The most sobering takeaway from the report: Endowments may not last for the long haul at the rate they are being spent.
“We may be sacrificing inflation-adjusted gains for future generations by placing a priority on providing funds for the current generation,” said Susan Whealler Johnston, president and CEO of the college business officers group.
That matters because nearly half of the money spent by endowments goes to student financial aid. Another 16% goes to support academic programs, 10%—faculty positions and 7%—campus operations, according to the report.
Schools with larger endowments enjoyed better returns as their riskier investments paid off. Among the 104 institutions with endowments over $1 billion, the one-year return was 9.7%, compared with an average 7.6% return for the 73 institutions with endowments under $25 million.