Diminished endowment returns are the latest revenue woes for several universities
- The latest bad news for higher education's revenue stream comes from endowments, as several of the wealthiest universities in the U.S. have reported that their investment returns for the past fiscal year fall significantly short of those from the previous year--when $1 billion endowments averaged 20% returns--and the pre-recession years.
- Harvard, Yale, Duke, and the University of Pennsylvania were among institutions seeing returns of less than 5% on their endowments, though institutions like the Massachusetts Institute of Technology and Stanford were able to avoid being part of that trend.
- Moody's Investors Service wrote in an Oct. 1 report that these smaller returns are a bad sign for universities that rely on endowment spending to fund a significant portion of the budget.
From the article:
One by one, the formerly profluent tributaries merging into the higher education revenue stream seem to face increasing obstruction. This time the bad news hits endowments. In the past month, several of the country’s wealthiest universities have announced investment returns for the past fiscal year (which ran from July 1, 2011 to June 30, 2012) that fall significantly short of the growth they saw the previous year – when institutions with more than $1 billion endowments saw returns averaging 20 percent – and in the pre-recession years. The headline report is Harvard’s 0.05 percent loss on its $30.7 billion endowment, the largest in the country. ...
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