The Endowment Decision Activity
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
The Endowment Decision Activity
Introduction
Ms. Bigus Buckus, a wealthy philanthropist, has offered a $100 million endowment to a deserving university. Ms. Buckus is an enthusiastic supporter of higher education, and believes that improving the quality of American colleges and universities is critical for the continued development of the nation, both economically and socially. In honor of her 90th birthday, Ms. Buckus has invited representatives from four schools to meet with her to discuss their financial needs. Believing that competition creates the environment for optimal decisions, she wants the representatives to debate their case in the presence of each other. At the conclusion of the discussion Ms. Buckus will bestow upon the “winner” the $100 million endowment.
Instructions for Participants
During the first joint class meeting, we will assign students to teams. You will have 1 hour to prepare and practice a 5-minute presentation describing why your school needs this endowment, and how your school will use the funds. Presentations should draw on the specialized knowledge from both courses.
On the second day, each school will be allowed 5 minutes to present their proposal, followed by at least one question for each team from the instructors. After the instructors’ questions, representatives from other schools may also ask questions of your team. However, during the presentation teams are asked to respect the input of representatives from other universities. Ms. Buckus is offended by those who attempt to dominate discussions.
Your school has sent you and your team to represent its interests. It is your responsibility to present the best case possible. Although your job is not in jeopardy, the administrators of your college are anticipating a favorable outcome. When you return to the campus your team will be asked to submit a detailed report describing the decision process.
About Endowments and Expenses
An endowment is a large amount of money that a non-profit organization invests. The organizations spend the investment returns, and leave the principal invested. It is common for an amount equal to about 5% of the total endowment to be spent per year. That means that Ms. Bigus Buckus’ endowment of $100,000,000 will generate a total of $5 million to be spent each year.
In addition, some donations are what is called “restricted,” meaning that the donor has given money to be used only for certain purposes, such as scholarships or a new building. Restricted funds may not be used for any purpose other than the one specified by the donor. This can mean that, even with a large endowment, schools may have difficulty covering their operating costs.
Source: Mallinger, Mark. 1999. The endowment decision: An exercise in negotiation and conflict management. Journal of Management Education, Vol. 23, No. 5, pp. 607—617. Updated 2019 by Elizabeth Siler, Ph.D., Worcester State University.
The Endowment Decision Activity
Example Expenses and Amounts
- A faculty member will cost $80,000—$120,000 per year (includes benefits) • WSU’s new wellness center cost about $60 million
- Scientific equipment can cost anywhere from $5,000 up to $1,000,000 or more • Full-time undergraduate tuition at private schools can be up to $50,000 per year • Capital expenditures = purchasing and/or maintaining buildings and large equipment • Operating expenses = salary, utilities, supplies and other day-to-day expenses • Cost of a new “smart classroom” = about $25,000
Summary of Colleges and Their Issues
All of these colleges are in the same general geographic area, like the colleges in and around Worcester or Boston.
AKERS COLLEGE (like WSU)
- Small, state-funded college
- High-quality, undergraduate institution
- Emphasis on teaching; small class size and student-faculty interaction encouraged · Reduction in government funding has left school without adequate resources for information systems technology, like smart classrooms, wifi, and computer labs
THURMAN UNIVERSITY (Like Clark or WPI)
- Small private college offering undergraduate and graduate degrees, including Ph.D. · Admits exceptional students in the sciences
- Prepares students for careers in government and industry
- High costs associated with operating a school of science and technology requires additional outside funding
REGENCY UNIVERSITY (Like UMass, esp. UMass Boston or Lowell) · Large, state-funded university
- Quality undergraduate and renowned graduate professional schools · Multicultural student body, wide range of academic programs
- Revenue shortage will force the dissolution of numerous programs; additional funds would allow quality to be maintained
HUNTINGTON UNIVERSITY (Like Yale)
- One of the country’s most prestigious private schools, founded in 1799 · Current endowment over $100 billion
- Provides quality education at all levels and across disciplines; many of the nation’s “finest” have attended Huntington
- The large endowment is primarily devoted to capital expenditures, putting a strain on the operational budget
Source: Mallinger, Mark. 1999. The endowment decision: An exercise in negotiation and conflict management. Journal of Management Education, Vol. 23, No. 5, pp. 607—617. Updated 2019 by Elizabeth Siler, Ph.D., Worcester State University.