By . When the economy is doing well, many colleges increase their endowment spending on new programs, new buildings, new positions, and breaks in tuition. But when times are tough—at precisely the moment that campuses could most use the money—colleges’ endowment managers are less likely to spend it.
“That’s a really strange thing to do if the purpose of the endowment is at least in part to help the university overcome economic shock,” says Jeffrey R. Brown, a professor of finance at the University of Illinois at Urbana-Champaign.  He refers to the behavioral pattern as endowment “hoarding,” a term that Sen. Charles E. Grassley, an Iowa Republican, used to criticize colleges that spent what he considered an inadequate portion of their endowment wealth. More...