The annual NACUBO-Commonfund report on college and university endowment values is out. The value of each endowment includes the effect of investment returns, spending, and donations through June 2012, and, on average, it was negative: the average endowment posted a return of -0.3 percent (net of fees) for the year, a decline from the 19.2 average return in the year ending June 2011. Harvard University continues to hold the nation’s largest endowment, with $30.4 billion under management, but that is a decline of -4.1%. There are 71 colleges and universities with more than a billion dollars in the coffers. Among these, the largest increase was at Ohio State University, with an increase of 11.6%.
What does this mean? Well, to begin with, many schools are really rich, but not all are. The rich aren’t necessarily getting richer; the investment environment is really difficult, donors have less money to give, and demands for spending are unlimited. None of that is a surprise.
If you are applying to college, you should pay attention to these numbers. The campuses with larger endowments will be able to offer more scholarship aid – even if they have a higher sticker price. They may also be more likely to hold the line on tuition increases.
On the other hand, a school with an endowment that is smaller than that of its peers, or that had big declines in the past year, will be less likely to offer generous aid and more likely to increase tuition over time.
You may be wondering what NACUBO-Commonfund is. NACUBO is the National Association of College and University Business Officers, and Commonfund is an organization that helps educational and charitable institutions invest their money better. This annual study is the standard in the business.
