Two new studies reveal that university endowments, battered by the recent economic crisis, have begun to grow again, adding fresh resources to the pool of funds they can commit to private equity and other investments.
Endowments grew on average by 11.9 percent in fiscal year 2010, which ended June 30th, according to a study released by the National Association of College and University Business Officers (NACUBO) and
Adding to the improving picture, universities had a slightly easier time raising new funds in 2010. They received about $7 billion in gifts destined specifically for their endowments, representing about a quarter of the $28 billion in overall donations that universities took in last year, according to Ann Kaplan, author of separate study from the Council for Aid to Education, or CAE. Giving was up 0.5 percent during 2010, a stark change from the previous year when donations slipped by 11.9 percent.
Both trends promise to help private equity firms on the fund-raising trail. According to the NACUBO study, allocations to private equity rose to 12.5 percent in FY2010 from 10.7 percent the previous year. Performance of private equity investments by endowments was also strong, returning 14.1 percent in FY2010.
Endowments bigger than $1 billion had the highest portion of capital (15 percent) targeted to private equity, according to the NACUBO study. Among the biggest private equity players is
In FY2010, Harvard’s endowment grew 5.7 percent and Yale was up 2 percent, according to NACUBO, both underperforming the S&P 500’s return of 10.4 percent during the period. Overall, both endowments are still substantially smaller than they were prior to the recession.
Not surprisingly, universities with the largest endowments also topped the donation list in 2010.
It still wasn’t a stellar year for the top five donation recipients in the CAE study: All but U.S.C. received smaller amounts in 2010 than in 2009. Eight schools among the top-20 were public, led by number 10
The top performing large endowment was