Financiers and the Unequal Expansion of University Endowments

Albina Gibadullina, University of British Columbia
Charlie Eaton, University of California Merced

With the US economy having grown more unequal and stratified over the past four decades, prestigious universities established themselves as central organizations in maintaining social closure among the elites through highly selective admission processes and socialization in exclusive alumni networks. As the state has been withdrawing funding for public higher education, university endowment funds began to play an increasingly central role in exacerbating the divides between elite private universities and their less prestigious counterparts. Relying on the original dataset of 5,162 board members of top 30 private and top 30 public research universities in the United States between 2003 and 2017, as well as the National Association of College and University Business Officers (NACUBO) university endowment data and the Voluntary Support of Education (VSE) data on university donations, this study examines the complex role financiers play on university governing boards and the impact they have on university endowment funds. First, we demonstrate how universities with a higher presence of financiers working in private equity and hedge funds become more likely to allocate their endowment fund capital into alternative investments (such as those invested in private equity and hedge funds). Secondly, we examine whether having university boards dominated by financiers helps university endowment funds to attain higher rates of return. Finally, we explore whether financiers on university governing boards enable universities to raise more capital through donations. We assess the implications of unequal endowment growth for understanding the structures by which financiers have amassed an increasing concentration of wealth in the broader economy.

No extended abstract or paper available

 Presented in Session 144. Economic and Ideological Underpinnings of Higher Education