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WASHINGTON, DC—In one of the most challenging periods for equity and fixed income assets in recent years, investment performance for college and university endowments dipped sharply in fiscal year 2022, along with a drop in overall asset values. Yet endowments reported providing $25.85 billion in FY22, with the largest percentage of spending supporting student financial aid.

Those are among the key findings of the 2022 NACUBO-TIAA Study of Endowments®, the preeminent analysis of the financial, investment, and governance policies and practices of the nation’s higher education endowments and affiliated foundations. This year’s study reflects the responses of 678 institutions and covers the fiscal year July 1, 2021–June 30, 2022.

“The 2022 fiscal year was truly a tale of two markets, with positive economic tailwinds driving equities higher through December 2021, followed by a crushing combination of inflationary pressures and other factors that forced most major investment indices down sharply by the year’s close,” said Jill Popovich, Senior Managing Director, Regional General Manager at TIAA.

Even in a difficult year, colleges and universities used their endowments for student- and mission-focused support, including student financial aid,” said Lynne Schaefer, interim president and CEO of the National Association of College and University Business Officers (NACUBO). “Endowments serve as a source of reliable and relatively steady revenue that higher education institutions and students can count on, regardless of market conditions.”

Values Decline, for Smallest Endowments in Particular

As of FY22’s end, the 678 institutions participating in this year’s survey reported endowment assets with a total market value of $807 billion, a decline of roughly 4 percent from levels at the end of FY21. The average size of endowments in the survey was $1.2 billion and the median endowment was about $203.4 million. More than half of participating endowments had less than $250 million. Of the total market value, 84 percent was held by endowments with more than $1 billion in assets.

The market value for the largest size cohort declined by 3.8 percent, while the average decline for the three smallest cohorts was 9.6 percent—a significant difference likely attributable to varying allocations to private markets—in particular, venture capital and private equity strategies. Smaller endowments tend to allocate far more to public equities and public fixed income, but both asset classes struggled in FY22 as interest rates increased. In contrast, large endowments with extensive exposure to private markets were better able to weather the volatility.

Returns Drop, Reflecting Fiscal Year’s Turbulent Second Half

For the 12 months ending June 30, 2022, endowments generated an average return of -8.0 percent overall, down sharply from the 30.6 percent overall average return in FY21—a dramatic reversal reflecting the fact that FY22’s second half included robust tightening efforts by central banks to combat surging inflation, along with significant geopolitical disruptions.

All endowment size cohorts posted negative returns. The largest endowments (with more than $1 billion in assets) were the best-performing cohort, with an average return of -4.5 percent, while the smallest cohort (less than $25 million) were the weakest performers, posting returns of -11.5 percent.

As in recent years, the largest endowments’ substantial exposure to private asset classes largely explains their relative outperformance.

“For several years, many market commentators predicted that markets were entering a period of lower expected returns, against the backdrop of a decade-long bull run in equity markets and declining interest rates that pushed bond prices higher,” said Popovich of TIAA. “FY22 may represent an abrupt entry into this long-anticipated low-return environment, with fundamental portfolio design and management implications for endowments.”

FY22’s negative returns significantly dragged down endowments’ long-term annualized performance. For all recent comparative time periods—one-year, three-year, five-year, 10-year, 15-year, 20-year and 25-year—endowments have now recorded in all but one period an annualized return below the generally accepted target return of 7.5 percent, which comprises three primary categories: spending requirements, inflation expectations, and fees and expenses.

At the same time that returns have failed to meet the traditional target, over the past two years the total of the target return's three primary components has increased from 7.51 percent to 8.23 percent. Endowments’ long-term inflation expectations have increased from 2.08 percent to 2.45 percent.

Overall Spending Increases, With Emphasis on Student Financial Aid

Study respondents this year reported spending a total of $25.85 billion from their endowments in FY22, up from $23.89 billion reported by respondents in FY21’s survey.

Of the $25.85 billion that endowments provided in FY22, student financial aid received 46 percent of the distributions, similar to FY21. Academic programs and research received an average of 15.6 percent of all endowment policy spending. Endowed faculty positions received 11 percent of spending, campus operations and maintenance received 10 percent, and all other purposes received a total of 17 percent.

Almost three-quarters of the educational institutions in this year’s survey used endowment money to fund some portion of their operating budget; the median percentage of budgets funded was 5.3 percent.

The average annual effective spending rate reported by endowments in FY22 was 4.17 percent, down from 4.79 percent in FY21. However, on average, total withdrawals from endowments increased in FY22.

“It’s important to note that actual dollars spent from an endowment can increase even if the spending rate does not, because most spending policies are based on a moving average of the endowment value over multiple years,” said Schaefer of NACUBO. “These ‘smoothing’ policies mean that regardless of short-term market conditions—such as a year like this—endowments can provide relatively stable revenue streams to meet current needs while ensuring investments are managed to support future generations as well.”

Gifting Holds Up Well, Providing Some Downside Protection

Gifting was strong in FY22 relative to FY21, rising an average of 22 percent across large and small endowments.

“Across most institutions, strong gifting activity partially offset the loss in value caused by the market downturn,” said Popovich. “The increase in gifting activity in FY22 could reflect market conditions as of December 2021, which generally were still positive and preceded the more difficult market environment of January through June 2022.”  

Of the 678 survey participants, nearly two-thirds reported that at least some level of gifting was specifically tagged to diversity, equity, and inclusion (DEI) initiatives. Of that group, 64 percent were small to mid-sized institutions with endowments of $250 million or below.

Larger Endowments Continue to Favor Private Markets

Compared with FY21, the most notable asset allocation difference is that, across all participating endowments, allocations to private equity and venture capital slightly exceeded those of public equities (U.S., non-U.S. and global).

Portfolio allocations as of June 30, 2022, were 28 percent in public equities (U.S., non-U.S. and global), 30 percent in a mix of private equity and venture capital, 17 percent in marketable alternatives, 11 percent in fixed income, 12 percent in real assets, and just under 3 percent in other assets.

Private energy and infrastructure were the strongest-performing assets for endowments, driven by spiking oil and natural gas prices caused by the Ukraine/Russia conflict, and increasing demand for commodities as the global economy continues to recover from the COVID-19 pandemic. Private equity, venture capital, private real estate, and other private real assets all posted strong returns in FY22 as well.

As in prior years, larger endowments showed far less reliance on fixed income and domestic public equities.

“The shift from public equities toward private equity and venture capital reflects the willingness and ability of larger institutions to reach for higher return targets,” said Popovich. “Smaller endowments may not be able to pursue such an approach due to greater fee sensitivity, lower risk tolerance, and different liquidity requirements, among other factors.”

Endowments’ allocations to non-investment grade fixed income and private debt again remained low in FY22 across all cohort sizes.

“As traditional fixed income assets have struggled during a period of rising rates, institutional investors of all types are dedicating more capital to non-traditional asset classes such as direct lending, high yield bonds, leveraged loans and private credit to diversify their fixed income exposures,” said Popovich. “These assets should in theory be able to navigate increasing interest rates due to generally higher yields and lower duration than investment grade credit.”

Marketable alternatives (primarily hedge funds) made up approximately 17 percent of survey respondents’ portfolios in FY22. Allocations to real assets increased across virtually all size cohorts in FY22 from the prior fiscal year, with growth likely driven by real assets’ relative strength compared with other public markets.

“Large endowments may have significantly higher real asset allocations because of investment policy statements that explicitly point to inflation as a variable to address,” said Popovich.  “Long-term inflation expectations jumped again in FY22, so this trend is likely to play out for many years to come.”

Commitment to ESG Principles Grows 

Across a wide range of asset classes, 18 percent of colleges and universities currently include responsible investing criteria within their investment activities, while another 18 percent do not currently include it, but are considering it.

Over 26 percent of respondents said they incorporate RI in their private equity allocations, a notable increase from the FY21 survey (19 percent). The same trend is seen in venture capital, private real estate, and private energy and infrastructure investing.

Roughly 24 percent of endowments reported they plan to add or expand RI approaches in their investment portfolio or investment policy due to an increased focus on diversity, equity, and inclusion.

In addition to incorporating RI strategies within their portfolios, over 86 percent of endowments that responded to this year’s question about investment policies include a commitment to environmental, social, and governance (ESG) principles in their policies, versus just over 80 percent last year. 

“Though RI is gaining acceptance, many endowments have questions about the effectiveness of RI strategies, which demonstrates the ongoing, significant need for more clarity in ESG reporting—and also for more support for endowments in aligning their responsible investing with their mission objectives,” said Popovich. “Providing this insight and guidance to endowments should be a huge imperative for asset managers as endowment interest in responsible investing continues to broaden.”

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 works to advance the economic vitality, business practices, and support of higher education institutions in pursuit of their missions. For more information, visit


About TIAA

TIAA is a leading provider of secure retirements and outcome-focused investment solutions to millions of people and thousands of institutions. It is the #1 not-for-profit retirement market provider[1], paid more than $6.4 billion in lifetime income to retired clients in 2021 and has $1.2 trillion in assets under management (as of 12/31/2022)[2].

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  1. As of July 21, 2022. Based on data in PLANSPONSOR's 403(b) 2022 DC Recordkeeping Survey, combined 457 and 403(b) data.
  2. As of December 31, 2022 assets under management across Nuveen Investments affiliates and TIAA investment management teams are $1,212 billion.

©2023 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017

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