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Northwestern’s endowment up 14.9%

A new study shows Northwestern University’s endowment grew by 14.9 percent last year and remained the 14th largest in the country.

The National Association of College and University Business Officers surveyed 746 schools.

It found Northwestern, with a $4.2 billion endowment at the end of its 2005 fiscal year, was just ahead of the University of Chicago, with an endowment of $4.1 billion. Chicago ranked 15th in 2004 as well.

Northwestern’s rate of endowment growth was in the middle of the pack among the top 20 schools. In that group third-ranked Stanford University did best, with a 23 percent increase, while Emory University showed the worst performance, with a 3.5 percent decline.

The endowment growth figures include the return on investment achieved on the school’s existing funds, plus new money added to the endowment, less spending from the endowment during the year.

NACUBO does not break out investment return figures for individual schools because of confidentiality agreements, but it said the average investment return for all schools surveyed was 9.3 percent last year.

It says schools typically spend 5 percent of their endowment each year, face an inflation rate of 3 percent and endowment management fees of about 1 percent, so a return of about 9 percent is needed for an endowment to be self-sustaining. Schools with larger endowments tend to achieve better investment returns than smaller ones.

Harvard University continues to have the nation’s biggest college endowment. It reached nearly $25.5 billion last year. The biggest endowment among midwestern schools is the $4.9 billion held by 10th ranked University of Michigan.

Related link:
Daily Northwestern – Study shows NU’s endowment up 15%

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