It is common to hear that elite US research universities are fabulously wealthy. Their multibillion-dollar endowments are seen as vast, untapped resources. In reality, the wealth of even the most-affluent universities are dwarfed by the value their graduates generate for society.
The future of universities
In 2023, the endowment value of the top ten wealthiest US universities was around US$271 billion (see go.nature.com/41wdedo). Yet, this is smaller than the estimated $455-billion fortune of a single individual: entrepreneur Elon Musk. The five richest individuals in the world — Musk, Larry Ellison, Mark Zuckerberg, Jeff Bezos and Larry Page — command a combined $1.55 trillion in net worth.
Have these five entrepreneurs, however innovative, really created more value than these ten world-leading institutions have? The evidence suggests otherwise.
A 2015 report (see go.nature.com/3vij3b1) on the Massachusetts Institute of Technology (MIT) in Cambridge calculated that active companies founded by the university’s alumni constituted an economy equivalent to the tenth-largest in the world ($1.9 trillion, as of 2014). A 2012 study on Stanford University, California, found much the same (go.nature.com/41vIbIh).
Universities are — and must continue to be — a force for good
Yet, none of this value appears on a university’s balance sheets. Unlike technology companies such as Tesla or Amazon, universities cannot claim the trillions of dollars generated by their faculty members, graduates and the technological ecosystems they seed.
The purpose of a research university is to create and disseminate knowledge as a public good, train human capital at scale and pursue fundamental enquiry without ownership of the resulting societal value. This has been a remarkably successful model. But its success is predicated on a long-standing social compact.
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In exchange for producing this public good, the United States has supported its universities through federal research funding, tax exemptions and tax incentives for private philanthropy. This compact has driven scientific and technological leadership for generations.
However, this social compact is being challenged. The administration of US President Donald Trump has paused funding to elite universities including Harvard, in Cambridge, and Columbia, in New York City. It has suspended grants that had already been approved.
The Republican-controlled US Congress has proposed massive budget cuts to the National Institutes of Health and National Science Foundation and a tax of up to 21% on income from university endowments. If enacted, these measures will severely hamper the ability of research universities to generate knowledge at scale.
