More than three-quarters of US universities saw their endowments shrink in the most recent financial year, as their investment portfolios lost money and spending outpaced new donations.
The figures, in a survey of more than 800 of the largest institutions published on Tuesday, suggest a looming funding crunch across US higher education as long-term investment returns sink further below target.
The average endowment shrank 2.9 per cent, according to the study by the National Association of College and University Business Officers (Nacubo) and Commonfund, amid increased spending on student financial aid and other contributions to universities’ operating budgets.
The average 10-year investment return has fallen to 5 per cent, below the 7.4 per cent target that universities say allows them to cover their spending obligations plus inflation and other costs.