U.S. college and university endowments returned an average of 8.2% (net of fees) for the 2018 fiscal year, ended June 30, according to the 2018 NACIBO-TIAA Study of Endowments, released Thursday. This compared with 12.2% for the preceding fiscal year.
The mission-critical 10-year average annual return increased by 1.2 percentage points this year to 5.8%, but still lagged the 7.2% average return institutions put forward as a long-term return objective.
The report said year-over-year performance fell short mainly because of a decline in U.S. and international equity markets.
The new study comprised 802 institutions, representing $617 billion in endowment assets. While the size of the median endowment was approximately $140 million, 41% of study participants had endowments of $101 million or less.
Participating colleges and universities reported spending upward of $21.6 billion from their endowments on campus operations in fiscal 2018. New data introduced in this year’s study show how institutions allocated their endowment spending dollars.
On average, schools used 49% of their total endowment withdrawals to support student scholarships and other financial aid programs, and 16% of withdrawals for academic tutoring and other related functions.
“The new endowment spending data from this year’s study clearly demonstrate the deep commitment colleges and universities make to support financial aid and student success,” NACUBO’s president and chief executive Susan Whealler Johnston said in a statement.
“These data show that students and their families are the ultimate beneficiaries of institutions’ endowed funds. We remain concerned, however, about the below-target long-term rates of return, which have made it much more difficult for colleges and universities to increase endowment spending to support their missions.”