US: Tight leash

Just when they need money most, some colleges and universities are incapable of tapping their rainy day funds, reports Inside Higher Ed. Currently, 21 states are still governed by decades-old laws that restrict endowment spending, according to the Uniform Law Commission. With revenues drying up for many colleges, these regulations are likely to result in fewer scholarships being awarded next year at some institutions, according to fund raisers and legal analysts.

At issue is a provision in the uniformly adopted law, which states that universities and other non-profit groups cannot withdraw money from endowments that fall below their "historic dollar value." The provision would kick in, for example, if a donor gave $1 million a year ago and the value of that fund has fallen below $1 million because of poor market returns. In the midst of an economic crisis, such scenarios are increasingly common, and the spending restrictions are causing heartburn for foundation officials.
Full report on the Inside Higher Ed site