Key Takeaways
- • Harvard University topped U.S. News's 2024 rankings of the largest college endowment funds at $50.9 billion, according to U.S. News data collected alongside its college rankings.
- • Endowments are designed as a continuous source of revenue for schools, with payouts typically restricted to a set percentage per year, reducing reliance on tuition and fees, according to Paul Friga of UNC Kenan-Flagler Business School.
- • Fundraising from alumni and aggressive investing are the leading drivers of large endowments, according to Bruce Kimball of Ohio State University.
- • Wealthier schools gain a compounding advantage, as affluent alumni give more and more often, and the largest endowments remain concentrated among a small number of institutions.
- • Endowment strategies have evolved from alumni fundraising in the early 20th century to private equity and venture capital allocations that emerged as mainstays in the 1990s, carrying high risk and high reward.
Summary
U.S. News & World Report, which annually collects endowment data in coordination with its college rankings, reports that endowment funds range from several thousand dollars to tens of billions. In the 2024 rankings, Harvard University led with $50.9 billion, a sum the publication notes exceeds the gross domestic product of many countries, including Sudan.
An endowment is a pool of financial assets, including stocks, real estate, and private donations, that a school can draw on to cover costs while aiming to grow the fund over time. Andrew Gillen, a senior policy analyst at the Texas Public Policy Foundation, describes it as a "super-charged rainy-day fund" under the control of the university or a closely related group. Endowment funds are distinct from tuition revenue, which covers day-to-day expenses such as utilities and salaries.
The core contributors are alumni and others who support the institution's mission. Vassar College's endowment, for example, originated with a bequest from founder Matthew Vassar and now exceeds $1 billion, according to Bryan Swarthout, the college's vice president for finance and administration. State governments sometimes contribute as well, according to Gillen.
According to Paul Friga of the UNC Kenan-Flagler Business School, payouts are typically capped at a set percentage annually, providing schools with stable revenue and reducing dependence on tuition. Funds typically support financial aid, research, faculty professorships, and strategic initiatives. Large endowments can also reduce the need for taxpayer support at public schools, according to Friga.
Bruce Kimball of Ohio State University attributes the growth of large endowments to fundraising and aggressive investing. Harvard, which dates its U.S. endowment to 1636, and Yale were early adopters of organized alumni fundraising. Kimball notes that investment strategies evolved from the 60/40 portfolio approach in the 1950s to total return investing in the 1970s and private equity and venture capital in the 1990s. Sarah Iler of UNC School of the Arts observes that wealthier schools attract more frequent giving and spend less per dollar raised. Of the top 15 U.S. endowments, according to U.S. News data, a third are Ivy League institutions. Kimball characterizes current private equity and venture capital strategies as high risk and high reward, and notes that wealth concentration among a few schools draws social criticism.
An endowment is a pool of financial assets, including stocks, real estate, and private donations, that a school can draw on to cover costs while aiming to grow the fund over time. Andrew Gillen, a senior policy analyst at the Texas Public Policy Foundation, describes it as a "super-charged rainy-day fund" under the control of the university or a closely related group. Endowment funds are distinct from tuition revenue, which covers day-to-day expenses such as utilities and salaries.
The core contributors are alumni and others who support the institution's mission. Vassar College's endowment, for example, originated with a bequest from founder Matthew Vassar and now exceeds $1 billion, according to Bryan Swarthout, the college's vice president for finance and administration. State governments sometimes contribute as well, according to Gillen.
According to Paul Friga of the UNC Kenan-Flagler Business School, payouts are typically capped at a set percentage annually, providing schools with stable revenue and reducing dependence on tuition. Funds typically support financial aid, research, faculty professorships, and strategic initiatives. Large endowments can also reduce the need for taxpayer support at public schools, according to Friga.
Bruce Kimball of Ohio State University attributes the growth of large endowments to fundraising and aggressive investing. Harvard, which dates its U.S. endowment to 1636, and Yale were early adopters of organized alumni fundraising. Kimball notes that investment strategies evolved from the 60/40 portfolio approach in the 1950s to total return investing in the 1970s and private equity and venture capital in the 1990s. Sarah Iler of UNC School of the Arts observes that wealthier schools attract more frequent giving and spend less per dollar raised. Of the top 15 U.S. endowments, according to U.S. News data, a third are Ivy League institutions. Kimball characterizes current private equity and venture capital strategies as high risk and high reward, and notes that wealth concentration among a few schools draws social criticism.
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