Some colleges and universities targeted by President Donald Trump are facing calls to draw from their endowments to offset federal funding cuts if they do not comply with his demands. Notably, Harvard University has defied the Trump administration’s requests to end its diversity, equity, and inclusion programs. This has led to the federal government freezing more than $2.2 billion in grants and $60 million in contracts to the university. Trump has criticized these institutions over their handling of pro-Palestinian protests and accused them of not doing enough to combat antisemitism, although critics argue that the administration is infringing on free speech rights.
While Harvard is resisting Trump’s demands, Columbia University has agreed to implement measures such as banning masks that conceal identification and hiring additional campus officers. Amidst the potential loss of federal funds, questions have arisen as to why universities do not dip into their billion-dollar endowments to resist Trump’s pressure. Former Harvard President Larry Summers suggested that universities should use their endowments in emergencies, but accessing these funds is not as simple as it seems. Endowments are primarily invested in nonliquid assets that were designated for specific purposes, making them challenging to repurpose at will.
Endowments are unique financial tools meant to support nonprofit organizations over the long term. They consist of contracts with donors that specify the use of funds for purposes such as scholarships, scientific research, and medical enterprises. Universities must manage these donations by investing them in stocks, real estate, or private equity to fulfill their intended purposes over time. Changing the means of endowment expenditure requires legal processes and approval from donors or their representatives.
While some suggest that universities should look to alternative funding sources to make up for lost federal funds, others caution against disbanding endowments. Bruce Kimball argues that drawing from endowments could have hidden costs in portfolio management and jeopardize schools’ long-term autonomy and flexibility. Only universities with the largest endowments are likely to have enough funds to cover the loss of federal support, while schools with smaller endowments may struggle to maintain their educational quality and viability if they use endowment funds to offset budget deficits.
Harvard, which boasts the largest endowment of any college or university in the country, has been vocal about its refusal to comply with the Trump administration’s demands. The university’s president, Alan M. Garber, cited violations of Harvard’s First Amendment rights and statutory limits of government authority as reasons for defying the administration. Progressives have applauded Harvard’s stance, while Trump has suggested that the university could lose its tax-exempt status if it continues to resist. As other colleges and universities face similar pressures, it remains to be seen whether they will comply or follow Harvard’s lead in opposing government interference.
