Endowment returns drop across higher education – Inside Higher Ed

by | Nov 8, 2022 | Education

After booming returns from a red-hot market last year, endowments across higher education have taken a hit this year, with declines seen across the sector.As many colleges begin to make their endowment results available, the numbers coming out show a tale of two years—one up, the other down—which experts attribute to market volatility.
Higher education endowments had a median return of 30.1 percent in fiscal year 2021. But analysis from this year shows declines; Wilshire Trust Universe Comparison Service reported earlier this year that college endowments fell by a median of 10.2 percent in fiscal year 2022, which closed on June 30, according to data provided to Inside Higher Ed. A more recent estimate from Cambridge Associates puts those losses at 7.8 percent.
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Reversal of Fortunes
Washington University in St. Louis saw its endowment returns soar to 65 percent last year. But this year the university reported a loss of 10.6 percent. A spokesperson did not comment on the abrupt turnaround—which is in line with what many other institutions reported—but said the university’s endowment report would be available in the coming weeks.
Harvard University—the largest endowment in higher education, valued at slightly more than $50 billion—saw a less dramatic reversal of 1.8 percent, which is still a big fall from the 34 percent return it enjoyed in FY 2021.
“This is a very good result given the significant declines in both the equity and bond markets in the past year,” university officials wrote in a letter attached to Harvard’s Annual Financial Report.
Yale University, which has the second-largest endowment at $41 billion, managed a positive return for fiscal year 2022 of 0.8 percent—though a far cry from last year’s 40.2 percent.
Among the country’s other richest institutions, Stanford University’s endowment fell by 4.2 percent; Princeton University saw a decline of 1.5 percent; the Massachusetts Institute of Technology experienced a …

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