Study shows lower returns for educational endowments

• Date: 01 April 2020
• Published date: 01 April 2020
• DOI: http://doi.org/10.1002/nba.30746

APRIL 2020 NONPROFIT BUSINESS ADVISOR

7

© 2020 Wiley Periodicals, Inc., A Wiley Company • All rights reserved

DOI: 10.1002/nba

Industry News

Higher education sees record donations in 2019

A new study from the Council for Advancement

and Support of Education shows that grants and

donations in support of U.S. higher education in-

stitutions reached $49.6 billion in 2019, the highest

level ever reported.

The figure—which includes charitable gifts from

individuals and organizations as well as qualified

grants from private foundations—marked a 6.1%

increase from the year before, according to the

CASE Voluntary Support of Education survey data.

That was the 10th consecutive year of growth,

although the rate of growth slowed compared to

the previous year, the data showed.

While the top-line figures are positive, the sur-

vey did shine a light on a couple potential areas

of concern. For example, even as organizational

giving increased, with foundations supplying the

largest share, personal donations from individu-

als—including alumni—decreased in that same

time period.

Gifts from alumni and nonalumni declined by

7.9% and 3.1%, respectively.

An increase in foundation support grew to 34.3%

of total giving, helping to counter the decrease in

individual giving—but the bulk of this increase was

from a single foundation contribution of $1.2 bil-

lion from Michael Bloomberg through his founda-

tion to Johns Hopkins University, the report said.

Without this gift, total support to higher

education would have increased only 3.4%, reach-

ing $48.33 billion—a level that would have barely

kept pace with inflation.

Other key findings from the 2019 survey data

include:

• Overall growth in voluntary support varied

by institution type with three types of institutions

reporting increased support in 2019—private and

public research/doctoral and public baccalaureate.

Giving to public master’s institutions was flat. All

other types of institutions reported declining gift

revenue in the aggregate.

• Mega-gifts—those topping the $100 million

mark—inched up from the year before. Mega-gifts

from eight single donors—totaling $2.21 billion—

comprised 4.5% of the total raised by all institu-

tions. In 2018, there were seven single donations

of $100 million or more.

To read the report in full, visit https://bit.

ly/2w4J5Gs. ■

Study shows lower returns for educational endowments

New research from the National Association

of College and University Business Officers and

financial services firm TIAA-CREF shows that

educational institutions saw a below-average

return on their endowments during fiscal year

2019. According to the 2019 NACUBO-TIAA

Study of Endowments—which draws on data

from 774 U.S. colleges, universities and affiliat-

ed foundations—U.S. colleges and universities’

endowments returned an average of 5.3% (net of

fees) for FY 2019, well below FY 2018’s average

of 8.2%.

However, despite the modest figures for 2019,

the average 10-year endowment return reached

8.4%, surpassing institutions’ long-term average

return objective of 7% for the first time in a dec-

ade. This was likely due to the strong stock mar-

ket recovery since the 2008 financial crisis as well

as solid management practices, NACUBO said.

Thanks to those strong 10-year returns,

three-quarters of institutions were able to

increase spending from their endowments to

support students and faculty, with an average

increase of more than $2 million. Participat-

ing institutions put 49% of their endowment

spending dollars to student financial aid, 17%

to academic programs, 11% to faculty and 7% to

campus facilities, the report showed.

For more information, visit https://bit.

ly/32tZ6BJ. ■

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