<p>We all know university endowments have, on average, shrunk anywhere from 15%-40% over the last 7 months. There is a strong likelyhood that they are going to shrink further over the next 4-5 months. How will the university endowment landscape look when NACUBO releases the 2009 figures based on the end of June 2009 values? My guess is that things will not change much among the 20 or so wealthiest universities. However, there could be significant differences once you leave the 20 wealthiest universities. </p>
<p>The last official figures for all universiites are the NACUBO June 2009 figures. The 30 largest universities endowments at the time are listed below. Whenever I leave a space between groups, it signifies a sizeable gap in endowment size. As such, the likelyhood of a university in one group overtaking universities in the group above are very slim. </p>
<li><p>Harvard University: $36.5 billion</p></li>
<li><p>Yale University: $22.8 billion</p></li>
<li><p>Stanford University: $17.2 billion</p></li>
<li><p>Princeton University: $16.3 billion</p></li>
<li><p>Massachusetts Institute of Technology: $10.1 billion</p></li>
<li><p>University of Michigan-Ann Arbor: $7.6 billion</p></li>
<li><p>Northwestern University: $7.2 billion</p></li>
<li><p>University of Texas-Austin: $7.2 billion</p></li>
<li><p>Columbia University: $7.1 billion</p></li>
<li><p>University of Chicago: $6.6 billion</p></li>
<li><p>University of Notre Dame: $6.2 billion</p></li>
<li><p>University of Pennsylvania: $6.2 billion</p></li>
<li><p>Duke University: $6.1 billion</p></li>
<li><p>Emory University: $5.5 billion</p></li>
<li><p>Cornell University: $5.4 billion</p></li>
<li><p>Washington University: $5.3 billion</p></li>
<li><p>Rice University: $4.6 billion</p></li>
<li><p>University of Virginia: $4.6 billion</p></li>
<li><p>Dartmouth college: $3.7 billion</p></li>
<li><p>University of Southern California: $3.6 billion</p></li>
<li><p>Vanderbilt University: $3.5 billion</p></li>
<li><p>University of California-Berkeley: $2.9 billion</p></li>
<li><p>Brown University: $2.7 billion</p></li>
<li><p>University of Minnesota-Twin Cities: $2.7 billion
25: Johns Hopkins University: $2.5 billion</p></li>
<li><p>New York University: $2.5 billion</p></li>
<li><p>University of North Carolina-Chapel Hill: $2.4 billion</p></li>
<li><p>University of California-Los Angeles: $2.3 billion</p></li>
<li><p>University of Pittsburgh: $2.3 billion</p></li>
<li><p>University of Washington: $2.3 billion</p></li>
<li><p>The Ohio State University: $2.1 billion</p></li>
</ol>
<p>Like I said, among the top 20, there will most likely be very little change in order. A school could drop or rise 2-4 spots, but no more. There will be significant movement in universities with endowments between $1.5 billion and $2.7 billion. </p>
<p>However, what will be most striking is the actual value of those endowments. The drops will be radical in nature…almost shocking. Last June, there were 4 universities with endowments exceeding $16 billion. By June of 2009, I would be surprised if there were more than 2. Quite frankly, I think only Harvard will have an endowment exceeding $15 billion come June.</p>
<p>There were an additional 5 universities with endowments between $7 billion and $10 billion. When the new figures come out in July, I am almost certain there will be only one (MIT) or perhaps even none with an endowment over $7 billion. Most of those will have endowments under $6 billion. </p>
<p>There were an additional 7 universities with endowments between $5.3 billion and $6.6 billion. When the new figures come out in July, I am almost certain there will be only one (Chicago) or perhaps even none with an endowment over $5 billion. </p>
<p>It has always been the case that private schools with huge endowments thrive, while private schools with small endowments teeter on the brink of viability. Ironically, in our new situation, it’s the big endowment schools that are in the greatest budget difficulties because so much of their operating budget comes from endowment investment revenue which is down, on average, about 30%. The small-endowment schools that have never had the luxury of budgeting substantial endowment interest aren’t taking nearly the same hit.</p>
<p>NACUBO did a survey that showed an average drop of 22% from July 1 to November 30 2008. I don’t know if the results are available for individual colleges. I think the market has bottomed and will be flat until June 2009. I think endowments will be down 25% for fiscal year 2009.</p>
<p>Thanks, Alexander. This is such a nice thread you’ve made.</p>
<p>I didn’t have any idea that USC has bigger endowment than either Cal or UCLA. Another thing is Brown. I thought it’s, at least, richer than Dartmouth. </p>
<p>The data also tell us that a lot of Ivies aren’t that rich. </p>
<p>Special mention to UMich, Northwestern and UT-Austin for a job well done.</p>
<p>Cal, on the other hand, has a really depressing figure. I’ve always thought that Cal is the type of school that can always pull out a lot of resources from alumni and friends for the university.</p>
<p>RML, although Cal and UCLA have smaller endowments than USC, do remember that they get hundreds of millions of dollars annually in state funding. And Cal has no medical school, and since Medical schools eat up a huge chunk of a universtiy’s budget, I would say that Cal is a little better off than USC financially and UCLA is probably equally healthy as USC financially. </p>
<p>This said, I agree that Cal’s endowment is low. As the premier public university in the United States, I would expect it to lead the pack on the endowment front and yet, it clearly lags Michigan, Texas-Austin and UVa.</p>
<p>It is really kind of irrelevant what the endowment figures are since there is such an incentive to stockpile money to look good for the US NEWS and other surveys. A school that has a higher endowment amount and spends less gets judged higher than a school that spends the money. Ben Stein wrote a magnificent piece in the NY TImes a few years ago showing that the portfolio management community uses the top colleges names to attract money out of which the portfolio manages get their cut. The more a college stockpiles the higher it is in US News and the higher the portfolio managers cut is. Menwhile, tuitions go to Mars and the 50% or so who pay the high full boat tuitions get mugged as they subsidize the other 50% who get the redistributed money. THe whole thing is a giant racket that I hypothesize is about to end with the 2008 economic collapse. The 50% full payers just aren’t going to come to the table anymore and if their States ty to play a similar robin hood game, those politicians will find themselves heading for new professions ( did anyone say Charlie Crist of Florida?). The whole system reminds me of the Forbes 400’s deleteious impact on philanthrophy. IF a billionaire makes a large contribution, he will find his place on the Forbes 400 to be lower next year.</p>
<p>Actually Vienna Man, endowment figures are not used by the USNWR rankings. Although I agree that endowment isn’t the most important criterion in determing institutional quality, it is nevertheless an important factor to consider. It isn’t by coincidence that the universities with the 10 largest endowments are all among the top 20 universities in the nation or that the universities with the next 10 largest endowments are all among the top 30 universities in the nation. I can only think of four exceptions of top 25 universities that do not have top 25 endowments. They are Caltech (which has fewer than 2000 students and no medical school), Carnegie Mellon, Georgetown and UCLA (which is a public university and gets a lot of money from the state).</p>
<p>Endowment figures feed the “financial Resources” ranking used by US News. A school’s financial resources will go down if it has a lower endowment. The correlation is almost exact. And yes my entire point and your entire point is that a higher rating comes from stockpiling more money. It’s lot like the nuclear megatonnage rankings you see for countries. </p>
<p>The endowment figures also impact the peer rankings portion too since the higher education set tends to value the endowment standings as an important thing. To go back to my analogy here, Countries tend to rate other counties with a high nuclear tonnage rating higher as well. Note , the USA has the highest nuclear tonnage in the world even though its economy is a joke which is financed by many countries with no nuclear bombs like Japan and Germany.</p>
<p>The Financial Resources rank of a university is based on how much money that university gives in form of scholraships and aid. It is another ploy used by the USNWR to hurt public universities since they are already subsidized and do not give as much additional money to their students. </p>
<p>Endowment size obviously plays a small part in the Financial Resources rank, since many universities use part of their endowment revenues to fund their scholraship budget, but that is the extent of which endowment is used.</p>
<p>The financial resources rank is average spending per student which includes a ton of other stuff besides financial aid and scholarships. The more a school pays its janitors, administrators, portfolio managers, and everyone else, the higher it will rate on this ranking. The more federal resources in terms of work study and federal loans it cycles through the expenditure number, the higher it will rank in this metric. Obviously, the more endowment income there is to play with, the higher the ranking will end up being. And I will bet, even though I don’t know, that the portion spent on instruction is probably lower than all of us think. I also wonder what is included in the catch all bucket called institutional support.</p>
No, we certainly aren’t. Only the Big 3 are truly loaded.</p>
<p>
At the risk of going off-tangent, the so-called “Joke” economy is still the richest in the world, richer in per-capita save for the tiny anomalies like Liechtenstein and Iceland (whoops, scratch that last one), I could go on…</p>
<p>The less polemical, as well as more interesting answer, however, is to consider that between the US and other countries (appropriately, countries like Germany and Japan) there is a portion of the trade relationship that is not directly economic–namely that the US underwrites the national defense of Europe and Japan, and also spends gobs of money on a global blue-water Navy that makes global trade (the lifeblood of Germany and Japan’s export-oriented economies) possible.</p>
<p>Now wasn’t that more interesting than just pronouncing something to be “a joke?”</p>
<p>I think a joke is an economy that has a lower per capita income on a ppp basis for the bottom 95% of its population than virtually all the OECD countries, that has a life expectancy that is lower than virtually all the other major economies and that, after the real estae crash, now has a nation that has virtually no household wealth among the bottom 80% of the population. Tragedy is probably a better term than joke. (And amazingly, the upper third who pay virtually all the income and social security taxes are perfectly happy to finance the military that protects Europe and Japan.) You are right, its not a joke and I shouldn’t be laughing.</p>
<p>VM-You might add that the US relinquished its position as the world’s largest exporter to Germany (a country with one fourth our population) a couple of years ago.</p>
<p>Depends on which part of Europe. France’s natural birth rate (that of ethnically French catholics) is as high as that of the US. England is not far behind. The rest of Europe is in trouble though.</p>
<p>Ilovebagels-I guess we in the US are really, really, really toast then since their apparently aren’t going to be enough Japanese and Germans around to buy our Treasury Bonds
Demographics, my dear boy, demographics. You have really wrecked my morning.</p>