After two years of sizable gains, college investment returns grow by just 2.4 percent in the 2015 fiscal year.
By
After two years of healthy growth, colleges' endowment investment return rates fell in 2015. While they didn't come close to the declines of some years in the past decade, the average rate is the lowest reported since 2012.
On average, colleges had 2.4 percent returns for the 2015 fiscal year, according to an annual survey by Commonfund and the National Association of College and University Business Officers. The survey includes data from 812 U.S. colleges and universities.
That’s considerably lower than the past two years, when returns hit the double digits. But the rate is higher than 2012's drop of 0.3 percent.
That kind of inconsistency isn’t abnormal, and it’s important to note how much average returns change over time. Looking back over the last decade, they go up and down every couple of years.
“The main point here is to illustrate the volatility of the age in which we live,” said William Jarvis, executive director of the Commonfund Institute. “If you were to even go back farther to the 2000, 2001 period -- which some of us remember -- it would be the same jaggedy path.”
The causes of this year’s lower returns aren’t a mystery, he added: the challenging market environment, the economic slowdown in China and the decrease in the price of oil all contributed to the decline.
Returns generally correlated with endowment size -- the wealthier the institution, the larger the returns. Colleges with endowments over $1 billion reported average returns of 4.3 percent, while colleges with endowments between $25 million and $50 million reported average returns of 1.9 percent. The only exception was the smallest category -- colleges with endowments under $25 million -- which reported average returns of 2.3 percent.
This year’s decrease also caused the 10-year average to dip to 6.3 percent. That's compared with 7.1 percent last year, and is below the 7.5 percent that many endowments need to maintain their purchasing power.
“Not being able to meet that long-term target may very well make it harder for schools to increase endowment spending,” said John Walda, NACUBO's president and CEO.
While state support for higher education is slowly going back up, he said, it’s still much lower now on average than it was before the recession. Institutions have been using their endowments to make up for those losses -- and without being able to hit their target 10-year average, colleges may find that harder to do.
But despite the low returns, most colleges -- 78 percent -- reported increased spending dollars from their endowments in 2015. That’s even slightly more than last year, when investment returns were considerably higher.
On average, colleges reported an increase in spending of 8.8 percent in 2015, a number well above inflation, Walda said. “That is a significant addition to the funds which were available to these institutions to support programs for students.”
How the money is used has a lot to do with the intent of the donors, Walda said. Because so many donors want to support students specifically, it’s likely that a great deal of this year’s spending went toward scholarships and financial aid.
But it may be harder for schools to raise their spending going forward, he added. And with the other fiscal challenges institutions are facing at the same time, such as declining enrollments and the pressure to cut tuition, that could pose a problem.
“Even this year, with endowment returns as low as they are, we can increase spending,” he said. “But you have to ask, how long can that continue?”
The average endowment is $651.5 million, but that number doesn’t reflect the average institution. Instead, it shows how dramatically the wealthiest institutions can change the average. The median endowment size is actually around $115 million.
Looking at colleges individually, not much has changed. There was some internal movement within the top 10 -- but over all, the same 10 institutions appeared. Harvard University tops the list again this year, with an endowment of $36.45 billion. While Yale University came in third last year, it moved up to second with an endowment totaling $25.57 billion.
On average, colleges relied on their endowments to fund 9.7 percent of their operating budgets in 2015, compared to 9.2 percent in 2014. But that number depends a lot on the college. Institutions with the most assets used their endowments to fund 16.5 percent of their budgets, while institutions with the least amount of assets used their endowments to fund just 4.7 percent of their budgets.
Colleges With the Largest Endowments
Institution | 2015 Endowment Value (in $000s) | 2014 Endowment Value (in $000s) | Percent Change |
Harvard University | 36,448,817 | 35,883,691 | 1.6 |
Yale University | 25,572,100 | 23,894,800 | 7 |
The University of Texas System | 24,083,150 | 25,425,922 | -5.3 |
Princeton University | 22,723,473 | 20,995,518 | 8.2 |
Stanford University | 22,222,957 | 21,446,006 | 3.6 |
Massachusetts Institute of Technology | 13,474,743 | 12,425,131 | 8.4 |
The Texas A&M University System & Related Foundations | 10,477,102 | 11,103,880 | -5.6 |
Northwestern University | 10,193,037 | 9,778,112 | 4.2 |
University of Pennsylvania | 10,133,569 | 9,582,335 | 5.8 |
University of Michigan | 9,952,113 | 9,731,460 | 2.3 |
Columbia University | 9,639,065 | 9,223,047 | 4.5 |
University of Notre Dame | 8,566,952 | 8,039,756 | 6.6 |
University of California | 7,997,099 | 7,384,410 | 8.3 |
The University of Chicago | 7,549,710 | 7,545,544 | 0.1 |
Duke University | 7,296,545 | 7,036,776 | 3.7 |
Washington University in St. Louis | 6,818,748 | 6,643,379 | 2.6 |
Emory University | 6,684,305 | 6,681,479 | 0 |
University of Virginia | 6,180,515 | 5,945,952 | 3.9 |
Cornell University | 6,037,546 | 5,889,948 | 2.5 |
Rice University | 5,557,479 | 5,527,693 | 0.5 |
University of Southern California | 4,709,511 | 4,593,014 | 2.5 |
Dartmouth College | 4,663,491 | 4,468,219 | 4.4 |
Vanderbilt University | 4,133,542 | 4,086,040 | 1.2 |
The Pennsylvania State University | 3,635,730 | 3,445,965 | 5.5 |
The Ohio State University | 3,633,887 | 3,547,566 | 2.4 |
University of Pittsburgh | 3,588,775 | 3,492,839 | 2.7 |
New York University | 3,576,180 | 3,422,227 | 4.5 |
Johns Hopkins University | 3,412,617 | 3,451,947 | -1.1 |
University of Minnesota & Foundation | 3,297,460 | 3,176,456 | 3.8 |
University of Washington | 3,076,226 | 2,832,753 | 8.6 |
Brown University | 3,073,349 | 2,999,749 | 2.5 |
University of North Carolina at Chapel Hill and Foundations | 2,988,806 | 2,695,663 | 10.9 |
University of Wisconsin Foundation | 2,465,051 | 2,332,185 | 5.7 |
Purdue University | 2,397,902 | 2,443,494 | -1.9 |
Williams College | 2,395,100 | 2,253,330 | 6.3 |
University of Illinois & Foundation | 2,388,469 | 2,277,932 | 4.9 |
University of Richmond | 2,371,810 | 2,313,305 | 2.5 |
Michigan State University | 2,274,813 | 2,145,424 | 6 |
Boston College | 2,219,600 | 2,131,400 | 4.1 |
California Institute of Technology | 2,198,887 | 2,093,842 | 5 |
Amherst College | 2,193,511 | 2,149,203 | 2.1 |
Pomona College | 2,098,704 | 2,101,461 | -0.1 |
University of Rochester | 2,050,199 | 2,015,283 | 1.7 |
The Rockefeller University | 1,987,027 | 1,985,942 | 0.1 |
Indiana University and Foundation | 1,974,215 | 1,988,336 | -0.7 |
The UCLA Foundation | 1,864,605 | 1,732,784 | 7.6 |
Georgia Institute of Technology and Foundations | 1,858,977 | 1,889,014 | -1.6 |
Wellesley College | 1,853,503 | 1,807,948 | 2.5 |
Swarthmore College | 1,845,799 | 1,876,669 | -1.6 |
Grinnell College | 1,787,775 | 1,829,521 | -2.3 |
Liberal Arts Colleges With the Largest Endowments
Institution | 2015 Endowment Value (in $000s) | 2014 Endowment Value (in $000s) |
Williams College | 2,395,100 | 2,253,330 |
Amherst College | 2,193,511 | 2,149,203 |
Pomona College | 2,098,704 | 2,101,461 |
Wellesley College | 1,853,503 | 1,807,948 |
Swarthmore College | 1,845,799 | 1,876,669 |
Grinnell College | 1,787,775 | 1,829,521 |
Smith College | 1,781,763 | 1,755,755 |
Washington and Lee University | 1,471,274 | 1,476,923 |
Bowdoin College | 1,392,760 | 1,216,030 |
Trinity University | 1,185,370 | 1,180,030 |
Read more by
Topics
College Pages
Inside Higher Ed Careers
Browse Faculty Jobs
Browse Administrative Jobs
Browse Executive Administration Jobs
You may also be interested in...
Today’s News from Inside Higher Ed
Popular Right Now
Advice for students so they don't sound silly in emails (essay)
Study documents economic gains from liberal arts education
How to write an effective diversity statement (essay)
NYU social work school admits to institutional racism in wake of student email
Survey asks community college students to detail their challenges
How to write an effective journal article and get it published (essay)
For Many, College Isn't Worth It
College completion rates vary by race and ethnicity, report finds
Judge says that U of Texas at Austin can't revoke former student's Ph.D. on its own, outside court o
Sign Up / Sign In
With your existing account from...
{* loginWidget *}With a traditional account...
{* #signInForm *} {* signInEmailAddress *} {* currentPassword *} {* /signInForm *}Newsletter enrollment
Existing account found
We have found an existing account for the email address.
Please sign in to update your newsletter preferences.
{* /signInForm *}Newsletter opt-out
Edit your newsletter preferences
Account Info
Sign In
Welcome back, {* welcomeName *}!
{* loginWidget *}Sign In
Welcome Back
Account Deactivated
Your account has been deactivated.
Account Reactivation Failed
Sorry, we could not verify that email address.
Email Verification Required
You must verify your email address before signing in. Check your email for your verification email, or enter your email address in the form below to resend the email.
{* #resendVerificationForm *} {* signInEmailAddress *}Almost Done
Please confirm the information below before signing in.
{* #socialRegistrationForm *} {* firstName *} {* lastName *} {* displayName *} {* emailAddress *} {* optInIHE *} {* optIn3rdParty *} {* agreeToTerms *}Almost Done
Please confirm the information below before signing in. Already have an account? Sign In.
{* #registrationForm *} {* firstName *} {* lastName *} {* displayName *} {* emailAddress *} {* newPassword *} {* newPasswordConfirm *} {* optInIHE *} {* optIn3rdParty *} {* agreeToTerms *}Thank You for Registering
We have sent a confirmation email to {* emailAddressData *}. Please check your email and click on the link to verify your email address.
Create New Password
We'll send you a link to create a new password.
{* #forgotPasswordForm *} {* signInEmailAddress *}Create New Password
We've sent an email with instructions to create a new password. Your existing password has not been changed.
Create New Password
This email address was registered with a social account. We've sent an email with instructions to create a new password, which can be used in addition to your linked social providers.
{| current_emailAddress |}
{| foundExistingAccountText |} {| current_emailAddress |}.
{| existing_displayName |} - {| existing_provider |} : {| existing_siteName |} {| existing_createdDate |}
{| existing_provider_emailAddress |}
Sign In to Complete Account Merge
Resend Verification Email
Sorry, we could not verify that email address. Enter your email below, and we'll send you another email.
{* #resendVerificationForm *} {* signInEmailAddress *}Change Password
Create New Password
We didn't recognize that password reset code. Enter your email below, and we'll send you another email.
{* #resetPasswordForm *} {* signInEmailAddress *}Create New Password
We've sent you an email with instructions to create a new password. Your existing password has not been changed.
Edit Your Account
Profile Photo
Linked Accounts
Link Your Accounts
This allows you to sign in to your account using that provider in the future.
Password
Deactivate Account
Change Password
Deactivate Your Account
Are you sure you want to deactivate your account? You will no longer have access to your profile.
{* deactivateAccountForm *} {* /deactivateAccountForm *}
Expand commentsHide comments — Join the conversation!