Giving Compass' Take:

• Sandy Baum argues that the vast majority of colleges do not have sufficient endowments to make them a viable solution to the college affordability problem. 

• How can funders identify and execute effective and scaleable college affordability solutions? 

• Learn how philanthropy can help address college affordability. 

Endowments support a wide range of activities including active research agendas, graduate study, and community enrichment activities in addition to undergraduate education. Many question whether wealthy institutions are doing enough to enroll and support low-income students.

Asking whether these schools could do more to spread opportunity is important, but half of the students in the private nonprofit sector attend institutions with endowments that can provide less than $1,300 per student per year; only 12 percent are at institutions that can add $10,000 or more from endowment income to their annual budgets.

Endowments are smaller in the public sector but are similarly concentrated. Five state universities and systems—which enroll 1 percent of the students in the sector—hold a quarter of all the endowment assets.

Endowment funds are important to institutions. They allow them to provide financial aid to most enrolled students, to offer opportunities that would otherwise be unavailable, to pay their faculty, and more. But endowments at the vast majority of colleges and universities are not large enough to substantially reduce tuition for most undergraduate students.

The discussion about whether all the income from endowments should be free from taxation is active and controversial. But whatever policies are designed to target the wealthiest colleges and universities are unlikely to touch the vast majority of undergraduate students.

Making college less of a financial strain for students and families will require restoring per student state subsidies at public institutions, increasing need-based financial aid from federal and state governments and from institutions themselves, improving efficiency on college campuses, and developing a stronger, more equal economy

Diverting attention from these difficult issues by focusing on the endowments held by a very small number of colleges and universities is not a real solution.

Read the full article about endowments by Sandy Baum at Urban Institute.