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Even as certain policy makers press for mandatory payouts from endowments, the concept of an endowment remains surprisingly elusive. In the absence of either operational concepts of endowments or well-established metrics for identifying and measuring endowments, public policy discussions proceed with an implicit model of an endowment as "money in waiting" that is not currently in use for exempt educational purposes. This Article suggests that endowments, however conceptualized or measured, are better understood as "money in use" even though it is not being distributed. It argues that most endowment money is currently in use for at least two purposes. The earnings on endowments are funding both current operations and long-term commitments. The endowment principle itself is used for various forms of credit enhancement for numerous forms of university borrowing. Because the endowment is in use, its distribution would have a far greater impact than policy makers understand.

The Article also suggests that mandatory distributions would have little impact on the public policy issue of access to education. Very few universities have substantial endowments and even fewer have endowments that could make a difference over the long term. Although Congress has the authority to require mandatory distributions as a condition of continued tax exemption, such a requirement has been used only in cases where there was reason to doubt that various types of exempt entities are using their funds for exempt activities. This is not the case with colleges and universities. Recommendations for mandatory distributions do not address any problem with the operation of colleges and universities for exempt purposes and do not offer any realistic hope for a solution of the very serious problem of financing the education and research mission of universities.

Universities depend fundamentally on government funding in the form of student loans and grants and contracts for research. Universities are "parastatal" enterprises that are publicly funded but privately operated. Much more research is needed on this aspect of university operations and on the actual uses of the endowment that are inconsistent with distribution. Imposing a mandatory distribution requirement on universities is not a substitute for public policies that offer realistic prospects for addressing the problems of access to education by students and adequate funding for research on which our economy and society depend.