Despite all the gloom and doom about college costs and the future of higher education, some schools should be feeling pretty flush these days.
Data gathered from 832 U.S. colleges and universities for the 2014 NACUBO-Commonfund Study of Endowments® show institutional endowments returned an average of 15.5 percent for the 2014 fiscal year as compared with 11.7 percent for FY 2013.
The college “endowment” is basically the total value of an institution’s investments—property, stocks, and cash. It mostly comes from donations from rich alums and others, but grows with wise management. In total, this year’s study represented $516 billion in endowment assets.
Usually colleges use the interest from their endowments to cover worthy expenses like scholarships for students. A college with a huge endowment may be less concerned about getting 100% of tuition from every student and can afford to repair buildings or buy new technology.
And the size of an endowment can be an indicator of the financial health of an institution. Nearly all endowments took serious hits after 2008 and have been working hard to recover since.
In fact, rising return rates have “enabled colleges and universities to increase spending from their endowments to support student financial aid programs, faculty research, and other activities vital to their missions,” according to the National Association of College and University Business officers (NACUBO).
Although the largest endowments mostly support elite public universities or university systems, a handful of public colleges have made it into the top 30 endowments including the University of Michigan (9), University of California (14), University of Virginia (18), the Ohio State University (24), the University of Pittsburgh (25), Pennsylvania State University (27), and the University of Minnesota (29).
And it’s also interesting to look at institutions that experienced significant—well above average—growth in their endowments over the past year. Among these are Texas A&M (27%), Michigan State (31%), St. John’s University (55%), UC Davis (31%), the New School (40%), Mercy College (43%), Chatham University (29%), Centenary College NJ (213%)
The DC area is home to a number of colleges with endowments among the top 150 in the nation, including the University of Virginia (18), Johns Hopkins University (26), University of Richmond (35), George Washington (57), Virginia Commonwealth University (60), Washington and Lee (63), Georgetown (66), University System of Maryland (95), William & Mary (115), and Virginia Tech (116).
Top 25 endowment funds by rank order ($000s):
- Harvard University $35,883,691 (+11% over FY13)
- University of Texas System $25,425,922 (+24.3%)
- Yale University $23,900,000 (+15%)
- Stanford University $21,446,006 (+14.8%)
- Princeton University $20,995,518 (+15.4%)
- Massachusetts Institute of Technology $12,425,131 (+14.4%)
- Texas A&M University System $11,103,880 (+27.2%)
- Northwestern University $9,778,112 (+24%)
- University of Michigan $9,731,460 (+16.1%)
- University of Pennsylvania $9,582,335 (+23.8%)
- Columbia University $9,223,047 (+12.5%)
- University of Notre Dame $8,039,756 (+17.3%)
- University of Chicago $7,545,544 (+13.1%)
- University of California $7,384,410 (+15.8%)
- Duke University $7,036,776 (+16.5%)
- Emory University $6,681,476 (+14.9%)
- Washington University in St. Louis $6,643,379 (+17.5%)
- University of Virginia $5,945,952 (+15.1%)
- Cornell University $5,889,948 (+11.7%)
- Rice University $5,527,693 (+14.3%)
- University of Southern California $4,593,014 (+18.7%)
- Dartmouth College $4,468,219 (19.7%)
- Vanderbilt University $4,086,040 (11.2%)
- Ohio State University $3,547,566 (+12.7%)
- Johns Hopkins University $3,451,947 (+15.6%)