The Nonprofit Sector’s “One Percent?” Large University Endowments

February 1, 2012; Source: Pensions and Investments | Big college endowments did quite well in fiscal year 2011, thank you very much. According to a new study of private and public university endowments (including those of university-related foundations) from the National Association of College and University Business Officers (NACUBO) and institutional investment firm Commonfund, the average endowment had a return on investment of 19.2 percent—compared to the previous year’s average of 11.9 percent.  Because only 823 universities participated in the FY2011 survey compared to around 850 in 2011, a matched analysis of the 799 that participated in both surveys showed an aggregate growth of assets of 18.1 percent.

Readers might recognize the names of the largest private nonprofit universities with hefty endowments that have grown substantially over the past year:


Harvard University

$31.7 billion (+15.1%)


Yale University

$19.4 billion (+16.3%)


Princeton University

$17.1 billion (+18.9%)


Stanford University

$16.5 billion (+19.1%)


Massachusetts Institute of Technology

$9.7 billion (+16.8%)


Columbia University

$7.8 billion (+19.5%)


Northwestern University

$7.2 billion (+20.8%)


University of Pennsylvania

$6.6 billion (+16.1%)


University of Chicago

$6.6 billion (+18.6%)


University of Notre Dame

$6.3 billion (+19.6%)


















The percentage change from 2010 to 2011 is not necessarily just due to returns in the market. In addition to investment gains and losses, these universities might have received new contributions to their endowments or might have withdrawn sums for institutional operations and capital expenses. Nonetheless, in the markets, the biggest endowments did the best. Endowments of more than $1 billion averaged returns of 20.1 percent. 

Commonfund suggests that the endowments of almost half of the surveyed institutions haven’t gotten back to their 2008 levels and that the 2011 results do not make up for the losses that university endowments suffered in fiscal years 2008 and 2009. 

But half are above their 2008 endowment sizes. The growth is driven by 30.1 percent returns in domestic equities and a slightly lower 27.2 percent return in international equities. Returns on some categories of alternative investments were also hefty, including 18.7 percent on private equity, 21.7 percent for venture capital, 23.5 percent on investments in energy and natural resources, and 26 percent on commodities and managed futures. The reason the smaller university endowments, particularly those below $25 million, didn’t do as well as the billion dollar endowments, according to Pensions and Investments, is that “smaller endowments don’t have the clout to invest with top-flight private equity and venture capital managers and have to rely instead on larger allocations to hedge funds, which in 2011 were the worst-performing alternative asset class on average.”

To take advantage of better investment possibilities, around half of endowments smaller than $50 million have been outsourced to investment managers (like Commonfund, which manages the investments of more than 1,580 nonprofit institutions). These managers commingle and pool the investments for returns that look like those generated by the biggest institutions. 

Realize that these private nonprofit universities are not only experiencing huge returns on their investments, but almost half of the universities in the NACUBO/Commonfund study reported increases in gifts and donations while less than a third reported decreases. These institutions are the nonprofit sector’s one percent.  The vast majority of nonprofits haven’t seen their invested fund balances grow by nearly one-fifth and don’t have a prayer of access to investing in assets that earn the likes of a 30 percent return. —Rick Cohen