[mathattack]

Endowments also worry about mapping their endowment to potential future costs or liabilities:

1) When the economy is bad, they need to provide more financial aid, so they want some counter-cyclical assets. (Long term bonds who increase in value when rates decline are an example.)

2) If they want to expand in the future, they don't want to be priced out of their neighborhood, so they're more likely to invest in local real estate.

This doesn't mean that endowments are all optimally managed - many would still be better served with ETFs. It's just not as simple as tossing everything into the S&P500.