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Endowment Spending Policy: An Economist’s Perspective
Thursday, January 1, 2004
The majority of colleges and universities today target their endowment spending at about 5 percent of a 12-quarter average of total endowment funds. The result over the past 10 years has been growing endowments, justified by the notion of intergenerational equity, ensuring the future generations will be able to draw as much out of the endowments as today. Peter Mehrling questions whether intergenerational equity requires endowments to grow by spending less then the income they generate, and proposes an alternative approach to endowment spending.