Dive Brief:

• A brutal stock market slowed college endowment returns in the 2018 fiscal year to an average of 8.2%, down from 12.2% in 2017, according to data from more than 800 institutions gathered by National Association of College and University Business Officers (NACUBO) and TIAA Endowment and Philanthropic Services. Ten-year returns stayed positive by growing to 5.8% but fell short of the 7.2% average target for colleges. 
• Surveyed schools collectively spent more than $21.6 billion from their endowments on campus operations during the year, with 49% of withdrawals going toward scholarships and aid. Two-thirds of schools raised their endowment spending, with the median increase at 6.6%.
• In the fiscal year 2018, donors gave nearly $10 billion in total new gifts to endowments. Median gift levels increased 15.6% year-over-year to $3.7 million in 2018. That figure belies the size of gifts, which ranged from less than $400,000 for smaller colleges to more than $50 million for colleges with a $1 billion or greater endowment. 

Dive Insight:

Collectively, college endowments held well over half a trillion dollars in assets by the end of fiscal 2018, with the total growing 8.8% year-over-year to $616.5 billion last year. Yet decreasing return growth is worrisome for colleges as some increase spending from their endowments.

NACUBO President and CEO Susan Whealler Johnston said in a statement that spending data showed the colleges' financial commitment to students, who were the primary beneficiaries of endowment funds. She raised concerns, however, about missing the target for long-term rates of returns, posing a barrier to colleges that want "to increase endowment spending to support their missions."  

Returns matter all the more as colleges increasingly come to lean on endowments in an age of declining state support and rising pressure to stem tuition hikes. TIAA CEO Kevin O'Leary noted in a statement that endowments are playing a growing role in operations, taking up 10% of the operating budget on average.

Not all endowments are equal, of course. Harvard University topped the list with a $38.3 billion endowment, up more than $2 billion from 2017 and roughly equivalent to the assets of Target Corp. and the manufacturer 3M.

As the gifts and investment accounts balloon at Harvard — which completed a five-year, record-breaking $9.6 billion capital campaign last year — the contents of its investment portfolio has raised some eyebrows. Managers have put money into everything from Brazilian farmland to California vineyards bearing precious water rights. Harvard's endowment is also the subject of new taxes as a result of the Republican tax law passed in 2017, which the Ivy League university estimates will cost it between $40 million to $50 million each year. 

No. 2 is the University of Texas System, which had an endowment valued at $30.9 billion last year. Yale University ($29.4 billion), Stanford University ($26.5 billion) and Princeton University ($25.9 billion) rounded out the top five. Compare those figures to Mount Saint Mary College, in Newburgh, New York, which had one of the smallest endowments at $5.7 million, about 0.015% of Harvard's.

Public colleges made up $203.8 billion, or about 38%, of the total endowment value across institutions. During the year, the median gift values at public colleges ($5 million) outpaced gifts to private schools ($3.1 million).

Public institutions have been expanding their fundraising ambitions in recent years, especially as states have slashed or stalled funding. Last year, the University of Michigan completed a record $5 billion fundraising campaign. Meanwhile, the University of Washington has a $5 billion campaign underway, the University of North Carolina at Chapel Hill is working toward $4.25 billion and the University of Florida is aiming for $3 billion.