THE DECLINE OF ENDOWMENT
According to the Office of Education, endowment in 1957-58 amounted to $4.65 billion. The Council for Financial Aid to Education, in its 1958- 59 report, puts the total at $4.61 billion for that year. These figures are for book value; market value early in 1960 was substantially higher. In fact a special survey ( College and University Endowment Investments, 1958), gave a total of $4.83 billion market value for an 85 per cent sample, or $5.56 billion in all. For some institutions endowment is a very important matter--e.g., for the 48 major private institutions that account for more than 40 per cent of the endowment of 1,042 IHL studied by the Council. Where endowment is around $5,000 per student (book value), the contribution is roughly $250 per year per student. Major private universities, private men's and women's colleges, and professional and specialized schools come under this category.
Nevertheless, we may be sure of one thing: endowment is much less important than it used to be. In 1900 it accounted for 25 per cent of educational income. But by the late 1950s its relative contribution was only about one-fifth as large, or 5 per cent. The decline of endowment income, in relation to total income, results in part from the large rise of current gifts. In 1957-58, $325 million became available for current operations out of gifts, the equivalent of income from $8 to $9 billion of endowment, over twice the value of endowment in that year. By 1958-59 the Council for Financial Aid to Education estimated grants for all purposes at $751 million, or four to five times the endowment income of 1957-58. Another indication of the reduced significance of endowment is the large relative rise of physical property. In 1889-90 and 1929-30 the endowment was roughly 80 per cent of the value of physical property. By 1 957-58 it was only 40 per cent of this value. The trend toward a declining percentage of gifts to general educational income is reflected in a declining significance of endowment.1
Why the reduced importance of endowment? One explanation of course is inflation. Since before the war endowments have lost up to one-