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The stock market has soared, generating huge gifts and rising endowments.
During the roaring markets of the later 1990s, for example, college downgrades were relatively infrequent compared with upgrades, as institutions benefited from rising endowments and also increasing student demand.
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And as their rising numbers, endowments and attendance can attest, they are big business.
All of this puts greater stress on the budgets of universities that relied on ever-rising endowment payouts from ever-rising endowments all to finance both day-to-day operations and expansions.
"What if the markets have actually dropped further, and the kind of economic news coming out suggests that unemployment will continue to rise and endowments for the foreseeable futures will remain flat?" That may mean colleges that are increasing financial aid to lure students may not be able to do so next year.
With dwindling endowments and rising tuition rates, schools are struggling to bridge the gap between student enrollment and funds for cutting edge research, faculty hires, and state-of-the-art facilities.
"This is a healthy discussion for universities and donors to have," said Senator Charles E. Grassley, Republican of Iowa, who has been urging wealthy universities to spend more of their endowments to combat rising tuition costs.
But hidden beneath the trappings of apparent prosperity are familiar signs of trouble: declining enrollment, rising tuition, debt and an endowment that is largely restricted.
To explore and isolate causes of auction fever experimentally, we design four different strategy-proof auction formats and order these according to expected rising bids based on pseudo-endowment effect arguments (psychological ownership and disparity between willingness to pay and willingness to accept).
A16 Foundation Grants on Rise Ballooning endowments and new money from wealthy individuals and corporations enabled foundations to make a record $23 billion in grants in 1999, a study found.
The endowment rose 40percentt in the year ended June 30, to $10 billion.
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