TaxNewsFlash-Exempt Organizations

June 2, 2008
No. 2008-45

Senate Finance Committee Leader Addresses University Endowment Payout and Reporting

In an article recently posted on the Senate Finance Committee’s Web site, ranking minority member Chuck Grassley indicates that legislation to impose minimum payout requirements on large university endowments is possible after the Finance Committee leadership completes its analysis of information collected from colleges and universities.

Referring to universities’ responses to letters that he and Senate Finance Committee Chairman Max Baucus sent in January 2008—letters requesting information regarding endowment payouts and student financial aid (see TaxNewsFlash-Exempt Organizations 2008-05)—Senator Grassley wrote:

We'll analyze that information and use it to continue the discussion about how to make college more affordable. Legislation to require the wealthiest institutions to have an annual 5-percent endowment payout remains a possibility, as does increased reporting about endowment performance and expenditures.

The article also disputes several criticisms of mandatory payouts, including arguments that imposing payout requirements on endowments would be harmful to colleges and low income students, and would be unworkable because of donor-imposed restrictions on endowment funds.

Full text of the article is available on the Senate Finance Committee Web site: http://finance.senate.gov/press/Gpress/2008/prg052908d.pdf.

For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or rspeizma@kpmg.com

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