An unusually high average one-year return rate of 15.1 percent for fiscal year 2004 helped bolster college and university endowments but did not erase several recent years of investment losses or negligible returns, a report from the National Association of College and University Business Officers (NACUBO) finds.

According to the 2004 NACUBO Endowment Study, when inflation and yearly endowment spending rates are considered, the five-year-average 3.8 percent rate of return on investments translates into a decline in endowment earning potential over time — even when high 2004 returns are factored into calculations. Nevertheless, the study, which surveyed 741 colleges and universities, representing an overwhelming majority of colleges and universities with endowments greater than $1 million, reported $267 billion in total endowment assets. It named Harvard University the nation's best endowed school, with $22 billion, followed by Yale, with $12.7 billion; the University of Texas system, with $10.3 billion; and Princeton and Stanford, both with endowments of $9.9 billion.

"Income and capital gains earnings from endowment investments are a critical source of funds for both independent and public institutions," said NACUBO president James E. Morley, Jr. "Institutional expenses continue to increase, while some revenue sources — such as public funds — are decreasing. These conditions, plus the growing need for student financial aid, make endowment income an increasingly vital funding element of most college and university budgets."

To view or download a table of institutions by total market value of their endowments (22 pages, PDF), visit: http://www.nacubo.org/documents/research/
FY04NESInstitutionsbyTotalAssetsforPress.pdf.