A volatile stock market during the last half of the 2022 fiscal year put a sharp dent in the returns and market value of college endowments.
According to the annual Nacubo-TIAA Study of Endowments, released today, college endowments had an average one-year return of -8 percent, net of fees, in the 2022 fiscal year. The steep decline from the year before — when endowments’ overall average return was an eye-popping 30.6 percent — shows the impact of external factors, such as inflationary pressures and the war in Ukraine.
Despite the difficult year, colleges continued to use their endowments to support students and other institutional priorities, said Lynne C. Schaefer, Nacubo’s interim president and chief executive officer.
Institutional spending from endowments included in the study increased 10.7 percent to $25.9 billion in the 2022 fiscal year, which ended on June 30 for most institutions. However, the average annual spending rate for college endowments fell to 4.2 percent, down from 4.8 percent in the prior fiscal year.
Endowments of all sizes saw negative returns, although small endowments fared the worst. Endowments with less than $25 million in assets posted an average return of -11.5 percent. For endowments with assets of more than $1 billion, the average return was -4.5 percent, the study found.
The Nacubo-TIAA study reflects responses from 678 institutions with endowment assets of $807 billion in the 2022 fiscal year, a total that was down about 4 percent from a year earlier.
The average size of endowments in the survey was $1.2 billion. However, the median size was about $203 million. More than half of the endowments in the study were less than $250 million.
Endowments also saw new gifts increase 22 percent — which helped offset their losses in market value. The surge in higher-ed giving was likely due to a strong stock market in December 2021 that coincided with year-end giving — as reported earlier this week in a survey by the Council for Advancement and Support of Education.
About two-thirds of endowments reported receiving some gifts for diversity, equity, and inclusion initiatives, such as scholarships, research programs, endowed chairs, and faculty funding. Of the recipients of such gifts, 64 percent were institutions with endowments worth $250 million or less.
Here are more highlights from the study:
