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College Endowments Average -1.9 Percent Return in FY16, But Endowment Spending Continues to Rise

January 31, 2017

Final results from the 2016 NACUBO-Commonfund Study of Endowments (NCSE) show that participating U.S. higher education endowments and affiliated foundations achieved an average investment rate of return of -1.9 percent (net of fees) for the 2016 fiscal year (July 1, 2015 to June 30, 2016). This is the second consecutive year that endowments have posted below-average returns; in FY15, endowments reported a gain of just 2.4 percent. The -1.9 percent average return is the lowest endowment performance since the 2008-2009 financial crisis.

Despite the continuing lower returns, many schools continue to increase spending from their endowed funds to support student financial aid, research, and other essential programs. In FY16, 74 percent of NCSE participants raised their endowment spending withdrawals to support campus operations, with a median increase of 8.1 percent, well above the 0.7 percent increase in inflation.

"In spite of lower returns, colleges and universities continue to raise their endowment spending dollars to fund student financial aid, research, and other vital programs," said NACUBO President and Chief Executive Officer John D. Walda said. "These substantial increases in spending from endowments demonstrate the deep commitment colleges and universities have to student access and success. Nonetheless, this year's results are cause for concern. Continued below-average investment returns will undoubtedly make it much more difficult for colleges and universities to support their missions in the future."

In total, 805 U.S. institutions participated in the 2016 NCSE. These institutions collectively held $515.1 billion in endowment assets. While the average endowment was about $639 million, nearly half the participants had endowments that were below $100 million.

A press release and six tables from the 2016 NCSE are available for free online. A NACUBO in Brief podcast episode on the study results is also available.

NACUBO is also pleased to offer an overview of the NCSE results. NACUBO Live!: Results of the 2016 NACUBO-Commonfund Study of Endowments, a live online broadcast from the 2017 Endowment and Debt Management Forum in New York City, will provide an overview of the results, look back at the challenges endowment managers faced in FY16, and review the strategies that institutions used to confront volatile market conditions during the year. Registering for this event will allow you to view the session online and submit questions to the panelists. The session will take place on Thursday, February 2, at 9:15 am ET. Click here to register for this event.

The 2016 NCSE final report will be available for purchase by March 2017. Once available, the online product will provide instant access to results of the study. Colleges, universities, and affiliated foundations that participated in the 2016 NCSE will receive complimentary access to the final report once it released.


Ken Redd
Director, Research and Policy Analysis