Endowment Rich Get Richer
Posted on January 23rd, 2006
(Source: Olin College)Nine colleges joined the billionaire club last year, as endowments climbed by an average of just over nine percent. Harvard still tops the list, at $25.5 billion—nearly twice that of second-place Yale. Not surprisingly, schools with the largest endowments realized the greatest returns. Having money, it appears, leads to more money.
Consider:
The number of North American colleges with endowments topping $1 billion has jumped to 56, a new study says, with nine schools joining the elite club in what was an average year for university investments overall.
Harvard remained the richest, with $25.5 billion, followed by Yale with $15.2 billion.
The wealthiest per student was Rockefeller University in New York, which has no undergraduates, followed by Olin College, a small engineering school in Massachusetts that opened in 2002 and pays full tuition for all students.
The National Association of College and University Business Officers surveyed 746 institutions for the study. It found that those institutions earned an average of 9.3 percent on their investments in the year ending June 30, compared to 15.1 percent in fiscal 2004 and 3 percent in 2003.
Colleges typically spend about 5 percent of their endowment per year to support everything from scholarships to landscaping. Accounting for inflation and management fees, the investments generally need to earn about 9 percent to preserve their spending power. Last year's 9.3 percent return precisely matched the 10-year average.
The NACUBO survey follows the release last week of a similar survey by the Commonfund Institute. That survey, which tracks endowments of 729 colleges, independent schools and educational foundations, reported average returns of 9.7 percent.
The surveys show once again that institutions that already have money find it easier to make more of it. Endowments with more than $1 billion earned 13.8 percent last year, NACUBO found, while institutions with under $100 million earned less than 9 percent.
Over the last decade, billionaire colleges have earned 12 percent per year, compared to 7.9 percent for colleges under $25 million. [....]
The University of Toronto became the first Canadian institution to amass $1 billion in American dollars. Oxford and Cambridge Universities in England are believed to be the only other non-U.S. schools with endowments that size.
The other eight universities passing the $1 billion endowment mark were: University of Wisconsin Foundation, University of Nebraska and Foundation, University of Delaware, University of Cincinnati, Amherst College, Smith College, Southern Methodist University, and Baylor College of Medicine.Read the full article here.
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