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A new survey shows that many colleges and universities experienced a loss in endowment values during the pandemic, with respondents averaging a -13.4 percent return during the first quarter of 2020, after paying fees.

The survey is a follow-up to the National Association of College and University Business Officers’ annual study of endowments, issued after the pandemic rocked college finances. More than 300 colleges and universities participated in the follow-up survey, which was in the field at the end of April and beginning of May. Their endowments averaged $547.4 million.

Institutions with smaller endowments reported larger first-quarter losses than those with larger endowments. Returns varied greatly on endowment size and investment strategies. Larger endowments had invested less in U.S. equities, while smaller endowments had invested more, the survey shows.

“Those smaller endowments had strong returns in a strong stock market but are at greater risk for investment losses when equity markets decline,” a write-up of survey findings said. “This is likely the most significant factor behind these results. However, with smaller investment portfolios, the upside is that those institutions were, in all likelihood, less reliant on their endowments as a significant source of operating revenue.”

The survey revealed several other interesting data points, including:

  • More than 70 percent of institutions said they expect to maintain their current policy spending rate. Another 8 percent of institutions plan to increase their spending rate, while 7 percent plan to decrease it.
  • Twenty-four percent of private institutions reported that they will borrow from their endowments.
  • Twenty percent of endowment funds were underwater -- meaning the fund had fallen below its original gift amount -- at the end of the first quarter of 2020.

The survey also asked respondents what steps they had taken to reduce expenses related to endowment management. Answers included intensified review of management fees, re-evaluation of spending policies, rebalancing the portfolio and reconsidering asset allocations, contacting donors to supplement spending with additional gifts or modifying current restrictions, and frequent investment committee and management meetings.