The eight Ivy League endowments averaged 8.3% return in fiscal yr 2023-24 (July 1, 2023, to June 30, 2024). Comparable colleges like Stanford and MIT returned 8.4% and eight.9% respectively. In sharp distinction, the S&P 500 gained 23.5% for a similar interval, virtually triple the Ivies.
To make issues worse, universities allocate tens of thousands and thousands of {dollars} from their normal revenues to their fund managers. Take Stanford, for instance. Its monetary property are managed by the Stanford Administration Firm. For the present 2024/25 fiscal yr, the Provost allotted $56.7 million to SMC. Through the years these allocations have amounted to lots of of thousands and thousands. Its head earns over $5 million a yr. The workers numbers 59 individuals, employed to satisfy the College’s Variety, Fairness, and Inclusion necessities. Its investments should additionally fulfill the College’s environmental issues.
What about long-term comparisons for common annual returns?
Time SMC S&P 500
5 years 9.9% 11.3%
10 years 8.6% 15.2%
20 years 9.3% 10.5%
Why the distinction? SMC invests in non-public fairness, actual property, and bonds, with a a lot smaller share in publicly listed equities. It should additionally take DEI and Environmental issues under consideration. Like generals preventing the earlier struggle, fund managers make investments on the previous mannequin.
Boards of Trustees have oversight on their endowment managers, normally delegated to Committees on Finance and Funding. Over a 3rd of Stanford Trustees are within the cash administration enterprise. One would suppose that modifications must be made amongst endowment fund managers when their budgets of tens of thousands and thousands of {dollars} lead to returns that pale in efficiency towards the S&P 500 . In any case, each college claims that it must be accountable stewards of their donors items.
Blunting any change is the truth that serving as a Trustee of one of many nice universities on this planet conveys monumental status within the philanthropic world. What most Trustees need is their title on a constructing, on a number of endowed professorships, and on analysis facilities and institutes. At Stanford, for instance, a 3rd of all professorships are named (endowed) and most buildings on campus are named. Barring a monetary shock just like the 2008-09 Nice Recession or a significant scandal, Trustees typically depart the administration of their universities to their Presidents, Provosts, Deans, and schools. The Ivies, Stanford, and MIT are blessed with fabulously rich alumni who’re more likely to donate contemporary cash yearly.
