College endowments saw lower returns in 2015 than they’ve seen in three years.
Endowments netted an average return of 2.4 percent for the 2015 fiscal year — which ended in June — compared with 15.5 percent for the prior fiscal year, according to the 2015 NACUBO-Commonfund Study of Endowments.
The National Association of College and University Business Officers, or NACUBO, is a membership organization representing more than 2,100 higher-education institutions nationwide. The Common Fund for Nonprofit Organizations, or Commonfund, is a nonprofit asset management firm.
Ten-year returns, which many endowment managers use as a target for long-range planning purposes, also declined to an average of 6.3 percent last year from 7.1 percent the prior year.
John D. Walda, NACUBO president and chief executive, says:
“FY2015’s lower average 10-year return is a great concern. On average, institutions derive nearly 10 percent of their operating funds from their endowments.
Lower returns may make it even tougher for colleges and universities to adequately fund financial aid, research and other programs that are very reliant on endowment earnings.”
Among the 10 colleges with the largest endowments, however, eight saw their endowment funds’ market value increase in 2015 — and all 10 now have endowments worth at least approximately $10 billion each.
Harvard University has the largest endowment by far, worth $36.4 billion as of last year, according to the study’s rankings of 812 institutions.
That makes it equivalent to the market value of Prudential Financial, according to Forbes data from May, and worth more than large publicly traded companies such as Delta Air Lines, Cigna and General Mills.
The 10 colleges with the biggest endowments are:
- Harvard University — $36.4 billion
- Yale University — $25.6 billion
- University of Texas System — $24.1 billion
- Princeton University — $22.7 billion
- Stanford University — $22.2 billion
- Massachusetts Institute of Technology — $13.5 billion
- Texas A&M University System and Foundations — $10.5 billion
- Northwestern University — $10.2 billion
- University of Pennsylvania — $10.1 billion
- University of Michigan — $10 billion
By comparison, the average endowment among the more than 800 schools studied was about $651.5 million, with more than half of the schools’ endowments worth less than $115 million.
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