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A school's endowment is a measure of its wealth and a major indicator of its long-term financial stability. Endowments are financial gifts usually designated for a specific purpose, such as scholarships, professorships or special programs. Schools invest the principal and spend a portion of the earnings, reinvesting the rest. For some schools, endowment income represents half the operating budget.
The global financial crisis resulted in an average loss of about 23 percent in the value of college endowments from 2008–2009. The 10 schools profiled have the largest endowments as of June 2009.
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Cambridge, MA1 Harvard University
Harvard's $25 billion endowment is made up of more than 11,000 individual funds. Even after a 30 percent loss in 2008–2009, the endowment's value is staggering—actually greater than the Gross Domestic Product (GDP) of half the nations in the world! Although Harvard remains immensely wealthy by any standard, it has cut staff, instituted a hiring freeze and halted some building plans to compensate for the losses. However, the nation's oldest institute of higher learning has not changed its generous financial aid policies, and in fact has committed to even more financial aid as it strives for an increasingly diverse student body.
- Endowment: $25.6 billion
- Scholarships and awards have more than doubled from 2001 to 2009, now totaling $388 million
Visit www.harvard.edu for more information.
New Haven, CT2 Yale University
Yale's $16 billion endowment is a distant second to Harvard, but massive nonetheless. Contributions from endowment funds equal almost half the University's net revenues and represent Yale's single largest source of support. To compensate for the 29 percent loss in 2009, the university has slowed both faculty hiring and the work on a new science campus. However, its long-planned overhaul of college housing will proceed and it says financial aid is "off-limits" for cutting.
- Endowment: $16.3 billion
- 2009–2010 tuition and fees had smallest increase in 43 years to help families struggling with the recession
Visit www.yale.edu for more information.
Palo Alto, CA3 Stanford University
The premier research institute in America has an endowment valued at more than $12 billion, down about 27 percent from 2008. Income from endowment investments accounts for almost 30 percent of the university's budget. To compensate, Stanford's administration has chosen to make sharp cuts all at once rather than spread them out over time in a process universities call "smoothing." The university has laid off more than 400 non-faculty staff, raised certain student fees, froze faculty hiring and closed its physics library. Its generous financial aid policies remain the same.
- Endowment: $12.619 billion
- Half of undergraduates receive need-based financial aid—officials expect that figure to rise as more families face financial problems
Visit http://www.stanford.edu for more information.
Princeton, NJ4 Princeton University
Princeton's endowment, valued at $12.614 billion on June 30, is a virtual tie with Stanford's and represents a slightly more positive, 23 percent loss from 2008 than the Palo Alto institution's 27 percent. Endowment income supports a big chunk of Princeton's budget—about 45 percent—so the university has capped raises and reduced administrative budgets to compensate. Its commitment to financial aid remains strong and it has limited tuition increases. And even though Princeton's endowment has suffered, its rate of giving is the third largest in its history, attesting to the loyalty of alumni and supporters.
- Endowment: $12.614 billion
- Recently added $5 million to financial aid packages
- Princeton is the wealthiest major university in endowment per student: $2 million
Visit www.princeton.edu for more information.
Austin, TX5 University of Texas System
Private donations have built much of the University of Texas's flagship campus at Austin: the Blanton Museum of Art, the McCombs School of Business and the AT&T Conference Center. These types of donations' values fell 16 percent between 2008 and 2009, to an endowment valued at just over $12 billion—an endowment that benefits the nine universities and six health-related campuses in the UT system. However, like other state universities, UT does not have the same dependency on endowment income as private institutions. According to one formula, $50 million from state allocations is as useful to a school as a $1 billion endowment. In 2007, UT received $1.8 billion in state appropriations.
- Endowment: $12.16 billion
- Total number of donors hit record levels last year
- UT educates one-third of Texas college students
Visit http://www.utexas.edu for more information.
Cambridge, MA6 Massachusetts Institute of Technology
MIT's endowment losses were slightly lower than those of the five wealthier schools. Its endowment lost about 21 percent, bringing the total value to around $8 billion. The renowned center for science, technology and research has instituted a program of paced cutbacks, but remains committed to its need-blind admissions policy and to meeting the full demonstrated need of students for all four years. MIT does not offer merit scholarships; however, 90 percent of its undergraduates receive need-based financial aid. Its president has also pledged an ongoing commitment to MIT's "standards of excellence and culture of inclusion."
- Endowment: $8.0 billion
- Financial aid budget increased 10 percent to $82 million for 2009–2010
Visit http://web.mit.edu for more information.
Ann Arbor, MI7 University of Michigan
The second-wealthiest public university, the University of Michigan has an endowment of about $6 billion, down almost 21 percent between 2008–2009. Like the University of Texas, Michigan has received major funding from state appropriations to ease reliance on endowment income and tuition. Nearly 81 percent of undergraduates who are Michigan residents and 53 percent of undergraduates from outside the state receive aid. Recently the university added more than 2,000 new scholarships.
- Endowment: $6.0 billion
- About $1.15 billion in endowment funds must be used for student financial aid as a condition of the gift
Visit http://www.umich.edu for more information.
New York, NY8 Columbia University
At just under $6 billion, Columbia's endowment is a fraction of other Ivy League schools and represents a 2008–2009 loss of about 20 percent. The university has the highest percentage of lower-income students among the Ivies, with 11 percent of undergraduates from families making less than $45,000 a year. The relatively small size of Columbia's endowment, coupled with the losses in earnings, means the funds can cover only about one-third of the cost of financial aid (compared to richer schools' two-thirds' coverage). To honor its passionate commitment to attract the best, most diverse student body, Columbia has launched a campaign initiative to bring in $101 million in new student scholarships by 2011.
- Endowment: $5.9 billion
- In 2009, 15 percent of incoming freshmen were the first in their families to attend college
Visit www.columbia.edu for more information.
Evanston, IL9 Northwestern University
At Northwestern University, endowment funds comprise only 18 percent of the operating budget, compared to 30–45 percent at other top schools. This lesser reliance means the $5.4 billion endowment's 24 percent drop in 2008–2009 has had a less dramatic impact. Certain cost reductions are in place, but the university was able to keep undergraduate tuition and room and board increases to a low 3.6 percent for 2009–10 while increasing scholarship funds by 10 percent, to $86 million. Northwestern's donor base remains loyal and generous, and the university remains committed to need-blind, full-need financial assistance.
- Endowment: $5.4 billion
- Royalties from pain-killing drug Lyrica, developed by Northwestern researchers, partially funded new scholarships
Visit http://www.northwestern.edu for more information.
Philadelphia, PA10 University of Pennsylvania
The University of Pennsylvania's $5.2 billion endowment sustained the smallest 2008–2009 loss any of the top 10 endowed schools: 16.8 percent. Penn says its budget is now balanced and that making a Penn education affordable for all qualified students remains as strong a commitment as ever. The Philadelphia-based Ivy League university's financial aid budget increased 43 percent between 2004 and 2009 and grew another 16.4 percent in 2009–2010. Like other top-tier schools, Penn has replaced loans with grants and now waives tuition for students with family incomes below certain levels.
- Endowment: $5.2 billion
- Ten percent of the Class of 2013 are the first in their families to attend college
Visit http://www.upenn.edu for more information.