Myths & Facts
About Cornell’s Finances and the PILOT
Myth: A greater financial commitment to the community will require cuts to scholarships, athletic teams, and employee salaries.
Fact: Cornell can finance a larger MOU by increasing the annual endowment distribution while maintaining the same operating budget.
Myth: New York State limits prevent Cornell from increasing the annual endowment distribution.
Fact: Cornell’s 2022 distribution of 3.3% was far less than the NYS limit of 7%. The proposed MOU would require an increase of 0.05%, plus an additional 0.01% for every percentage point of annual investment profits. When Cornell’s endowment was smaller, they regularly paid out about 5% of the endowment annually.
Myth: Endowment funds are donor-restricted, so they cannot be used to pay the MOU.
Fact: The endowment contains both restricted and unrestricted funds, both of which are distributed annually. Only a small fraction of Cornell’s operating budget is financed by donor-restricted funds, giving them a great deal of flexibility to finance their operations and capital projects, and to increase their contribution to the Ithaca community.
Myth: A larger MOU will significantly inhibit the growth of Cornell’s endowment, putting them at a competitive disadvantage with other Ivies.
Fact: Depending on endowment growth, the proposed MOU would result in an endowment 1-2% smaller in 10 years (2034) relative to a scenario where the MOU does not change. Assuming endowment distribution remains ~6% of the operating budget, the effect on the operating budget would be approximately 0.1%. This effect is far too small to put Cornell at a competitive disadvantage.