Skip to content Menu

Media contacts:

Katy McCreary | 202.861.2503 |

Vanessa Sussman | 917.405.1897 |

(WASHINGTON, DC) – U.S. college and university endowments and their affiliated foundations spent more from their endowments in fiscal year 2020 than in the fiscal year prior, supporting students, faculty, and mission despite lower average returns.

That is a key finding of the 2020 NACUBO-TIAA Study of Endowments® (NTSE), the preeminent analysis of the financial, investment, and governance policies and practices of the nation’s higher education endowments and affiliated foundations, released today. This year’s study reflects the responses of 705 institutions representing $637.7 billion in endowment assets and covers the fiscal year July 1, 2019–June 30, 2020.

Collectively, the study findings suggest higher education institutions could be facing a long-term era of muted returns that will encourage a fresh look at financial and investment strategies if they are to continue to meet critical return targets – and sustain their mission of providing urgently needed support to students.

Illuminating Pandemic’s Initial Impacts

As of June 30, surveyed institutions reported an average endowment size of $905 million, up 1.6 percent from 12 months earlier. The median endowment among respondents totaled $164.6 million; 45 percent of endowments totaled less than $140 million.

“With data through mid-year 2020, the study captures the first several months of the higher education community’s experiences with the global COVID-19 pandemic; in next year’s report, the fiscal year 2021 findings will help complete the picture of how institutions and their endowments coped,” said Susan Whealler Johnston, Ph.D., president and CEO of the National Association of College and University Business Officers (NACUBO).

“Even in this challenging year, higher education institutions reinforced their commitment to students and used their endowments exactly as designed: to provide ongoing, predictable – and even increased – support for their educational missions, a commitment that endowment leaders work to ensure will extend to future generations,” she said. 

Diminishing Returns

As of June 30, 2020, endowments’ average one-year returns were 1.8 percent, compared with 5.3 percent for FY19. The historical target return for endowments has been 7.5 percent, comprising spending requirements, inflation expectations, and fees and expenses, among other elements. But in recent years, endowments have been challenged to meet this target: Although 10-year annualized returns total 7.5 percent, five-year annualized returns total just 5.1 percent, with 15-year annualized returns at 6.2 percent and 20-year returns at 5.5 percent.

Among other challenges, the long-term investment return experience of endowments could soon motivate at least some institutions to reconsider core investment strategies, the study suggests. 

“The one-year performance figure reflects the reality that few market sectors were immune to the steep downturn in early 2020 and most markets had not fully recovered by the time the fiscal year ended on June 30,” said Doug Chittenden, Executive Vice President and Head of Institutional Relationships, TIAA. “Investment markets rebounded strongly in 2020’s latter half, so the FY20 investment return figure likely understates the performance achieved by most funds in calendar year 2020. 

“But going forward, if returns continue to fall short, endowments will need to consider all their possible levers for meeting their targeted return rate,” he said. “An endowment can consider adopting more risk and exploring changes in portfolio construction, among other steps.”

Endowment Spending 

The 705 institutions in the study collectively spent $23.3 billion from their endowments in FY20, an increase of 4 percent from FY19. Seventy percent of institutions increased spending from their endowments in FY20, with an average increase of about $3.3 million.

“This increase in spending reflects the success of governance policies focused on intergenerational equity,” Dr. Johnston said. “With solid fiscal management, endowments can consistently support institutions with more revenue each year than the previous year.” 

Endowments’ average effective annual spending rate — the dollars spent from endowments divided by the endowment market value on July 1 — increased as well, to 4.59 percent in FY20, up from 4.36 percent in FY19. 

Financial aid to students represented 48 percent of all endowment spending, the single largest percentage. An additional 17 percent of endowment spending funded academics, including teaching, tutoring, and related support.

“Endowments, year in and out, are an essential tool for enabling enrollment and encouraging student success,” Dr. Johnston said.  “They also are key instruments in college and university long-term planning goals.” 

Given COVID-19 challenges, almost half of endowments increased their spending support for their institution’s operating budget in FY20. Over 40 percent reported that their institution’s cash flow declined in FY20, likely from decreases in tuition revenue due to lower enrollment and lost revenue from on-campus services such as student housing, dining, and parking. Endowments also reported that new gifting in FY20 declined by about 16 percent from FY19 levels.

“A subdued outlook for returns across asset classes could force some institutions to re-examine their endowment spending rates or find other ways to resolve funding gaps,” said Dimitri Stathopoulos, Senior Managing Director, Nuveen. 

Rethinking Asset Allocations

Another challenge for endowments will be maintaining optimal allocations of fund assets as the market environment remains uncertain. Across all endowments, portfolio allocations as of June 30, 2020, were 33 percent in public equities (U.S., non-U.S. and global); 23 percent in a mix of private equity and venture capital; 20 percent in marketable alternatives; 12 percent in fixed income, and 11 percent in real assets.

Smaller endowments had significantly greater exposure to fixed income, particularly investment-grade securities, likely viewing bonds as a hedge against equity market volatility. For example, while the allocation to investment-grade fixed income for institutions with more than $1 billion in assets was 5.3 percent, it was 22 percent for those with $25-50 million in assets and 27 percent for those with less than $25 million.

“Smaller endowments soon could feel compelled to re-examine their significant bond allocations given that currently interest rates have virtually no room left to fall – and, going forward, fixed income will likely not offer institutions the returns they enjoyed in past years,” said Mr. Stathopoulos.

These endowments also could be well advised to tap new sources of portfolio diversification. In FY20, the largest and smallest endowments both enjoyed the best (above average) returns: 2.5 percent. Smaller endowments were heavily concentrated in domestic public equities and investment-grade fixed income, but larger endowments had larger allocations to alternative investments that may offer a counterweight to public equities and fixed income. Such investments often are not accessible to smaller endowments because of investment minimums and other factors.

“Institutions will need to be especially thoughtful about their endowment’s strategic and tactical positioning as pandemic impacts continue playing out, amid an uneven global economic recovery and persistent low-rate environment,” said Mr. Stathopoulos. 

Responsible Investing: Opportunity to Expand Implementation

In 2020, the global pandemic and social unrest put new emphasis on the practice of responsible investing, which is shaped by key environmental, social, and governance (ESG) issues.

About 80 percent of endowments said that ESG factors are reflected in their investment policy, but endowments generally have yet to integrate responsible investing criteria into portfolio construction in a meaningful way across asset classes. About 19 percent of endowments incorporate responsible investing criteria into public equity portfolios, the asset class most likely to reflect these criteria; 16 percent do so for global equities. 

Performance concerns and potential conflicts with fiduciary duties are the top reasons offered by endowments for not pursuing responsible investing; just 19 percent believe responsible investing can deliver “alpha,” that is, performance in excess of a market return.

“Market evidence increasingly indicates that a responsible investing approach can indeed deliver competitive returns,” said Mr. Stathopoulos. “The opportunity to more closely align investing and mission while also meeting return targets could encourage more endowments to consider these strategies.”

For the first time, the NACUBO-TIAA survey inquired about diversity policies in asset management. Of institutions that answered the question, 6 percent reported having a formal policy addressing diversity and inclusion related to investment manager selection, with institutions with the largest endowments significantly more likely to have diverse managers in their portfolios. 

“Advancing diversity in all facets of higher education is a crucial step college and university leaders must take,” Dr. Johnston said. “We urge endowment leaders to look closely at ways they can invest with asset management firms controlled by women and people of color while still meeting investment goals, and we encourage the active participation of all talented managers.” 

Founded in 1962, the National Association of College and University Business Officers (NACUBO) is a nonprofit professional organization representing chief administrative and financial officers at more than 1,700 colleges and universities across the country. NACUBO’s mission is to advance the economic vitality, business practices, and support of higher education institutions in pursuit of their missions. For more information, visit

About TIAA
With an award-winning1 track record for consistent investment performance, TIAA ( is the leading provider of financial services in the academic, research, medical, cultural and government fields. TIAA has $1.3 trillion in assets under management (as of 12/31/20202) and offers a wide range of financial solutions, including investing, banking, advice and education, and retirement services.

TIAA-CREF Individual & Institutional Services, LLC, and Nuveen Securities, LLC, Members FINRA, distribute securities products.


©2021 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, New York, NY 10017


This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.


1 The Refinitiv Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60 and 120 months. Lipper Leaders fund ratings do not constitute and are not intended to constitute investment advice or an offer to sell or the solicitation of an offer to buy any security of any entity in any jurisdiction. For more information, see Lipper Fund Awards from Refinitiv, ©2020 Refinitiv. All rights reserved. Used under license. The Award is based on a review of risk-adjusted performance of 39 companies for 2016, 36 for 2017, 35 for 2018 & 2019, and 30 for 2020. The award pertains only to the TIAA-CREF mutual funds in the mixed-asset category. Without such waivers ratings could be lower. Past performance does not guarantee future results. For current performance, rankings and prospectuses, please visit

2 Based on approximately $1.3 trillion of assets under management across Nuveen affiliates and TIAA investment management teams as of 12/31/2020.



# # #



Katy McCreary

Director, Public Relations


Related Content

2023 NACUBO-Commonfund Study of Endowments

This annual survey provides comprehensive analysis of investment returns, asset allocations, and governance policies and practices at higher education institution endowments and affiliated foundations, representing over $630 billion in endowment assets.

Future Endowment Study Participation

Information about participating in the 2023 endowment study for college and university endowments and affiliated foundations.

NTSE Frequently Asked Questions

A list of common questions and answers about the NACUBO-TIAA Study of Endowments (NTSE)