College and university endowments had a good 2023 thanks to the stock market

MARKETPLACE

Stephanie Hughes

February 15, 2024

2023 was a good year for the equities markets, and that was good news for the colleges and universities that have money invested through their endowments. According to an annual survey out on Thursday by the National Association of College and University Business Officers, the average return on endowments in fiscal year 2023 was 7.7%.

You can think of an endowment like it’s a pot of money for a university to use — or really, like lots of little pots of money each given by a different donor, often for a particular purpose.

“This money can be used to build a new building. This money can be used to go to student financial aid,” said Dominique Baker, a professor of education and public policy at the University of Delaware.

She points out that the majority of colleges in the U.S., both public and private, have endowments. They can create a kind of financial backstop for the schools, said Ted Mitchell, president of the American Council on Education.

“If other things in the world don’t go right — say enrollment plummets or there’s a natural disaster — there’s a pot of money that can be used to support the operations of the institution,” he said.

The survey found that endowments provide, on average, about 11% of the annual operating budgets for schools. In 2023, that money went to academic programs, faculty salaries and facilities; about half went to grants and scholarships for students.

Continue Reading