Endowments are trust funds that support teaching, research and community services of colleges, universities. Foundations are formed from charitable donations - monetary or financial assets.
Endowments have a special legal structure designed to preserve the investment pool indefinitely for specific purposes. Typically, endowment funds follow a strict set of long-term principles that dictate asset allocation and return without much risk.
Five largest university foundations
The five largest university funds are owned by Harvard University, the University of Texas system, Yale University, Stanford University and Princeton University. Each owns more than $ 25 billion in assets.
This data comes from the National Association of College and University Leaders, the TIAA asset management company, which collected data from 774 colleges, universities and their subsidiaries. Together, the assets of 4 universities amounted to $ 630 billion. But while the top endowments are in the billions of dollars, the average fund is about $ 144.4 million.
University endowments are aimed at making a profit from assets, which can then be spent on priority areas of development - research, salaries, financial assistance.
Harvard University
- Fund volume - $ 40.9 billion
Harvard has the largest foundation in the world (at the end of 2019). The Harvard Endowment Fund is made up of over 13,000 divisions created over the past 350 years. In 2019, the foundation donated $ 1.9 billion to the university, representing 35% of its annual income. The Harvard Management Company has controlled the university's endowment since 1974. About 33% of assets were transferred to hedge funds, which provided a return of 5.5%. The share of public shares accounts for 26%, brings 5.9% of profitability, the share of direct investments accounts for 20%, they bring 16%.
University of Texas at Austin
- The size of the donation fund is $ 30.1 billion.
The University of Texas investment firm A&M supports University of Texas A&M and small schools, channeling revenues to medical research, health education, public health, nursing, and treatment programs.
Yale University
- The volume of the fund is $ 30.3 billion.
The fund allocated $ 1.4 billion to the university, or about 34% of its revenues. 30% of assets - investments with a lower level of risk (cash, bonds, funds of absolute return), 21.5% of assets - venture capital, 16.5% - buyback using borrowed funds.
Stanford University
- The volume of the fund is $ 27.7 billion.
In 2019, the endowment fund allocated $ 1.3 billion to the university for 4.9% of assets. This amount was 21.8% of the total expenses of the university. The majority of donations go towards scholarships, fellowships, professorships, and other academic support.
The fund is overseen by Stanford Management Company, which manages the university's other assets. About 30% of the university's combined pool of assets goes to private equity. Absolute return funds were 20%, international equities - 20%, real estate - 8%.
Princeton University
- The volume of the fund is $ 26.1 billion.
The Princeton University Investment Company manages most of the fund. Managers earned 6.2% of the $ 25.6 billion they control. In 2019, the endowment provided the university with $ 1.4 billion. About 18% of donations go to support students, which allows the university to cover 100% of the cost of tuition, fees, accommodation, meals for students from families earning less than $ 65,000 / year. About 24.5% of students receive a Pell Grant, which is awarded based on financial need. More than 61% of undergraduates receive financial aid, and 82% can complete their studies without debt.
Endowments during a pandemic
American universities have been criticized for receiving aid due to the pandemic. Donald Trump and lawmakers have criticized high schools for taking funds while keeping billions of dollars in funds intact. Harvard, Stanford and dozens of other colleges eventually changed course after increasing pressure, stating that they would not accept incentive aid despite severe financial losses.
Endowment funds in Russia
There are currently about 100 endowment funds operating in Russia with a total volume of about 20 billion rubles.
The goal of Russian endowment funds is to prepare the material basis for the development of higher education, science, culture, and sports. The largest foundations are associated with the country's leading universities. They, like in the West, are financed by university graduates, large businessmen, employees of state corporations.
The first endowment fund in Russia was created at MGIMO: it finances about 3% of the university's expenses. The endowment of the Russian School of Economics - about 15% of the annual budget, the fund of the European University in St. Petersburg - up to 30% of the expenses of the university.
Top largest donations to universities
- Terry Gow, founder of Foxconn, donated $ 454 million in 2007 to fund the National Taiwan University Cancer Hospital .
- In 2015, Penny Knight donated $ 500 million to Oregon Health and Science University (OHSU) to fund cancer research.
- Helen Diller, wife of billionaire Sanford Diller, donated $ 500 million to the University of California, San Francisco.
- Florence Irving donated $ 600 million to Columbia University and the New York Presbyterian Church to fund cancer research on her behalf and her husband, Herbert.
- Intel co-founder Gordon Moore and his wife Betty have donated $ 600 million over 10 years to the California Institute of Technology.
- Anil Agarwal, a $ 3.5 billion Indian steel and mining tycoon, donated $ 1 billion to fund a research university in Odisha.
- The biggest gift in the history of high school - to Johns Hopkins University - was made by Michael Bloomberg: he donated $ 1.8 billion.
