UChicago’s endowment is right where it needs to be if they wish to avoid the federal excise tax on net investment income. Right now, they are right under that $500k per student threshold to avoid the tax. Otherwise, it’s a little over $8 mill/year in federal taxes (assuming net assets of $8.5 bill and their current return of around 6.9%). If their return springs back to 8%, that’s $1.5 million more. Might not seem like a lot but $8-$10 million probably pays for quite a few faculty members (all in). No doubt they have done this analysis and know how to make this calculation more accurately. Some asset classes might be excluded, for instance. Anyway, a small increase in endowment wouldn’t be costless; in fact, the present value of those “taxes” would be around $121 million ($8.5 million/year at a discount rate of 7%). That’s the threshold a large donor (or group of donors) would have to clear to make the donation worth it to UChicago, assuming that the donation kicks the school into “endowment tax” territory.