Endowments at major U.S. colleges and universities reported an average loss in market value of 1.9 percent in fiscal 2016.
The drop in endowment value in the 2016 NACUBO-Commonfund Study of Endowments compares with a 2.4 percent increase in value for endowments in fiscal 2015—which was the lowest rate of growth in three years.
The data compiled in the 2016 survey of 805 U.S. colleges and universities contributed to a decline in 10-year average annual returns for the instittutions—5.0 percent for the 10 years ending in fiscal 2016, compared with 6.3 percent for the 10 years ending in fiscal 2015.
"This year’s long-term return figure is well below the median 7.4 percent that most institutions report they need to earn in order to maintain their endowments’ purchasing power after spending, inflation, and investment management costs," NACUBO (National Association of College and University Business Officers) says in a news release.
NACUBO says that despite the decline in investment gains, 74 percent of participating institutions reported that they increased spending from their endowments to support their institutions' missions. The median increase among those colleges and universities was 8.1 percent.
“These substantial increases inspending from endowments demonstrate the deep commitment colleges and universities have to student access and success," says NACUBO President and Chief Executive Officer John D. Walda. "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.”
The largest endowment was at Harvard University, which reported a fund of $35.4 billion. That represents a 5.2 percent decline in value compared with the 2015 value of $36.4 billion.
Collectively, the 805 schools that participated in the 2016 NCSE had $515.1 billion in endowment assets.