College and University Endowment Returns Fell in 2022, Reflecting ‘Turbulent’ Year With Surging Inflation

By Maria Carrasco, NASFAA Staff Reporter

Despite the fact that endowment returns dropped in fiscal year 2022, colleges and universities reported more endowment spending than the previous year, with the largest percentage of spending supporting student financial aid, according to a new report from the National Association of College and University Business Officers (NACUBO). 

The report from NACUBO and TIAA, a financial services company, surveyed 678 colleges, universities, and education-related foundations with $807 billion of total endowment assets, which is about a 4% decline from fiscal year 2021. The report covers the fiscal year of July 1, 2021 through June 30, 2022.

NACUBO notes that more than half of participating endowments had less than $250 million, but out of the total market value, 84% was held by endowments with more than $1 billion in assets. That wide variation in endowment size was reflected in the average and median endowment size, at $1.2 billion and $203.4 million, respectively.

In FY 2022, endowments generated an average return of -8% overall, down from FY 2021’s rate of 30.6%. NACUBO notes the “dramatic reversal” reflects that the second half of FY 2022 “included robust tightening efforts by central banks to combat surging inflation, along with significant geopolitical disruptions.”

Negative endowment returns also affected institutions’ long-term performance metrics. Five-year returns for FY 2022 averaged to 7.3%, and 10-year returns averaged to 7.8%. That’s compared to FY 2021’s metrics, which were 11.4% and 8.5%, respectively.

“For several years, many market commentators predicted that markets were entering a period of lower expected returns, against the backdrop of a decade-long bull run in equity markets and declining interest rates that pushed bond prices higher,” Jill Popovich, senior managing director and regional general manager at TIAA, said in a statement. “FY22 may represent an abrupt entry into this long-anticipated low-return environment, with fundamental portfolio design and management implications for endowments.”

NACUBO notes that although there was a negative rate for endowment returns, the overall decrease would have been significantly larger if not for the surge in gifting in FY 2022. 

Institutions received a total of $14.5 billion in gifts, a 22% increase from the $11.9 billion received in FY 2021. Nearly two-thirds of institutions reported that at least some level of gifting was specifically tagged to diversity, equity, and inclusion initiatives, and of that group, 64% were small- to mid-sized institutions with endowments of $250 million or below.

Additionally, while institutions are reporting drops in endowment returns, they’re also spending more, especially when it comes to student financial aid. Institutions reported spending a total of $25.85 billion from their endowments in FY 2022, about $2 billion more than what respondents reported in FY 2021’s survey.

Nearly half of the $25.85 billion, 46%, went toward student financial aid. Another 15.6% went to academic programs and research, 11% went to endowed faculty positions, 10% went to campus operations and maintenance, and 17% went to all other purposes. 

“Even in a difficult year, colleges and universities used their endowments for student- and mission-focused support, including student financial aid,” Lynne Schaefer, interim president and CEO of NACUBO, said in a statement. “Endowments serve as a source of reliable and relatively steady revenue that higher education institutions and students can count on, regardless of market conditions.”


Publication Date: 2/21/2023

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.

Related Content

Annual Business Meeting and Policy Update


Federal Work Study


View Desktop Version