Key Takeaways
- • Emory University pays a 1.4% excise tax on net investment income, roughly $9 million last year, and expects its rate to rise to 4% under the new budget bill recently passed by Congress, which the authors say would roughly triple its annual tax obligation.
- • Emory's endowment is a pool of more than 2,400 individual donor-restricted funds, not a single pot of money, with about 40% dedicated to health care and the health sciences.
- • The university invests each fund's principal and spends roughly 5% of earnings annually to honor donor intent, with the remainder kept invested in perpetuity.
- • Emory's senior advancement and government affairs leaders argue the tax would reduce funding for scholarships, research, and patient care.
Summary
Josh Newton, Senior Vice President for Advancement and Alumni Engagement, and Cameron Taylor, Vice President for Government and Community Affairs at Emory University, published an opinion piece on Emory News advocating for the university's endowment and explaining the consequences of the federal endowment tax. The authors describe the piece as a nonpartisan explanation of how endowments work and why the tax matters.
According to the article, Emory's endowment is composed of more than 2,400 individual funds, most established by donors for specific purposes such as scholarships, faculty professorships, research, clinical care, and community programs. The university invests the principal of each fund and spends about 5% of earnings annually in line with donor intent, keeping the remainder invested to support the mission in perpetuity. The authors state that the endowment is not a strategy for building institutional wealth but a source of stability for academic and health care missions.
The article identifies three areas the endowment directly supports: student access and support, research and discovery, and health care and community well-being. Roughly 40% of the endowment is dedicated to health care and the health sciences, supporting the School of Medicine, Rollins School of Public Health, Nell Hodgson Woodruff School of Nursing, and Emory Healthcare.
On taxation, the authors note that Congress imposed an excise tax in 2017 on the net investment income of a small group of private universities. Emory currently pays a 1.4% rate, approximately $9 million last year. Under the new budget bill recently passed by Congress, the authors state Emory's rate is projected to increase, and if the university falls into the 4% bracket as it anticipates, its annual tax obligation would jump threefold. The authors argue this would reduce resources for scholarships, research, and patient care.
The piece concludes that endowed funds are purpose-driven investments and that taxing nonprofit private universities ultimately affects the students, researchers, and patients they serve.
According to the article, Emory's endowment is composed of more than 2,400 individual funds, most established by donors for specific purposes such as scholarships, faculty professorships, research, clinical care, and community programs. The university invests the principal of each fund and spends about 5% of earnings annually in line with donor intent, keeping the remainder invested to support the mission in perpetuity. The authors state that the endowment is not a strategy for building institutional wealth but a source of stability for academic and health care missions.
The article identifies three areas the endowment directly supports: student access and support, research and discovery, and health care and community well-being. Roughly 40% of the endowment is dedicated to health care and the health sciences, supporting the School of Medicine, Rollins School of Public Health, Nell Hodgson Woodruff School of Nursing, and Emory Healthcare.
On taxation, the authors note that Congress imposed an excise tax in 2017 on the net investment income of a small group of private universities. Emory currently pays a 1.4% rate, approximately $9 million last year. Under the new budget bill recently passed by Congress, the authors state Emory's rate is projected to increase, and if the university falls into the 4% bracket as it anticipates, its annual tax obligation would jump threefold. The authors argue this would reduce resources for scholarships, research, and patient care.
The piece concludes that endowed funds are purpose-driven investments and that taxing nonprofit private universities ultimately affects the students, researchers, and patients they serve.
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