U.S. university endowments reported stable returns in fiscal year 2025, with an average annual return of 10.9 percent for the 657 institutions participating in the NACUBO-Commonfund Study of Endowments (NCSE). This was a slight decrease from the 11.2 percent return in FY24 but marked the third consecutive year of double-digit gains. The strong performance was largely attributed to robust public equity markets, particularly large-cap technology and AI companies, and a rebounding bond market, despite a contracting GDP. Non-U.S. equities also outperformed U.S. equities for the first time in several years.
Despite overall stable returns, endowment size did not consistently correlate with performance in FY25, a shift from historical trends. While the largest endowments (over $5 billion) saw the highest average return at 11.8 percent, smaller funds performed roughly in line with median mega endowments. For instance, the University of Wisconsin-Madison, with an endowment of $4.9 billion, was a top performer among institutions tracked by NEPC, achieving a 16.2 percent return due to a heavy equity allocation and effective stock selection. The median mega endowment returned 11.3 percent.
Institutions increased spending from their endowments, withdrawing a total of $33.4 billion in FY25, an 11.0 percent increase from the previous year. The primary allocation of this spending was 47.4 percent towards student financial aid, followed by 17.7 percent for academic programs and research. This increased reliance on endowments highlighted their crucial role in stabilizing operations and supporting institutional missions, particularly amid economic challenges. However, new donations to endowments declined by 9.2 percent to just under $14.0 billion from FY24's $15.4 billion, with smaller institutions experiencing steeper declines.
Among the wealthiest institutions, Harvard University remained the nation's wealthiest with an endowment of $55.6 billion, followed by Yale at $44.1 billion, and Stanford at $40.7 billion. MIT saw the largest year-over-year increase among mega-wealthy institutions, with its endowment growing 11.4 percent from $24.6 billion to $27.4 billion. Overall, the 657 institutions in the study represented a total of $944.3 billion in endowment assets, with the median endowment valued at $253.6 million. These results demonstrate the continued importance of well-managed endowments in supporting higher education.
