ben stein has an insightful piece in today’s nytimes about the tough questions around yale and harvard’s gigantic endownments.
first, these funds have become massive, yale topping $13 billion mostly due to the above average returns their managers have generated. the tough questions are whether the conventional wisdom is true that these managers are actually the primary reason for this performance or are there institutional forces working here such as the fact that these endowments are tax free and can generate short term gains without the tax hit normal funds take or the fact that their sheer size gets them better access to private equity buyouts.
his second point is very interesting and one that many of us have probably considered. why should he bother contributing $5000 to a fund that is growing by $3 billion annually? wouldnt this money have more direct impact going to the spca or families of us soldiers killed in iraq?