Endowments

In 2007, half of the students at private doctorate-granting universities attended schools with endowments of $119,900 or more per full-time equivalent (FTE) student; the other half attended schools with endowments of $119,900 or less per FTE student. With a typical spending rate of 4.4%, this median level of endowment assets translated into about $5,300 of endowment income per FTE student, while the median endowment at private baccalaureate institutions yielded about $1,500 per student.

Key Takeaways

In public institutions, typical income from endowment ranged from about $700 on the $15,400 per student at doctorate-granting universities to about $100 on the $2,100 per student at master’s universities.
In 2007, the top 10% of private doctorate-granting universities held 53% of endowment funds in this sector and the second decile held 18%.
The top 10% of private master’s universities held 39% of endowment funds in this sector and the second decile held 22%.

The top 10%of private baccalaureate colleges held 50% of endowment funds in this sector and the second decile held 23%.
Funds are similarly concentrated in the public sector, with the top decile in terms of endowment per student holding 44% of all assets among doctorate-granting universities, 39% among master’s universities, and 45% among baccalaureate colleges in 2007.

ALSO IMPORTANT

In a survey of 370 private and 188 public colleges and universities (and 209 independent secondary schools) the Commonfund Institute found that in 2006-07, colleges and universities spent an average of about 4.4% of the value of their endowments to supplement their operating budgets. These funds financed about 16% of operating expenditures at institutions with endowments exceeding $1 billion and 20% at those with endowments between $501 million and $1 billion, compared to 2% at institutions with endowments smaller than $10 million and 5% at those with endowments between $10 million and $50 million.
The rate of return to endowment funds fluctuates considerably over time. According to the Commonfund Institute, between 1999-00 and 2006-07, the average return varied from a low of -6% in 2001-02 to a high of 16.9% in 2006-07.

Figure 11: Endowment Assets per Full-Time Equivalent (FTE) Student at Four-Year Colleges and Universities by Decile and Carnegie Classification, 2007

Highest Decile

Second

Third

Fourth

Fifth

Sixth

Seventh

Eighth

Ninth

Lowest Decile

Endowment assets include funds that by law must be preserved, with only the income available for spending, because of restrictions placed by donors. Institutional policy dictates the preservation of other endowment funds. Most colleges and universities spend 4% to 6% of their value of their endowment s each year as additions to the operating budget.

The scale on the private four-year graph is 10 times that on the public four-year graph.

Notes: The value of endowment assets was as of the end of fiscal year 2007. As of late 2008, the value of most endowments was much lower than that reported here. Endowment assets are based on data for 63 private doctorate-granting, 109 private master’s, 168 private baccalaureate, 142 public doctorate-granting, 216 public master’s, and 98 public baccalaureate degree institutions. Average endowment per FTE for each decile of institutions is calculated by ordering the institutions in the sector by assets per FTE and dividing the students in the sector into deciles. Total assets in the institutions enrolling 10% of students in the sector are divided by the number of students in those institutions.
Sources: National Association of College and University Business Officers (NACUBO) Endowment Study; NCES, Integrated Postsecondary Education Data System; calculations by the authors. Data are from NACUBO where available.
excel

Download Excel for this figure.
excel

Download Excel for all figures.

This graph was prepared in October 2008.