US endowments soar on stock gains

Annual survey of 720 campuses pegs average stockpile at $1.1 billion, up 35 per cent in year, with student aid benefiting

二月 18, 2022
gift illustrating endowments to US universities
Source: iStock

US university endowments shot up 35 per cent on average in the most recent fiscal year, reflecting huge stock market investment gains and strong increases in charitable giving, an annual report has found.

The institutional nest eggs realised significant growth in nearly all asset classes, led by a 31 per cent jump in stock earnings, according to the report by the National Association of College and University Business Officers (NACUBO) and the education-focused insurance company TIAA.

The NACUBO-TIAA survey was based on responses from 720 institutions for the fiscal year that ended in June 2021. The average size of endowments in the survey reached $1.1 billion (£800 million) at the end of that 2021 fiscal year, with the median endowment about $200 million.

The academic wealth expansion was aided by a 15 per cent increase in charitable gifts directed toward endowments, NACUBO and TIAA found.

A separate survey by a different membership grouping, the Council for Advancement and Support of Education (CASE), covering 822 institutions in the same 2021 fiscal year, found a 17 per cent single-year increase in gifts to endowments, as part of a 7 per cent rise in all types of gifts to US colleges and universities.

Both groups reported that philanthropic gains were especially strong among small and medium-sized endowments, with CASE noting the year included major donations to historically black institutions by billionaires MacKenzie Scott and Michael Bloomberg.

The good news is tempered, NACUBO and TIAA said, by signs that US economic conditions are worsening as inflation rises and pandemic-driven uncertainties persist. The impressive bounty also comes as elite US institutions face sustained political pressure to be more generous with student aid and to make more socially minded investment choices.

As the survey results were being prepared, a coalition of students at Yale, Princeton, Stanford and Vanderbilt universities and the Massachusetts Institute of Technology announced they were filing legal complaints against their institutions to force divestment from the fossil fuel sector, arguing that supporting destructive industries violates their legal requirements as charitable missions.

Universities do appear to be exercising more benevolence with their endowments, NACUBO and TIAA suggested. Student aid accounted for 47 per cent of endowment spending in fiscal 2021, the largest single category, the groups said. And more than 80 per cent of institutions apply some type of environmental, social and governance conditions to their investment decisions, they reported.

And while elite US universities have a history of directing large endowment gains towards needy students, they have been found to do it in a way that prioritises making themselves more selective rather than more diverse.

CASE, extrapolating its survey data to higher education overall, estimated that total giving to US colleges and universities reached almost $53 billion in fiscal 2021, up from nearly $50 billion the previous year. CASE said that foundations and alumni remain the top donors to US higher education, accounting for more than 56 per cent of all reported gifts.

Alumni in particular increased their donations by nearly 11 per cent in the 2021 fiscal year, well above the 7 per cent overall gain in gifts, CASE reported. Donations to higher education with no restrictions at all jumped more than 30 per cent, it said.



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Reader's comments (1)

Since Jan 1 that number is -10% ... the S&P grew 27% in 2021, 18% in 2020 and 38% in 2019. Overall, it grew 97% since 2019 through the end of 2021. ... From July 2020 to June 2021 (which I am assuming is that fiscal year), the S&P grew by 39%. So the growth overall is basically slightly above a neutral indexed portfolio. Perhaps these figures put the numbers above in perspective such that they are seen as pretty much something any board would expect to see given the growth in the markets over the pandemic period.