Getting and spending

Does Princeton spend enough of its endowment every year? Do other rich schools? Outside the bubble, a lot of people loudly insist that we don't. Newspapers and magazines, trade journals like the Chronicle of Higher Education and well-informed blogs like University Diaries tell the world that we take in too much and spend too little. Even inside the bubble, it's impossible to avoid the news of Iowa Sen. Chuck Grassley's hearings and the Robertson lawsuit.

Returns on the biggest endowments have been stunning in the last few years. For the 2006-07 fiscal year, returns on Princeton's endowment clocked in at 24.7 percent — which means that it rose almost three billion dollars in one year. Yale did even better, Harvard and Stanford just a little worse. The scale of the sums involved can stagger you — especially if you work, as most academics do, at an institution poorer than these, or if you're a parent or student paying tuition and fees that seem to rise almost as quickly as the endowments do. Shouldn't the richest schools break those immense piggy banks and shake more of their savings into the hands of their own students? After all, a relatively modest increase in spending would enable universities to freeze tuition entirely. And if we're unwilling to make that decision ourselves, why shouldn't Congress force our hand?

I've paid some tuition and fees myself, and I know it's not fun. But I really doubt that it's a good idea for the government to step in. According to the most recent Shanghai list of the world's 500 best universities, eight of the top ten and 54 of the top 100 are in the United States — as compared with 31 in the more populous European Union. Talk to university administrators around the world, and they will tell you that they long to reproduce the best features of our system, including large endowments and massive, entrepreneurial fund-raising. Do we really want to fix one of the American systems that actually work? To put government fully in charge of one of the most competitive and successful areas of American life?

If you're as old as I am, moreover, you know something that most participants in the current debate never mention (possibly because they're too young to know): What goes up comes down. In recent years, endowments have soared. But the curve hasn't always pointed upwards. Back in the '70s, some private universities began spending more than the traditional percentage of their endowment income on the advice of the Ford Foundation's McGeorge Bundy. When the economy hit bad times, they found themselves locked into high yearly expenses even as their endowment income shrank. That's why Yale stopped maintaining its campus — a decision which came with a billion-dollar price tag in deferred maintenance.

Big endowments don't just cover climbing walls and comfy, high-tech dorms — two of the luxuries critics often mention. They also pay for big science, much of which costs universities even more than it brings in by way of grants, and deep scholarship, which costs more than some realize. Even humanists cost money. To study history and literature, we need a great library. To have a great library, we need to buy books from around the world even as the dollar shrinks, pay for more sophisticated — and expensive — electronic systems and upgrade the building, which is showing its age — not least in my carrel, which leaks when it rains. These are not visible, glamorous needs. No one will step up and give us the millions it will take to meet them. Can you see a donor glowing with pride as he contemplates the Alfred Prufrock '87 air conditioning ducts? That's why we need the regular income that endowment yields.

It's easy to understand the complaints. The cost of four years here — and at other, comparable schools — keeps climbing, faster than the cost of living, faster then parental incomes — even as our investments swell. Occasional serious disagreements between universities and donors, like those in the Robertson case, have reinforced existing suspicions. Parents, donors and politicians all have a legitimate interest in knowing how we're actually using the endowment, even if we would be best served by keeping our autonomy.

In my experience, Princeton generally uses its resources with care, intelligence and precision. Try to get your out-of-pocket expenses repaid from your own research fund, and you'll find that this slick, modern university still has a good, old-fashioned Presbyterian passion for seeing to it that no dime is frivolously spent. But I'm not sure that we've done a very good of explaining — to the larger university community or to the wider world — exactly why and how we manage our wealth. We're about to start a campaign for even more capital, during which we'll talk a lot about new needs and opportunities. I hope we'll also take the opportunity, as universities generally haven't, to educate the larger university community and the world about what we do with all the money we already have. That would be another way for Princeton to practice leadership. Anthony Grafton is the Henry Putnam University Professor of History. He can be reached at grafton@princeton.edu.