Bowing to popular demand, here is said thread: https://twitter.com/pashulman/status/1249016880100147201

Most importantly, university endowments are not bank accounts.

Second most importantly, university endowments are not bank accounts.

And finally, university endowments are not bank accounts.

There is no "endowment." There is only a collection of hundreds or thousands of individual funds, most purposed by the terms of the gift to fund a specific part of university operations: financial aid, faculty salaries, research, plant maintenance, etc.

Universities plan their budgets for the coming fiscal year (or, ideally, years) in advance. Trustees set a a specific percentage draw from the endowment accounts, and the percentage applies to a multi-year average of the funds, evening out really great and really terrible years.

What gets drawn feeds into the university's operating budget for that year, also comprised of student tuition and fees, research grants, and other gifts.

Without extraordinary legal maneuvering, which basically means breaking the terms of a legal contract--and requiring either the permission of the original donor or designee or consent from the state attorney general or a judge...

...drawing more from the endowment just means more funds *for the purposes the fund is restricted to*.

So say the trustees decide in an emergency to pull more from the endowment: great! Now there's more money to buy works in western American literature for the library.

At some level, there is some fungibility: drawing more for a fund providing for one professor's salary frees up any additional operating funds that could be repurposed for other things; but it also permanently decreases the capital available for paying that salary in the future.

And it would create a complete budgetary mess to work through, and probably wind the institution up in a ton of lawsuits.

Yes, universities could try and break the terms of their contracts. But again, this is a legal mess, not quick, and screwing up the long term planning intrinsic to having endowments in the first place. You can't have stable institutions without this kind of financial security.

I have no idea if Harvard or any other school keeps endowed accounts specifically to generate emergency funds. Maybe they do. I'm sure they have some form of emergency funds. We're all just facing not only potentially huge losses but a completely unpredictable FY2021.

I don't know why this thread isn't mega-viral yet.

Ok back to gardening.