Elite Universities Saw Endowments Slide In Fiscal Year 2022

In a sharp turnaround from a record year in 2021, many elite universities are reporting that their endowments lost value in fiscal year 2022. Harvard University was the latest to report a decline, announcing on Thursday that its endowment dropped $2.3 billion in the past fiscal year.

That’s a 1.8% loss on its endowment investments, the first negative year for Harvard since 2016. And it’s a steep decline from the 33.6% returns that the University enjoyed last year. The losses brought Harvard’s total endowment value to $50.9 billion, which is still the largest of any university by far.

Harvard has plenty of company. Among its Ivy League peers, Brown University reported that its endowment generated a -4.6% investment loss during the fiscal year ending June 30, 2022. Brown’s endowment value decreased from $6.9 billion to $6.5 billion during the year.

Columbia University reported the biggest lost among the Ivies, with a net return from the endowment of -7.6%, contributing to a loss of about one billion dollars in its endowment total.

Dartmouth Colleges endowment fell by 3.1%. Cornells dropped 1.8%, following a 41.9% gain last year. The University of Pennsylvania‘s $20.7 billion endowment had an essentially flat return for the fiscal year. Its endowment had returned 41.1% for the fiscal year ended June 30, 2021.

Yale University is the sole Ivy League institution so far to report an endowment increase during 2022, a very modest .8%, which is its lowest percentage return since 2009. Princeton University had not reported its 2022 fiscal year returns at the time of this article.

Nor were the losses confined to the Ivy League. Duke University’s endowment posted a -1.5% fiscal year 2022 return. MIT’s endowment portfolio experienced a -5.3% loss, and Bowdoin College lost 7.1%.

The losses do not come as a surprise. Equity markets were buffeted last fiscal year by a host of economic difficulties, including continuing supply chain problems, the war in Ukraine, greater-than-anticipated inflation, and tightening U.S. monetary policy. And as several institutions were quick to point out, their fiscal year 2022 declines were not as bad as those experienced in other investment sectors.

For example, commenting on Harvard’s negative returns in the University’s Annual Financial Report, University Treasurer Paul J. Finnegan and Harvard Vice President for Finance Thomas J. Hollister wrote that the returns were a “very good result given the significant declines in both the equity and bond markets in the past year.”

Still, it was a dramatic turnaround from the prior fiscal year when across the nation, university endowments – particularly the already larger ones – realized their best returns in decades. What effects the losses will have on university budgets, especially at private institutions, which rely on endowment income for much of their operating budget, will be closely watched as the year progresses.

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