College Finances Report a 11.2% Increase in Returns During Fiscal Year 2024; Harvard Remains Top Dog
Colleges and universities saw a impressive 11.2% average net return in fiscal year 2024, as per the 2024 NACUBO-Commonfund Study of Endowments. This marked a significant improvement from the 7.7% net return in the previous year and a stark contrast to the negative return of -8.0% in FY 2022. Over the past decade, the average return stood at 6.8%.
The highest FY 24 returns were reported by institutions with endowments under $50 million, averaging 13.0%. Conversely, institutions with endowments exceeding $5 billion saw the lowest returns at 9.1%. This disparity could be attributed to smaller endowments placing more of their funds in public equity markets, which typically yield superior returns compared to alternative asset categories.
The NACUBO-Commonfund Study collects data from 658 U.S. colleges and universities and affiliated foundations for the fiscal year spanning July 1, 2023 to June 30, 2024. Participating institutions reported an aggregate endowment value of $873.7 billion, marking an increase of over $34 billion from the previous year. Median endowment size stood at $234 million.
Endowment values are influenced by various factors such as withdrawals for operational costs, payment of fees, contributions, and investment gains or losses. During FY 2024, institutions spent $30 billion from their endowments, a slight increase from $28.4 billion in the previous year. The largest portion of these funds, 48.1%, was allocated towards student financial aid.
Institutions on average used their endowments to cover 14% of their annual operating expenses. Schools with endowments exceeding $5 billion and those with endowments between $1 billion and $5 billion utilized their endowments to fund 17.6% and 18.9%, respectively, of their annual operating budgets. Smaller endowments financed 11.2% to 15.6% of their budgets. The average spending rate in FY 2024 was 4.8%, a slight rise from the previous year's 4.6%.
"These results underscore the essence of endowments—the boundless philanthropy of donors who continue to sustain the fundamental teaching, research, and service missions of American colleges and universities," NACUBO President and CEO Kara D. Freeman stated in a press release. "Faculty and staff undeniably gain from this benevolence, but students remain the primary beneficiaries, as an overwhelming majority of these resources are used to preserve student aid and affordability. This is pivotal work, and it would be myopic to further tax these funds and redirect them from their true purpose."
Harvard University held its position as the institution with the largest endowment, boasting a FY 2024 market value of nearly $52 billion. Twenty-one institutions reported endowments valued at more than $10 billion, with another twenty-nine holding endowments between $5 billion and $10 billion. Overall, 144 institutions reported endowments exceeding $1 billion.
The 21 institutions with endowments of at least $10 billion were:
- Harvard University $51,977,208,000
- University of Texas System $47,464,820,000
- Yale University $41,441,700,000
- Stanford University $37,631,000,000
- Princeton University $34,052,327,000
- Massachusetts Institute of Technology $24,572,716,000
- University of Pennsylvania $22,347,945,000
- Texas A&M University & Related Foundations $20,381,028,000
- University of Michigan $19,166,266,000
- Regents of the University of California $19,103,077,000
The sources indicate that donors contributed a total of $15.2 billion in new gifts to endowments during FY 2024, a nearly 20% increase from the previous year. This and the resulting investment gains contributed to an average endowment size growth of 4%.
- The NACUBO-Commonfund Study, which collects data from Harvard University among other universities and affiliated foundations, reported an average net return of 11.2% for fiscal year 2024.
- As per the NACUBO-Commonfund Study of Endowments, Harvard University, with its endowment worth nearly $52 billion, saw a notable increase in its net return in FY 23 compared to the previous year.
- The NACUBO-Commonfund Study also revealed that universities and colleges, including Harvard University, had an average endowment growth of 4% in FY 24, largely due to donor contributions and investment gains.
- The study further highlighted that universities and colleges, including Harvard University, spent a significant portion of their endowments on student financial aid, with the largest portion being 48.1% in FY 24.
- Despite the impressive returns reported by Harvard University and other institutions in the NACUBO-Commonfund Study of Endowments, Kara D. Freeman, NACUBO President and CEO, urged against further taxing and reallocating these funds, as they primarily benefit students in terms of affordability and preserving student aid.
