The Times (of London) profiles Cooper Union's endowment and its head John Michaelson.
"Men never do anything well except through necessity," wrote Machiavelli, a charter member of the Consigliere Hall of Fame. The fact that Cooper Union charges no tuition and must rely on its endowment for 70% of its expenditures has concentrated Michaelson's mind on two simple goals: "no material losses" and "a constant cashflow to meet expenses."
The other endowments mentioned in the article, which rely on endowment income for only about a third of expenditures, all follow the Yale Model of illiquidity-embracing strategies like PE, VC and hedge funds, which promise neither of Michaelson's two guiding principles. They thought they'd be compensated for this over time in the form of higher returns, in some cases correctly, and consoled themselves that their ancient institutions could handle short-term declines in endowment value with equanimity. What they did not count on was that during times of crisis, short-term declines in the endowment are correlated with things like the willingness of parents to afford high tuition, the propensity of faculty and staff to resist strongly any layoffs or strict cost control measures, and the propensity of alumni to make up any shortfalls with increased gifts. It was a political and psychological miscalculation more than an investment miscalculation. In a sense then, the dynamic faced by the sophisticated endowments of the more famous universities was more similar to Cooper Union's dynamic of discipline enforced by necessity than they realized.