Endowments of major universities such as Cornell have received much attention over the past few years. Last academic year, the U.S. Senate Finance Committee launched an investigation into the finances of universities with endowments that exceeded $500 million dollars and required all of these universities to file reports detailing their finances. Underlying this investigation was some Senators' belief that the universities should be spending more from their endowments to increase their institutional financial aid budgets and limit their tuition increases. This year, the nation's financial meltdown and the reported large declines in the values of the endowments at many universities (including Cornell) have led to story after story about how universities are slashing their budgets, freezing faculty and staff salaries, cutting faculty and staff employment levels (often by attrition but sometimes by layoff), and slowing down, or stopping, building projects. But in spite of all of this attention, many people do not really understand what endowments are, how they are used, how they are invested and the investments managed, how decisions are made about how much to spend from them and why the reported declines in endowment values are having such profound effects on Cornell and other universities. In this paper, the author talks about these issues. (Contains 2 tables and 1 footnote.)