Waste of the Day: University Endowments Soar
Topline: The top 20 private universities received $22.3 billion in federal research grants and contracts in fiscal year 2025, but it appears some of that funding helped them grow their own cash reserves.
A statistical analysis from Open the Books found a moderate correlation between 20 elite colleges’ per-student government funding and per-student endowment growth. Schools that received the most taxpayer funding from 2018 to 2025 were the most likely to see their endowments grow, sometimes by more than 200%.
Key facts: The analysis included all eight schools of the Ivy League and other elite colleges like Duke, Emory and Northwestern.
The funding helps pay for vital research on medicine, energy and much more, but it also forces taxpayers to spend tens of billions of dollars every year on overhead costs. For every $1 a college receives for research, it typically receives another 50 to 60 cents to cover other expenses like building maintenance, janitors and grant writing.
Elite schools could arguably cover more of their own expenses without billing taxpayers. Johns Hopkins University got $2.6 billion in research funding last year and has consistently been among the top recipients of government funding. The Massachusetts Institute of Technology received $12.6 billion from 2018 to 2025 — more than $1 million per current student — while its endowment grew by 67%. The trend is similar for most top schools.
When a college receives federal money for research, it can avoid withdrawing money from its endowment to fund the same project. That frees up money to be spent on administrative salaries, athletic facilities, art galleries and more. Schools can also opt to keep the money invested and allow their private funds to grow even larger.
An ordinary private business would have to pay a 20% capital gains tax on profits from its investment, but universities mostly evade the tax because they are registered as nonprofits.
The 2017 Tax Cuts and Jobs Act required private colleges with more than $500,000 in endowment assets per student to pay a 1.4% tax on realized gains.
The One Big Beautiful Bill Act expanded that to an 8% tax on schools with endowments worth more than $2 million per student, but that currently only applies to three schools.
The grant funds include awards of questionable value. Columbia University received $745,323 to test a hypothesis that "curiosity promotes learning.” Duke University got $784,147 to build robots that mimic the movements of mantis shrimp. Cornell University received $5,500 for an open-access edition of a book that describes itself as celebrating the contributions of women “espousing communism.”
Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com.
Summary: Federal money should be funding research that benefits taxpayers, not helping wealthy universities boost their own bottom lines.
The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com
