Is NACUBO Legal? Part Deux

By Lynne Munson

Richard Vedder asked this question last Tuesday, suggesting that the National Association of College and University Business Officers' penchant for secrecy, among other things, should spur scrutiny. And I had the opportunity to raise the issue with the Democrat and Republican staff of the Senate Finance Committee last Friday.

Committee staffers had invited me to share my thoughts on higher education endowment hoarding, a problematic practice which is much higher on the committee's agenda than I'd realized. And that's quite something because, if you read between the lines of the Washington Post, these are the same folks who were behind EduCap's recent takedown (for good or ill??). My sense is that they mean business. My questions about NACUBO met with a bit of eye-rolling and an interest in my own lengthy struggle to wrest information from NACUBO.

That story begins months ago when I was conducting research for an article I recently published in Inside Higher Education.

It is important to understand--as most readers of this blog no doubt do already—that
NACUBO is basically the only source of information on higher education endowments. If you contact a college or university directly and ask almost any question about what the institution does with its endowment, most press officers react with horror and sometimes sputtering claims of ignorance. That's if your call gets returned at all.

The only folks who do get schools to divulge almost any information about their endowments is NACUBO, which circulates an annual survey of highly specific questions about endowment investment and spending practices. Last year over 700 schools responded. The survey results for individual schools were published in an annual report which is readable only if you can decode NACUBO's cipher-like presentation of the information. More on that in a moment...

Of course I didn't realize this when I originally called NACUBO requesting a copy of their report. I told their press person that I was working on an article about endowment payout and promised in all sincerity that their report would get top billing if they sent me a copy. They explained that it was not their policy to make the report available to the press. Dumbfounded I asked why, since they'd published a press release [often a tell-tale sign that you'd like press attention :)] and would no doubt sell more of their pricey reports if people knew they existed. They repeated that the report was simply unavailable unless I bought one for $290.

Gee, I told their press person, that seemed awful steep. But the report sounded like it would be so very helpful that I decided to ask a few more questions. I'd read in the press release on NACUBO's website that the survey found "a typical annual spending rate of approximately five percent of total endowment holdings." This was higher than my research indicated so I asked what information the report contained which backed up the 5% number. NACUBO's press person told me that they could not supply such info -- that I'd have to buy the report. After going around that circle a half dozen or so times they finally admitted there was no specific info in the report to back up the 5% number and that the line in the press release wasn't based on survey findings. Now I was becoming suspicious.

So I asked: How about NACUBO's claim that the report contains payout information on specific colleges and universities? It contains that doesn't it? Well, NACUBO admitted, it does and it does not. The largest section of the report lists the more than 700 responding institutions along with their payout rates since 1997. But the list includes no names. Each institution name is coded so the list amounts to 25 pages of senseless grids of numbers. And the only people who can decode it are the colleges and universities themselves.

So, despite the non-profit status NACUBO enjoys, they do not make available to the public (aka the consumers of higher education), or to Congress, or to anyone but their own members, information on what portion of their tax-free endowments their individual members are spending (or hoarding). The fact that only NACUBO members can exchange this information allows them the opportunity to collude behind closed doors and maximize benefits for themselves. Let me stress the word opportunity in that previous sentence because I'm not saying that this is happening. But the way NACUBO treats this information makes it entirely possible.

The bottom line is that NACUBO is allowing their members to share and utilize inside information that they are keeping secret from everyone else. They shouldn't be doing that. Or so I told the Senate.