Northwestern, if nothing else, is filthy, stinking rich. As of February of this year, the University boasted an endowment of about $8.7 billion. To put it more bitingly, we hold about as much wealth as 10 million Haitians produce in a year. Although we cannot compare to Stanford (about $18.2 billion) or Harvard (about $32.3 billion), we still have an incredible sum compared to the vast majority of American colleges. Since the new decade, as public universities clench teeth and raise tuition in response to cuts in government funding, NU is blessed with stable balance sheets all around.

Stability is well and good; campus revenues are stable, with undergraduate tuition stably rising to 3.8 percent this year and the endowment stably growing by 11 percent annually. But stability, in another sense, is strange. The endowment is stable in the sense that a gaping dark hole is: we know it is there, but we cannot see into it. Maybe those who manage it cannot do so either. For all the small talk made about how little NU is spending its endowment, few people actually understand where it would be spent in the first place.

There are a few definitions we should know. An endowment fund could be described as a big, big portfolio: It is a name for all the stocks, debt, property and hedge funds into which the University’s different parts invest their money. But an endowment is also restrictive: People deposit or donate their cash into the endowment, and if they say their money can be used only for a specific campus activity, the University must honor their decision. In another twist, an endowment is perpetual: If the people investing into the endowment give the University the freedom to choose how the funds are spent, nothing stops the school from raking in investment returns for as long as they like.

This leads to a puzzle. Although taking marginally more out of the endowment can cover many small costs, endowment money is not supposed to cover small costs because of its size. The goals of an endowment are nobler. It serves as perpetual revenue that prevents sudden collapses in balance sheets. If not that, then it preserves intergenerational equity: Students in the future will have the same quality of service as today, regardless of  higher prices for future services.

Even if the endowment’s goals are noble, its managers can play it fast and loose. The NU endowment follows a popular strategy, a Swensen model with payout anchored to real spending. This means the University targets how much they want to expand, calculates future costs and prepares to fund those payments by gambling on riskier stocks – likely making more than expected and further whetting the University’s appetite. Of course, if you are more pessimistic and think there’s a crash on the horizon, you might think NU is asking for another 17 percent loss on their investment.

What if, more importantly, we want to bring the endowment strategy back down to Earth? There is a different way to see the endowment’s purpose, best championed by NU economics professor Burton Weisbrod. In his view, an endowment is a “rainy-day fund” at its heart, and we wish for it grow stably to serve that purpose. NU, though not battered by a financial storm, has its share of showers: The average NU student debt load has risen to $25,000, which hits those in schools with lower average incomes, like the Medill School of Journalism or the School of Education and Social Policy, even further. If NU replicates Princeton’s model, which targets a rise in endowment payout rates and is not afraid to use its rainy-day fund, we could see the benefits. NU can subsidize unpaid internships such as Medill’s Journalism Residency program, offer debt relief and even reduce tuition rises during economic downturn.

Every once in a while, there are students who question if NU’s endowment is invested in the right places, as during the anti-Apartheid and divestment movements. But let us go further—we should ask if it is invested for the right goal.

Tom Cui is a Weinberg senior. He can be reached at [email protected]. If you would like to respond publicly to this column, send a letter to the editor to [email protected].