In fiscal year 2021, college and university endowments posted dramatically higher investment returns, asset values, and giving levels compared with fiscal year 2020, a report from the National Association of College and University Business Officers (NACUBO) and TIAA finds.

According to the 2021 NACUBO-TIAA Study of Endowments, which is based on data from 720 institutions representing $821 billion in endowment assets, the average size of endowments in FY21 was $1.1 billion, up 35 percent from FY20, with the median endowment at about $200 million. The study also found that for the 12 months ending June 30, 2021, endowments generated an overall average return of 30.6 percent (net of fees), up sharply from a 1.8 percent overall average return in FY20. All endowment size cohorts saw returns greater than 20 percent for FY21, though the return gap between the largest endowments (more than $1 billion in assets) and the smallest ($25 million or less) was more than 13 percentage points.

Universities in the survey reported that new gifting in FY21 also increased significantly, rising 15 percent over FY20, with increases in gift activity particularly strong among small and midsize endowments. For the first time, the survey also gauged how many respondents received gifts specifically for diversity, equity, and inclusion (DEI) initiatives (including scholarships, research programs, and endowed chair and faculty funding), with 65 percent of respondents reporting receiving such gifts.

According to the study, the average annual effective spending rate reported by endowments was 4.54 percent in FY21, consistent with FY20; student financial aid received the largest percentage of endowment spending (47 percent), followed by academic programs and research (15 percent), endowed faculty positions (11 percent), and campus facilities’ operation and maintenance (9 percent). In addition, more than half of endowments increased support for their institution’s operating budget in FY21.

“This year’s results reflect strong market performance and good endowment management and more importantly, provide continued financial reliability for support of students, faculty, and academic programs,” said NACUBO president and CEO Susan Whealler Johnston. “At NACUBO, we are heartened to see donors giving to priorities in areas critical to the mission and future of higher education. Increased focus on DEI initiatives is an organizational and sector-wide priority, and we encourage our members to find impactful ways to allocate these gifts now and over the long term.”

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