Please send money Tom Smith

Yale University has an endowment of $22.5 Billion and has been making returns of over 20 percent a year for the last ten years.  Last year it was more like 28%.  But let's say 20.  So that's income of over $4.4 Billion per year.  But let's say 20 percent is more than anyone should expect -- so let's say ten.  Ten percent of their actual return would be $440 million; ten percent of that $44 million; and ten percent of that $4.4 million.  Per year.  So the interest on the interest on the interest on the interest is . . . millions.  Well.

It's that time of year and I have recently received a letter from both the Yale Law Fund and an email from just Yale I guess, perhaps Yale the Platonic entity.  Asking me to send them money.  If I send more than $5 to Yale the platonic entity, I will get my name on a list available on the web.  Be still my heart. I guess it costs a little less than $5 by the time you pay union wages in New Haven to enter somebody's name in an HTML file.  Though it's probably done in India somewhere.  I calculate Yale is making $141 (roughly) every second, just by existing.  OK, by investing in hedge funds and private equity funds you have to really rich to have even heard of.  God must really appreciate the For God For Country and For Yale thing for them to be getting 28%.  It's the Efficient Market Hypothesis Except for Yale I guess.  This means they are making $5 dollars every 0.03 seconds.  That's about how long it takes me to decide whether to send them money.

Maybe I'm missing something.  Often, I see persons of apparent homelessness begging for money at intersections in the unfashionable part of the county where I reside, my investments not having worked out as I hoped.  Sometimes I roll down the window and give them $5.  Actually, that's not true.  I never give them money. Very rarely, I think about giving them money.  However, I have a good reason.  I don't give them money because if I did, that would be money I would no longer have.  I also think if I did, they would probably just spend it on wine or something.  I sometimes see them by the Ralph's where I stop to pick up wine on the way home.  You can't believe how expensive wine is these days.  It's a scandal.

But these people generally look like they could use some some extra cash, some green, some spare beans, a fatter wedge, if you see what I mean.  If they were stretching their hand out of new Ferrari or (like I saw the other day, being driven apparently by a member of one of the local tribes that runs gaming establishments) a rose-colored Bentley, I would think "Why TF is he asking me for money?  He should be giving me money."  Once, back in DC in the 1980s, there were many homeless people on the streets who would panhandle for money.  It became a big issue.  I took to asking them to give me money.  Usually they declined, but once a guy handed me a handful of quarters.  It must have been $20.  I could have sent it to Yale I guess, but I just kept it.  There's nothing wrong with quarters.  They spend.

I have thought of asking Yale to stop writing and asking me for money.  But why should I?  I like getting the letters.  They fill me with a kind of awe.  They remind me that greatness comes to those who dare to ask for more than anyone can possibly think they deserve.  They fascinate me.  What can they possibly say to make me think I should send what $50, $100? to the people who are making 28% a year on $22.5 Billion?  They say they need the money, which cannot be true, except in the sense of me and the beggar.  I am astonished.  In a way, thrilled.  Rock on, Yale.  Rock on.

Comments

[Allan Niemerg]

Tom,
I don't know how you can be so cold-hearted. Harvard has $35 billion dollar endowment. That's 56% more than Yale's. And while Yale was earning a piddling $4.4 billion on their endowment, Harvard brought in a whooping $6 billion. How anyone could stand for such an injustice is beyond me.

[Steve]

When Glenn Reynolds last linked a story about Harvard's endowment I calculated that Harvard could give full four-year scholarships ($45,620x4) to its entire incoming freshman class (2100) each new year for 91 years with that current endowment of $34,900,000,000. assuming static numbers. I hope I got my numers right! I guess Yale has some catching up to do.

[mwj4c]

At the two schools discussed in the post and the comments (and probably most universities) - Harvard and Yale - I'm guessing that most professors are cashing checks that were cut on cash earned only due to ideas/principles/realities that they rail against publicly.

But, they cash the checks.

I don't mind self-interest, but I mind hypocrisy quite a bit.

[Iapetus]

I get similar beggar letters from Harvard all the time. And telephone calls from Harvard students pleading for money. I chuck the letters into the wastebasket and tell the students no. Unless, of course, the Faculty of Arts and Sciences apologizes to former University President Larry Summers and offers him his old job back. That usually stuns them into silence. Click. The phone on the other end of the line goes dead. Works every time.

[Iapetus]

I get similar beggar letters from Harvard all the time. And telephone calls from Harvard students pleading for money. I chuck the letters into the wastebasket and tell the students no. Unless, of course, the Faculty of Arts and Sciences apologizes to former University President Larry Summers and offers him his old job back. That usually stuns them into silence. Click. The phone on the other end of the line goes dead. Works every time.

[jon spencer]

And as always all that interest is non-taxable.

[Stuart]

It gets worse. I went to Columbia Law School and my daughter is now in Columbia College. I have (thankfully) paid off the loans I took for law school, and am now paying upwards of $50,000 each year to educate and house my daughter at this elite institution. My wife and I were gobsmacked to receive a solicitation to donate to the "Parents Fund" at Columbia, which purports to have been set up to provide those enhancements to the student experience and other extras that tuition and fees just can't provide.

Columbia Law School gave me a wonderful three-year experience, and I don't mind giving them some money, though I do wish they wouldn't charge so much to their students. But a "Parents Fund" at Columbia College? Are they kidding? This is a new height of greed, I have to say. Going after alumni is one thing. But PARENTS?? People who are already dipping into savings just to pay the exorbitant tuition and expenses?

Columbia University's endowment is $6 billion. That's chump change next to Harvard and Yale, but still..........

[YLS2002]

Every year I look forward to Yale's letters - solely for the joy of reading your commentary. Don't forget - the law school Dean's letter is right around the corner (or did it come with the fundraising piece?).
And yet, I feel warm and fuzzy knowing that I surely must be great because I was once a student at such a clearly great place. Ha.

[dcuser]

For those who want to make charitable contributions to education, it seems that one's money would make far more difference directed to a struggling public school in an economically depressed neighborhood.

[dearieme]

They are so rich that they don't need students' fees. So why don't they just do without students altogether and function as pure institutions of scholarship? It's a mystery.

[dgm]

One year I got a fundraising letter asking for my $10,000 donation to the University of Chicago Law School. Now, I love that place and attending was one of the best experiences of my life, but $10,000? I thought it was a joke. Had I stayed in private practice maybe I would not have been so appalled. But that's a hell of a lot of money to give to an institution that isn't even feeding hungry people or otherwise providing the basics to people truly in need.

[Dan Simon]

Dearime: It's a matter of prestige. Without America's Best and Brightest falling all over themselves to pay an arm and a leg to sit at their scholars' grad students' feet, Yale would be nothing more than a very large, inefficient think tank. High-profile scholars would notice that, and start accepting more lucrative or cushier jobs at other think tanks, while those who actually enjoyed teaching would head for real universities. The tenured deadwood, of course, would hang on till the bitter end, and before too long Yale would be universally recognized as a once-great institution, lately sunken into decrepitude.

CEOs who continue captaining corporations long after they've earned more money than they could ever spend in their lifetimes, have the same motivation. With a high-powered job, they're colossi bestriding the world; without one, they're retirees playing golf.

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