If the endowment is fully gifted out or spent on assets of the university, then the net growth of the endowment will be zero and it won’t impact the tax base or tax. It’s only the fund assets divided by full-time equivalent students which drive the yes or no on the tax. Looks like this gift is going to the research building on campus and cancer research center in midtown Atlanta.
Money magazine computes Emory’s per student endowment as falling just under $500,000
College 2017 Endowment Value % Change in Market Value Value per Student
Harvard University $36.022B 4.3 $1,522,104
Yale University $27.176B 7 $2,191,268
University of Texas $26.535B 9.60 $147,675
Stanford University $24.785B 10.70 $1,541,160
Princeton University $23.812B 7.5 $2,951,077
MIT $14.968B 11.4 $1,315,751
Univ of Pennsylvania $12.213B 14 $541,389
Texas A&M $11.556B 9.60 $97,189
University of Michigan $10.936B 12.20 $197,056
Northwestern University $10.437B 8.20 $568,540
Columbia University $9.997B 10.60 $389,018
University of California $9.788B 17.3 $36,235
University of Notre Dame $9.352B 11.70 $762,463
Duke University $7.911B 15.70 $509,248
Washington University in St. Louis $7.861B 11.4 $562,770
University of Chicago $7.524B 7.5 $487,698
Emory University $6.905B 7.9 $493,635
Cornell University $6.758B 13.20 $288,941
University of Virginia $6.394B 9.20 $277,836
Rice University $5.814B 9.20 $872,778
USC $5.128B 11.3 $127,612
Dartmouth College $4.956B 10.8 $782,398
Ohio State University $4.253B 18.90 $70,612
Vanderbilt University $4.136B 9 $342,139
New York University $3.992B 14.5 $89,774
@BiffBrown
Are these Emory’s 2016 or 2017 Endowment numbers? Which one is used for the new law?
@VANDEMORY1342 I’m not sure about how these were computed.
I think the value of the endowments in 2018 and the increase in their investment value will count. The new tax law doesn’t come into effect until 2018.
American Council on Education analysis shows that Emory will not be impacted by the endowment tax at least initially.
https://www.cnbc.com/2018/03/09/colleges-are-fighting-a-new-endowment-tax-this-one-kentucky-school-got-a-pass.html
There’s also a bipartisan bill in the works to repeal the endowment tax.
https://delaney.house.gov/news/press-releases/delaney-byrne-introduce-the-don-t-tax-higher-education-act
Emory President Sterk co-signed a letter addressed to the leaders of Congress protesting the endowment tax and asking for its repeal.
https://ofr.harvard.edu/files/ofr/files/march_2018_endowment_tax_letter_to_leadership_from_schools.pdf
'Schools had been looking for help on this issue, and they got it in the form of Internal Revenue Service guidance issued Friday. A college trade group had asked Treasury Department officials last month to use a “stepped-up” basis for calculating the tax. Using appreciated prices means the tax will only apply to income earned since the end of 2017, which in turn would mean a lower bill than using the original cost basis."
https://www.bloomberg.com/news/articles/2018-06-08/colleges-get-tax-reprieve-in-push-to-value-endowment-assets
This is good news.
“Schools may increase enrollment – or give the appearance of doing so by changing the way they measure it – to reduce their endowment-per-student ratio to miss the tax threshold set by Congress, wrote economist Peter Hinrichs. Those colleges with low enrollment may reduce it in order to stay below 500 students to avoid the tax.”
https://www.bloomberg.com/news/articles/2018-05-17/schools-may-try-to-dodge-endowment-tax-cleveland-fed-study-says
An analysis right out of Captain Obvious’ handbook…