Notre Dame CIO Scott Malpass on Endowment Tax

How many can claim to have grown their alma mater’s endowment 30 times over 30 years?

[Scott] Malpass is a double Domer, graduating in 1984 and then receiving a master of business administration degree from Notre Dame in 1986. He returned to the University in 1988 from a Wall Street firm and became chief investment officer of Notre Dame the following year.

Back then the University’s endowment stood at $425 million. Now it’s $13.3 billion. 

Translation: Notre Dame’s endowment has grown 31 times the size it was 30 years ago. Let that sink in a minute.

Endowment pool has made a Notre Dame education possible for thousands more students

Last year, the University President spoke about the endowment tax in a speech to faculty.

While we should be confident about the value of our work at Notre Dame, we must acknowledge the negative public perceptions about higher education. Its reputation—deserved or not—for elitism, political bias, expense, and even irrelevance did real damage to Notre Dame and a select group of other universities last year as tax reform legislation unfolded. For the first time ever, Congress decided to tax the endowments of certain private universities, including Notre Dame. It was a 1.4% excise tax on endowment earnings at universities with $500,000 of endowment per student. That formula captured only 30 universities, among the most distinguished in the United States, but exempted all public universities, including ones like the University of Texas with an endowment of more than twice that of Notre Dame. On the other hand, other well-endowed private universities, like Columbia, were also exempted due to the vagaries of the formula. When Congress first set its sights on private university endowments, it identified 160 universities to tax. By the time the bill passed and various interests had prevailed, Congress had manipulated the formula to bring the number down to 30.

President’s Annual Address to the Faculty 2018

Though higher education does have a cost, the return on investment is more than financial.

…we must, institutionally and individually, be prepared to make the case for the value of a Notre Dame education. I have spoken before about the dangers of justifying the value of an education solely in terms of the financial return on a financial investment. Such a justification, I believe, encourages us to view the value of education as the financial rewards, separate from the intellectual, moral, and spiritual enrichment that are the central objectives of a Notre Dame education. Nevertheless, for families considering such a steep financial commitment, we must be prepared to explain why such an investment makes sense.

Nearly half of all Notre Dame students receive some financial aid, and so most do not pay the $71,801 that is the full cost of attendance—which is the average cost that includes tuition, room and board, books, travel, and personal expenses. Even for those who do, the investment makes sense.

And not all pay full price.

To learn more about the endowment at Notre Dame, listen to Scott Malpass on Capital Allocators.

Episode 25:  Scott Malpass – The Fighting Irish’s Twelfth Man

The Statue of Our Lady on the Dome at Notre Dame staring at the moon.
Twitter @NotreDame

Post by Marcelino Pantoja