On February 18, 2016, the US House Committee on Ways and Means and the US Senate Committee on Finance jointly sent a letter to 56 institutions inquiring about endowments greater than $1 billion held by colleges and universities.

The purpose of the 2016 inquiry is to understand how colleges and universities are furthering their exempt educational purpose by using endowment assets. Areas of interest include questions and requests for information about: 

• Endowment management, including investment and management fee arrangements
• Spending and use, such as payout policies and percentages devoted to financial aid
• Naming rights donations and the amount that’s used for financial tuition aid
• Conflicts of interest related to endowment management, including relationships with advisors, employees, board members, and asset managers

Although responses to these inquires will require time and effort, the 56 colleges and universities that received them can also provide useful information on the essential needs and fundamental uses of such endowments. 

Background

Congress has had its eye on endowments for some time. In October 2015, the Ways and Means Subcommittee on Oversight held a hearing on the rising costs of higher education and tax policy. Then, in December 2015, Congressional Research Services published College and University Endowments: Overview and Tax Policy Options. The report discussed certain tax policies requiring a minimum payout on endowments, limiting charitable deductions to endowments, and revising offshore investments used by endowment funds. Also, back in 2008, the Senate Committee on Finance sent a letter to 136 colleges and universities with endowments of $500 million or more, focusing on endowment management to make tuition affordable for low- to middle-income families. 

We're Here to Help

If you’d like more information regarding the letter from Congress or help managing your endowment, contact your Moss Adams professional.