University endowments are upping their spending as alumni donations have fallen significantly, according to the latest NACUBO-Commonfund Study of Endowments. Still, during a turbulent and combative year, returns were overall strong.
Amid federal pressure and grant withdrawals, U.S. colleges and universities withdrew $33.4 billion from their endowments during fiscal year 2025, an 11 percent year-over-year increase and up more than 17 percent over the past two years. And while returns were strong, new gifts declined 9.2 percent to nearly $14 billion from FY24’s $15.4 billion. Institutions with assets under $50 million reported a significantly steeper average decline of 26.5 percent.
Participants in this year’s study reported an average annual return of 10.9 percent for FY25, down slightly from last year’s 11.2 percent. Meanwhile, the 10-year return was 7.7 percent, up from 6.8 percent last year.
Across all study respondents, the highest return, 11.8 percent, was reported by institutions with assets over $5 billion; the lowest, 10.5 percent, was reported by those with assets between $101 and $250 million. (All returns are reported net of fees.)
The highest annual returns came from global equities and developed non-U.S. markets — each delivering returns of about 17 percent. No single allocation produced a negative return in FY25.
Five-year returns also rose to 10.2 percent from 8.3 percent. Performance was strong across asset classes and strategies. U.S., non-U.S., global equities, and emerging markets posted the best gains, with private strategies not far behind. Fixed income also delivered its strongest returns in years.
Institutionally related foundations (separate 501(c)(3) nonprofits connected to the school) and combined endowment/foundations each reported average returns of 11.1 percent, while public colleges and universities reported a 10.9 percent average and private institutions reported 10.8 percent.
Measured on a dollar-weighted basis, how allocators diversified portfolios across asset classes and strategies did not reflect material changes from year to year.
The 657 institutions in this year’s study represented a total of $944.3 billion in endowment assets. The median endowment was $253.6 million, and more than one-quarter of study participants had endowments that were $100 million or less.
William Jarvis, the former managing editor of the study and now a senior leader in Bank of America Private Bank’s Philanthropic Solutions team, explained over video on Thursday that there are two circumstances playing out in 2025 that are a readjustment from previous years. The first is that there’s “more of an IPO market and more of an M&A market now than there was a couple of years ago.” The second is that “there’s a broadening of markets from tech stocks.”
Amid a weakening dollar, companies with strong cashflow, stocks aligned to the U.S. consumer sector, European defense stocks, or Japan, will benefit, Jarvis added.
