Now I know better. In three recent private letter rulings, the IRS allowed a university to allow donors to establish either charitable remainder trusts (in which income goes to the donor until some event, usually death or the death of both donor and spouse) or charitable unitrusts (in which the income goes to the university, but the principal goes to the donor's heirs at death), with the income tied to the return on the university's endowment.
This means that universities will soon be effectively in the mutual fund business. And for universities like Yale and Harvard, which specialize in investing in private equities and real estate, the day-to-day value of the endowment is more than a little subjective. Now there's even more reason to take an expansive view of those returns.
--tim francis-wright
http://www.irs.gov/pub/irs-wd/0352017.pdf http://www.irs.gov/pub/irs-wd/0352018.pdf http://www.irs.gov/pub/irs-wd/0352019.pdf