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U.S. NEWS Monday 6 February 2017

Study: College endowments have worst year since 2009

million, the average return ing. At the same time, most many regions, some schools
was a loss of 1 percent. schools continued to in- will face budget cuts if re-
To help jumpstart its per- crease spending from their turns don’t improve.
formance, Harvard’s en- endowments last year to Still, the average endow-
dowment agency recently pay for operating costs, ment was almost $640 mil-
made plans to cut half its scholarships and research. lion in 2016. Some members
230 staff members, focus- John Walda, president and of Congress have criticized
ing instead on hiring exter- CEO of the association be- colleges in recent years
nal investment experts. hind the study, said univer- for amassing large sums of
Overall, the 10-year aver- sities are increasingly rely- money while increasing tu-
age for endowment returns ing on endowment money ition, prompting some law-
fell to 5 percent, well below to make up for decreases makers to propose man-
the goal of 7.4 percent that in state funding. He add- datory yearly minimums
many colleges set to make ed that, amid predictions that schools would have to
up for inflation and spend- of declining enrollment in spend on scholarships.q

This photo shows Harkness Tower on the campus of Yale Univer-
sity in New Haven, Conn. A study of 800 colleges found that the
average endowment return was a 2 percent loss, the worst per-
formance since the economic recession in 2009. The largest en-
dowments were among those hit hardest, including Harvard’s,
which posted a 5 percent loss but remained the biggest at $34
billion. Yale’s remained No. 2 with $25 billion.
(AP Photo/Beth J. Harpaz)
COLLIN BINKLEY strong gains and a series of
Associated Press swings before that.
BOSTON (AP) — Hundreds “We live in an age of tre-
of U.S. colleges lost money mendous volatility,” Bill Jar-
on their investments last vis, executive director of
year, continuing a down- the Commonfund Institute,
ward slide that threatens said in a telephone con-
to put a pinch on budgets, ference with reporters on
according to a new study. Monday. Some of the na-
Among 800 schools includ- tion’s wealthiest universities
ed in the study, the aver- were hit hardest last year.
age endowment shrank Harvard University’s $34 bil-
by almost 2 percent, the lion endowment remained
worst performance since the largest but fell by 5 per-
the economic recession in cent, the study found. The
2009. The annual study is value of Columbia Univer-
done by the National Asso- sity’s endowment fell by 6.2
ciation of College and Uni- percent, to $9 billion. The
versity Business Officers and University of Chicago’s fell
the Commonfund Institute, 7 percent, to $7 billion.
a Connecticut investment Yale University stayed at
firm. In contrast to college No. 2 behind Harvard, with
endowments, the Standard a $25 billion endowment,
& Poor’s 500 index, a broad followed by the University
measurement of the stock of Texas system, with $24
market, ended 2016 with a billion. Both held about
gain of 9.5 percent. even since the year before.
Many colleges invested In general, wealthier
heavily in stocks outside schools invest more so-
the U.S., which performed called “alternative strat-
poorly, pulling down their egies,” including hedge
overall returns. Investments funds, which on average
in energy and natural re- led to losses. But the small-
sources also led to losses. est investments, which rely
It was the second year in a on traditional types of in-
row that colleges saw their vestments such as bonds,
returns decrease, follow- performed better. For en-
ing two previous years of dowments smaller than $25