The 2020 NACUBO-TIAA Study of Endowments,[1] covering July 1, 2019-June 30, 2020, was recently released. The study gathers data from 705 U.S. colleges and universities regarding investment management. In this piece we highlight the key findings.

Spending Rates and Distributions

  • The institutions reported an average effective spending rate of 4.59%, increasing from 4.36% in the prior year. It is important to note that this was against a backdrop of the average long-term return objective increasing slightly to 7.1%.
  • This year, it was reported that participating institutions used 48% of total endowment withdrawals to support student financial aid programs, 17% to academic programs, 11% to endowment faculty positions, 7% to operation and maintenance of campus facilities and 16% to “all other purposes.”
  • Total distributions from endowments in the study were up 4% year over year to over $23.3 billion. Only 9.5% of responding institutions reported changing their spending policy, and, of those, 16% cited “increasing spending to cover the impact of Covid-19,” 37% “increased for other reasons” and 47% “decreased for other reasons.”

Endowment Returns

  • The report noted that the participating endowments returned an average of 1.82% (net of fees) for fiscal year 2020 (FY2020, 7/1/19 – 6/30/20). The report cites that, coupled with the 5.3% return reported for fiscal year 2019 and some of the poor returns from 2008-2009 previously falling off the timeframe measured, decreased the 10-year average annual return to 7.48% (from last year’s 8.4%).
  • It is important to note this is above the long-term return objective reported this year at 7.1%. This is only the second time the 10-year annualized return has been above the long-term return objective in the previous decade.

Asset Class Return Breakdown

The report lists U.S. equities and investment grade active fixed income as the top performers at an average of 4.04% and 3.85%, respectively. Private energy and energy infrastructure, marketable real assets and non-U.S. equities were cited as a drag on performance in FY2020, causing portfolios with higher exposures to underperform relative to their peers.

Asset Allocation Trends

The report notes that the allocation to alternative assets correlated positively to the size of the endowment, with institutions above $1 billion in assets having the most exposure and institutions below $25 million having the least exposure; conversely, fixed income and U.S. equities were prominent in the below $25 million institutions (average of 30.9% and 42.4%, respectively) relative to those above $1 billion (average of 11.0% and 10.0%, respectively).

About Us

The Endowment & Foundation National Practice Group builds on our long-standing commitment to philanthropy and is focused on endowments, private and public foundations, and nonprofit organizations. We seek to help   these organizations address their distinct investment, distribution and capital preservation challenges.

For more information, contact Henri Cancio-Fitzgerald at