Harvard and Princeton do financial planning on the scale of generations and indeed centuries. And they draw on experience.
So, looking back, colleges like Harvard and Princeton are reportedly observing that multi-generational family relationships have correlated with increased rates of large gifts from those families. And large gifts have played a large role in getting them to the favorable positions that they currently enjoy.
And of course over the time scales they operate, gift returns are compounding to high cumulative multiples. And they manage their endowments such that new gifts invested plus income reinvested, minus new gifts and income used, still results in compounding growth in inflation-adjusted terms.
OK, so where will they be in 50 years? 100 years? 200 years? Those are the sorts of questions that they plan around. And they are not going to be persuaded by logic suggesting they would be fine for now since they can draw on a large endowment. They will want to be assured that they will be able to both continue their present operations AND also continue to stay at the top of the endowment ladder into the far future. And one of the key variables in that equation is new gifting.
Now, there are some people who have argued that maybe they are overestimating the sensitivity of new gifting to legacy policies. However, the studies those people have offered to that effect are not really testing these multi-generational theories. So, it will be interesting to see how that plays out.
But again, I am quite sure these colleges will be unpersuaded by arguments that do not address basic issues like how they use new gifts to both fund current operations and also grow their endowments for the far future. Because they know what they are doing, how they got here, and how they plan to keep it going in future centuries.