[musicale]

Can someone explain why a public university is giving money to Sam Altman rather than the other way around?

Or is this the primary/hedge-fund part of the university rather than the professional sports organization or the vestigial academic departments?

[alephnerd]

Universities don't generate their operating budget on tuition alone. They need to use a mix of grantmaking, IP commercialization, investments, Federal tuition support, broadcast licenses, and (in UMich's case) some state government support to keep the lights on.

In UMich's case, the State of Michigan only covers 3% of the entire funding for UMich. The university needs to foot the bill for the remaining 97% on their own [0].

That's where endowments come in. By trying to be savvy with the rate of return on your endowment, you can create a self sustaining budget for your institution.

Also, UMich Ann Arbor's yearly budget is $10 Billion, but their endowment (aka their piggybank) is only $17 Billion. If they raided their piggybank, they could only keep the lights on for 2 years at most.

> professional sports organization or the vestigial academic departments

Professional Sports is self funded by the athletics department.

What's a "vestigial academic departments". For example, Computer Science was "vestigial" in most universities until the 1970s, often being a wonky major in the Math or Physics department. What makes you an arbitrator for what field is more important than others?

[0] - https://publicaffairs.vpcomm.umich.edu/key-issues/tuition/ge...

[tetrazine]

Because they believe they will turn a profit on the investment (in expectation). Next question

[malfist]

Universities are not hedge funds

[dublinben]

The distinction is less clear these days. What is clear is that they're frequently limited partners pitching in millions for venture funds.

[bugglebeetle]

In the US, they more or less are. The education side business is just for tax benefits.

[zitterbewegung]

Yea they are prop funds instead.

[PaywallBuster]

Top ones have nearly $50B

https://en.wikipedia.org/wiki/List_of_colleges_and_universit...

[jgord]

Dont the larger universities have vast property holdings and investments they manage ?

Smaller universities seem to make a lot on student rental accommodation, at least in places like Australia.

Maybe tuition is their side business.

[aragilar]

Which universities in Australia? Most of the student accommodation is independent (especially ones associated with the sandstone unis, see https://www.abc.net.au/triplej/programs/hack/broderick-revie... for why that's sometimes a problem), and there's no requirement to use student accommodation. International student tuition is a major funding source, but I've never heard of accommodation being much of a money spinner.

[tnecniv]

They do. They also own lots of intellectual property and will provide some amount of financial support to startups that grow out of the university commonly. At the end of the day, they have endowments and they want to grow those.

Specifically, regarding property, at schools I’ve attended they owned real estate in the city around the campus, not just the campus itself. Part of that is investment and part of it was looking to the future for when they run out of space on the current campus to build new facilities and need to grow the campus

We don’t think of pension funds as hedge funds either but they also invest heavily to grow the fund.

[pixl97]

No they are an endowment which isn't too much different.

[itemize]

basically, univ can run a fund of funds with their endowment