This archive report was first published on 15 September 2019.
Princeton University in New Jersey, United States, has been a beacon of academic excellence since its charter in 1746, making it the fourth oldest college in the country. The university is part of the elite Ivy League, a group of prestigious institutions known for their high academic and social standing.
According to Princeton's financial aid policy, about 60% of its students receive financial assistance. This aid is provided in the form of grants, which do not have to be repaid. As a result, 82% of the university's recent graduates have graduated debt-free.
Princeton's endowment funds, which stood at $25.9 billion (Sh2.6 trillion) as of 2018, play a crucial role in providing financial aid to students. The university's endowment rule of thumb dictates that not more than 5% of the endowment assets should be spent in investable income per annum. This translates to approximately $1.3 billion (Sh130 billion) per annum, which is used to fund scholarships and other academic programs.
Princeton's model of providing financial aid to students through endowment funds is a testament to the power of strong governance. The university's Investment Policy Statement, which is accompanied by large payouts, ensures that the endowment funds are allocated and spent appropriately. This level of transparency and accountability is essential for building strong institutions that can benefit generations.
As we reflect on our own native struggles with inheritance and wealth distribution, it is clear that Princeton's model can be replicated in Kenya. By creating strong institutions with sound governance systems, we can ensure that wealth is transferred to future generations in a responsible and transparent manner.
However, building such a framework would require a comprehensive approach, including tax incentives and benefits for donors, as well as strong corporate trustees to hold funds in trust. Legacies are built by strong institutions that stand on the shoulders of strong governance. Perhaps we can someday do the same for our own people.
