While attending higher education in the United States is widely considered an investment, one investment in particular is far more central to the nature of universities: the endowment.
University endowments are large sums of money accumulated through sizable donations, known colloquially as “gifts,” by — notably wealthier — community members, alumni and former faculty. Some endowments can reach staggering sizes; unsurprisingly, the total endowment of the Ivy League schools was over $192 billion according to a Forbes report that further projected the sum would skyrocket to over $1 trillion by 2048. The University of Connecticut’s own endowment hovered over $600 million as of 2021, was even one of the few endowments that experienced growth the following year, according to a UConn Today article. An incentive for contributing gifts is that they are tax-deductible, making it less than surprising that endowments are so attractive to wealthy donors. Donations alone, however, are not what keep endowments afloat; nor are these accumulated donations readily available to spend on students, faculty, staff and infrastructure at the behest of the community. Rather, endowments grow by being funneled into investment portfolios as illiquid — neither cash nor immediately convertible into cash — funds. Those funds that are expendable on the university are managed by the UConn Foundation, an undemocratic and unaccountable private organization that lacks any meaningful transparency before those it supposedly exists to serve: students, faculty and staff.
The UConn Foundation, headquartered at 2390 Alumni Drive, manages only 4% of the total endowment, according to the Foundation’s 2021 factsheet, which amounted to less than $20 million at the time. The purpose of this policy, as stated in the factsheet, “is intended to provide stable income to the University for its current needs while maintaining the long-term purchasing power of the endowment.” This year, the Foundation distributed just over $20 million of the endowment to scholarships, research grants, technology and more; however, the UConn community ostensibly benefiting from these monies has no democratic input into their investment or expenditure, even as tuition and fees continue to rise, thus increasing the financial burden on students and faculty. The problem here is circular: How can a university benefit from an endowment that is poorly spent?
While a meager portion trickles down to members of the UConn community, this process is highly selective, unequitable and lacks transparency. For example, donors, not current students and employees of the university, are granted full discretion for where donations go. And although there are over 1,200 funds for donors to choose from, according to the Foundation’s website, the daily benefits to students from these donations are limited to scholarships or research grants, most of which are competitive. Although the endowment could be distributed to reduce the cost of attendance and enhance academic opportunities to all students regardless of program, the structure of the Foundation only lends itself to deepening the crisis of education wherein costs increase and opportunities thin out for the majority of students. Furthermore, because the liquid funds of the Foundation amount to less than 10% of UConn’s rigid, heavily earmarked total budget, it is all the more important that available funds are flexible and distributed fairly. Democratizing the UConn Foundation, or subjecting it to the control of students and university employees in addition to alumni and donors, may effectively tap into its wealth — for example, by increasing the amount of expendable funds from 4% to 10% — while utilizing existing expertise to protect its financial solvency.
Transparency is a particularly large problem. Information is not readily available regarding which UConn scholarships are financed by the Foundation or what the investment portfolio of the remaining $580 million consists of. As a private, non-profit organization, the UConn Foundation is not subject to the Freedom of Information Act; thus information that is unequivocally of public interest is not accessible by that public.
This issue has come to a head in recent years, particularly over the UConn Foundation’s millions in investments in fossil fuel companies. Despite the Foundation’s stated commitments to sustainable investments, UConn environmental activists have no means of holding it accountable, much less knowing, should it renege on divesting from fossil fuel industry firms. What’s more is that the investment manager overseeing the vast remainder of the endowment not managed by the endowment, BlackRock, itself has a 6.6% stake in the weapons contractor Raytheon, suggesting that UConn’s own financial well-being is contingent on the manufacture and sale of weapons of war, directly contradicting its own human rights mission, as we have discussed in a recent editorial. Absorbing the UConn Foundation into the university would render it a public entity, and add a guardrail of accountability to the organization.
The Daily Campus Editorial Board opposes the undemocratic, opaque structure of the UConn Foundation. An endowment meant for the community must also be accountable to the community— not serial endowment fundraisers with little connection to UConn like the Foundation’s current President and CEO, Jake Lemon. In order for UConn’s massive endowment to have a meaningful impact on the whole of the university, it must become a democratically-governed public institution.
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