As state funding for universities wanes, colleges are beefing up with endowments, putting to bed the myth that such institutions must be funded – and controlled – by government. These college endowments are so successful in fact, that some states (Massachusetts, for example) want to sap the funding by taxing it at a rate as high as 2.5 percent. And, as ALG News reported earlier, some colleges, like Harvard, are questioning the propriety of “taxing success.”
However, the use of endowments raises another question as well: Do universities even need public funds to survive in the first place? State schools in Virginia have shown that no, they do not.
UVA, one of a few Virginia state colleges to have taken primary responsibility for its own financial decisions, has seen the percentage of its operating budget funded by the state decline by nearly 50% since 1998. To counter, UVA has built up an endowment, out of which it is able to grow.
Additionally, the financial autonomy granted to it by the state has enabled the college to actually improve its financial situation. And that’s not surprising – responsible organizations are quite capable of managing their own funding. And what’s more, they can do it better than big government – with its short-sighted goals and long tentacles.
No money is given without strings attached. And schools that accept government funds are then forced to wade through government regulations and red tape, which cost excessive amounts of time, money, and institutional freedom. This has led some colleges to refuse government funds for themselves and their students – and they end up stronger for it.
As a former president of Hillsdale once said:
“If I have learned anything at all in my career as an educator, it is this: Whom the gods would destroy, they first subsidize. ”
As these colleges demonstrate, institutions of higher education should not have to rely upon federal, state, or even local funding to stay in operation. The use of endowments is proof of that. If colleges offer a good product at a fair price, not only will students (and their parents) buy its services, but grateful alumni, spurred on to success by the education they received, will gladly fund it. It’s called the “free market system” – and more of the nation’s colleges and universities can free up themselves from ruinous controls.
