Drawing upon a study by Moody's Investors Service, Nick Anderson reported in the Washington Post last week that "the ten richest universities in America hold nearly a third of the total wealth, in cash and investments, amassed by about 500 public and private institutions. The 40 richest hold almost two-thirds of the total wealth." He noted further that this financial gap is widening, with their assets growing at a far faster rate from 2009 to 2014 than the portfolios of schools below them.
In addition, Moody's found that nearly 60 percent of gifts last year of the schools that Moody's reviewed flowed into the endowments of forty institutions. Moody's summarized that "this growing gap will pose increasingly competitive challenges for institutions that do not have the resources to invest in facilities, financial aid, and other strategic initiatives at the same level as their wealthier counterparts."
The Moody's report is significant because it demonstrates the growing wealth inequality gap that cuts across America at all levels. It raises a practical question for most American colleges and universities including some of the most revered, if not best financed, among them: "What's a 'poor' college to do?"
One possibility is for their higher education leadership to throw in the towel, at least over the term that corresponds to their service to the institution. A number of my colleagues who have or still serve as presidents answer the question on what to do with the word: "retire." It is the most distressing and irresponsible of all possible answers because it presumes that the can gets kicked down the road to be picked up by their successors. It's impossible to imagine what colleges might face in this murky future. Will it be possible to catch up?
A second possibility is for a new administration to arrive on campus as a change agent to set an institution on a more ambitious trajectory. While this is arguably a better and more enlightened option, this approach assumes that there are sufficient tools to succeed in this effort. And it presumes that the campus culture understands the pressing need to adapt and is willing to work toward a future that is less incremental and more intentional. If the governance structure is weak, then all bets are off.
Yet while arguably a few might envy the wealthiest institutions for their good fortune, almost no one would responsibly argue that the Harvards of the world should shut down their philanthropic machines. They are what they are. The largest public and private universities are predominantly research facilities with large graduate and professional school programs and expensive and recurring capital investments. They educate few American undergraduates.
For the rest of higher education who educate most college-bound students, here are a few simple options to consider:
- The factors affecting post-recession American higher education suggest strongly that an incremental approach to building a stronger college will no longer work. Is change coming? It is possible to be both worried and optimistic about the future of higher education simultaneously? It may even be a good thing for a college's stakeholders. Be sure not to shoot the messenger.
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