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College Endowments Report Decline in 10-Year Return Despite 12.2 Percent One-Year Return for FY17

January 25, 2018

Results from the 2017 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 12.2 percent (net of fees) for FY17 (July 1, 2016 to June 30, 2017). This is a sharp reversal from last year’s -1.9 percent average one-year return.

Despite this year’s gain, endowment results have generally been on the decline for much of the past decade. As a result, the annualized 10-year average return fell to 4.6 percent from last year’s 5.0 percent.

2017 NACUBO Commonfund Study of Endowments

Many schools continued to increase spending from their endowed funds to support student financial aid, research, and other essential programs despite these lower long-term results. In FY17, 65 percent of NCSE participants raised their endowment spending dollars to support campus operations, with a median increase of 6.5 percent, well above the 3.7 percent increase in the Higher Education Price Index (HEPI). More than three-quarters of the schools with more than $1 billion increased their spending dollars, and the average endowment spending rate for these schools grew to 4.8 percent in FY17 from 4.4 percent the year prior.

More than 800 U.S. higher education institutional endowments and affiliated foundations participated in the FY17 study. Collectively, these institutions held nearly $567 billion in endowment assets. While the average endowment was about $700.7 million, nearly half the participants had endowments that were below $100 million.

A press release and six tables from the 2017 NACUBO Commonfund Study of Endowments are available on the public NCSE webpage. The 2017 NCSE final report will be available for purchase in February.

NACUBO will offer an overview of the NCSE results during a live online broadcast from the 2018 Endowment and Debt Management Forum in New York. Click here to register.

Ken Redd, senior director of research and policy analysis at NACUBO, discusses the 2017 NCSE results in this complimentary NACUBO in Brief podcast.