles of electric streetcar routes, operated by two companies: Pacific Electric Railway, with its “Red Cars,” and Los Angeles Railway, with its “Yellow Cars.”
The system wasn’t perfect by any means. Many people felt that streetcars were inconvenient and also unhealthy when they were jammed with riders. Moreover, streetcars were slow because they had to share the road with automobiles. As auto usage climbed and roads became congested, travel times increased.
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Nonetheless, many Angelenos rode the streetcars – especially during World War II, when gasoline was rationed and automobile plants shifted to producing military vehicles. https://www.youtube.com/embed/AwKv3_WwD4o?wmode=transparent&start=0 In 1910, Los Angeles had a widely used local rail network, with over 1,200 miles (1,930 kilometers) of track. What happened?
Demise of public transit
The end of the war marked the end of the line for streetcars. The war effort had transformed oil, tire and car companies into behemoths, and these industries needed new buyers for goods from the massive factories they had built for military production. Civilians and returning soldiers were tired of rationing and war privations, and they wanted to spend money on goods such as cars.
After years of heavy usage during the war, Los Angeles’ streetcar system needed an expensive capital upgrade. But in the mid-1940s, most of the system was sold to a company called National City Lines, which was partly owned by the carmaker General Motors, the oil companies Standard Oil of California and Phillips Petroleum, and the Firestone tire company.
These powerful forces had no incentive to maintain or improve the old electric streetcar system. National City ripped up tracks and replaced the streetcars with buses that were built by General Motors, used Firestone tires and ran on gasoline.
What’s undisputed is that, starting in the mid-1940s, powerful social forces transformed Los Angeles so that commuters had only two choices: drive or take a public bus. As a result, LA became so choked with traffic that it often took hours to cross the city.
Three key improvements are planned for the Olympics. First, LA’s airport terminals will be connected to the rail system. Second, the Los Angeles organizing committee is planning heavily on using buses to move people. It will do this by reassigning some lanes away from cars and making them available for 3,000 more buses, which will be borrowed from other locales.
Finally, there are plans to permanently increase bicycle lanes around the city. However, one major initiative, a bike path along the Los Angeles River, is still under an environmental review that may not be completed by 2028.
Car-free for 17 days
I expect that organizers will pull off a car-free Olympics, simply by making driving and parking conditions so awful during the Games that people are forced to take public transportation to sports venues around the city. After the Games end, however, most of LA is likely to quickly revert to its car-centric ways.
As Casey Wasserman, chair of the LA 2028 organizing committee, recently put it: “The unique thing about Olympic Games is for 17 days you can fix a lot of problems when you can set the rules – for traffic, for fans, for commerce – than you do on a normal day in Los Angeles.”
This article has been updated to indicate that Los Angeles has four light-rail lines.
Dive into “The Knowledge,” where curiosity meets clarity. This playlist, in collaboration with STMDailyNews.com, is designed for viewers who value historical accuracy and insightful learning. Our short videos, ranging from 30 seconds to a minute and a half, make complex subjects easy to grasp in no time. Covering everything from historical events to contemporary processes and entertainment, “The Knowledge” bridges the past with the present. In a world where information is abundant yet often misused, our series aims to guide you through the noise, preserving vital knowledge and truths that shape our lives today. Perfect for curious minds eager to discover the ‘why’ and ‘how’ of everything around us. Subscribe and join in as we explore the facts that matter. https://stmdailynews.com/the-knowledge/
International Women’s Day is celebrated globally on March 8th to honor women’s achievements and promote gender equality, originating from a 1908 march in New York for better rights.
International Women’s Day is a global celebration that honors the achievements of women and highlights the progress still to be made in the fight for gender equality. On this day, people around the world come together to recognize the amazing contributions of women everywhere and to rally for greater gender equity in all areas of life.
The origins of International Women’s Day can be traced back to 1908, when 15,000 women marched through the streets of New York City to demand better working conditions and the right to vote. Since then, the celebration has grown to be an international event, with more than 100 countries recognizing the day. The United Nations even declared March 8th as International Women’s Day in 1975, to honor the struggles of women around the world.
This year’s International Women’s Day theme is #ChooseToChallenge, meaning that everyone is encouraged to call out gender bias and inequality when they see it. We’re also encouraged to celebrate women’s achievements, support each other, and take action for equality.
It’s important to recognize the progress we’ve made in terms of gender equality, but we still have a long way to go. International Women’s Day serves as a reminder that we must continue to fight for gender equality in all areas of life. Let’s use this day to honor the contributions of women around the world, and to continue the fight for a more equitable world.
Rebecca Jo is a mother of four and is a creative soul from Phoenix, Arizona, who also enjoys new adventures. Rebecca Jo has a passion for the outdoors and indulges in activities like camping, fishing, hunting and riding roller coasters. She is married to Rod Washington
Byron Allen’s Starz Stake Signals Bigger Moves in the Streaming Industry
Byron Allen’s Starz: Byron Allen has acquired a 10.7% stake in Starz Entertainment for approximately $25 million, signaling his long-term media strategy amidst industry consolidation. This investment positions him influentially in the evolving streaming market despite intense competition.
Byron Allen — Founder/Chairman/CEO of Allen Media Group
Byron Allen’s Starz investment
Media entrepreneur Byron Allen has taken another step toward expanding his growing media empire. Through his family office, Allen recently acquired a 10.7% stake in Starz Entertainment, purchasing the shares from a fund managed by former U.S. Treasury Secretary Steven Mnuchin.
The transaction, valued at approximately $25 million, gives Allen a significant minority position in the premium cable and streaming platform. While the investment itself may seem modest compared to the billion-dollar deals common in Hollywood, analysts say the move could signal a larger strategy unfolding in the rapidly evolving streaming industry.
Why the Starz Deal Matters
The shares were sold by Mnuchin’s Liberty 77 Capital fund, which previously invested in the company when Starz was still connected to its former parent, Lionsgate.
In 2025, Lionsgate completed a corporate restructuring that separated its operations into two distinct companies:
Lionsgate Studios – responsible for film and television production
Starz – focused on premium cable and streaming services
Following the spin-off, Starz became an independent publicly traded company. As a result, investors are still determining the platform’s long-term value in an increasingly crowded streaming marketplace.
Despite facing intense competition from larger platforms such as Netflix, Disney+, and Amazon Prime Video, Starz continues to maintain a strong subscriber base and recognizable content franchises.
Outlander – historical drama series
The Power franchise created by Courtney A. Kemp and executive produced by 50 Cent
Byron Allen’s Long-Term Media Strategy
Allen’s investment strategy has long focused on owning media distribution and infrastructure rather than simply producing content.
The Weather Channel
Dozens of local television stations across the United States
Multiple niche cable networks and digital platforms
Over the past several years, Allen has also pursued larger acquisitions, reportedly exploring deals involving companies such as Paramount Global and BET Media Group. While those deals did not materialize, they signaled his ambition to expand Allen Media Group into a major force in global media ownership.
The Bigger Picture: Industry Consolidation
Allen’s investment arrives during a time of significant disruption in the entertainment business. Traditional cable television continues to decline as audiences migrate toward streaming platforms. At the same time, major studios and media companies are struggling to make streaming services consistently profitable.
Industry observers believe these pressures could lead to a new wave of consolidation across Hollywood and the streaming sector. Smaller platforms like Starz could become attractive acquisition targets for larger companies seeking additional subscribers and content libraries.
A Potential Hidden Opportunity
For now, Allen’s 10.7% stake does not give him control of Starz. However, it does provide influence as one of the company’s larger shareholders and leaves open the possibility of increasing his ownership in the future.
If consolidation accelerates and streaming platforms begin merging or forming partnerships, assets like Starz could become significantly more valuable. For Byron Allen—whose career began as a stand-up comedian before evolving into one of the most prominent independent media owners in America—the investment may represent another calculated step in a decades-long strategy built around media ownership and long-term growth.
Dive into “The Knowledge,” where curiosity meets clarity. This playlist, in collaboration with STMDailyNews.com, is designed for viewers who value historical accuracy and insightful learning. Our short videos, ranging from 30 seconds to a minute and a half, make complex subjects easy to grasp in no time. Covering everything from historical events to contemporary processes and entertainment, “The Knowledge” bridges the past with the present. In a world where information is abundant yet often misused, our series aims to guide you through the noise, preserving vital knowledge and truths that shape our lives today. Perfect for curious minds eager to discover the ‘why’ and ‘how’ of everything around us. Subscribe and join in as we explore the facts that matter. https://stmdailynews.com/the-knowledge/
Todd L. Ely, Associate Professor of Public Administration; Director, Center for Local Government, University of Colorado Denver This article is republished from The Conversation under a Creative Commons license. Read the original article.
