A Closer Look at Community Colleges

April 7, 2025 |
3 minute read
|
A Closer Look at Community Colleges
6:20

Earlier this year, Commonfund, in partnership with the National Association of College and University Business Officers (NACUBO), released the 2024 NACUBO-Commonfund Study of Endowments (NCSE). The Study examines investment performance, governance and management practices at hundreds of U.S. higher education endowments and related foundations over the July 1, 2023 – June 30, 2024 fiscal year (FY2024).

Following the release of the FY2024 study, Commonfund did a deep dive into results from the 19 participating community colleges. Below is a comparative analysis of these institutions and the 658 total respondents from the full NCSE report. Note: Additional types of schools surveyed in the full report are private colleges and universities, public colleges and universities, institutionally-related foundations (IRFs) and combined endowment/foundations. Detailed analysis of these is included in the full report.

Community colleges accounted for $655.0 million of the reported $873.7 billion in assets represented in the full FY2024 Study, with an average endowment size of $34.5 million vs. $1.3 billion respectively.  

THE TOP-LINE RESULTS

Performance

Returns for all time horizons reported in the Study were positive across both groups for all institution sizes. The 19 community colleges participating in this year’s Study reported a 13.1 percent average 1-yr. return vs. 11.2 percent for the total NCSE respondent’s cohort. Three-, five- and 10-year average returns for community colleges were reported as 3.7, 8.0 and 7.2 percent, respectively, vs. 3.4, 8.3 and 6.8 percent for total NCSE respondents over the same time periods. Note: There was not enough data to report longer-term returns for the community college group. 

Asset Allocation

The 19 community colleges participating in FY2024 reported an overweight to U.S. equities more than three times that of the NCSE total respondents (45.4 percent vs. 13.0 percent). Other areas where community colleges had a significant overweight to asset classes were non-U.S. equities (10.3 percent vs. 5.6 percent) and fixed income (26.0 percent vs. 10.2 percent). Notable underweights, compared to total NCSE respondents, were reported by community colleges in marketable alternatives (4.2 percent vs. 16.1 percent), private equity (2.4 percent vs. 17.1 percent), private venture capital (0.9 percent vs. 11.7 percent) and real assets (3.2 percent vs. 10.8 percent).

Spending

Community colleges reported an annual effective spending rate of 3.7 percent, falling from the 4.5 percent reported for this cohort in last year’s Study. This compares with 4.8 percent for total NCSE respondents, up from 4.7 percent last year. Looking at spending policy, the most frequently reported spending methodology being used is a percentage of a moving average, 63.2 percent of community colleges reported using this method to determine their annual spending, while 76.3 percent of total NCSE respondents did so. The next most frequently used spending methodology for community colleges was deciding on an appropriate rate each year, reported by 15.8 percent of these institutions, whereas the second most used spending methodology for total NCSE respondents was the weighted-average or hybrid method, with 10.1 percent of institutions reporting using that method. Many schools indicated “Other” for their spending methodology – 21.1 percent of community colleges and 11.6 percent of total NCSE respondents.

Gifts

FY2024 marked a noteworthy increase in average new gifts to endowment reported by total Study participants. Total gifts to the 658 NCSE respondents in FY2024 were $15.0 billion, up from $12.0 billion reported for FY2023. However, community colleges saw average gifts fall, from $1.6 million in FY2023 to $0.7 million in FY2024. This compares with $24.4 million average gifts for total NCSE respondents. Further, as it typically is, the median gift size was below that of the average ($0.5 million for community colleges vs. $5.0 million for total NCSE respondents)—a sign that a few outlying institutions received exceptionally large gifts over the course of the fiscal year. 

Operating Budget Support

A plurality of total respondents to the FY2024 NCSE reported an increase in funding of the operating budget from the endowment – 41.9 percent, while 38.4 percent reported they decreased their support to the operating budget. Community colleges reported that an average of 16.7 percent of operating budgets were funded from their endowments, comprising a wide range from 0.0 percent to 75.0 percent, compared with total NCSE respondents that reported an average of 14.0 percent. Median values were 1.0 percent vs. 6.1 percent for the community college cohort vs. total respondents. 

Responsible Investing Practices

While the adoption of various responsible investing practices has grown in recent years – 37.5 percent of total NCSE respondents reported instituting responsible investing practices at their institution – that figure is only 6.6 percent at community colleges. This data indicates a leveling off of the incremental increases reported in the past several studies. While data reported by community colleges is limited at this time, we will continue to survey and monitor this segment of the nonprofit sector over the coming studies.

We hope these top-line insights will serve as a guidepost for your own analysis into these important topics and we encourage you to read the Study in its entirety to best evaluate your performance vs. your benchmark or peers. If you are interested in participating, please contact us here.  

 

 

Amanda Novello

Author

Amanda Novello

Senior Policy and Research Analyst

Disclaimer

Certain information contained herein has been obtained from or is based on third-party sources and, although believed to be reliable, has not been independently verified. Such information is as of the date indicated, if indicated, may not be complete, is subject to change and has not necessarily been updated. No representation or warranty, express or implied, is or will be given by The Common Fund for Nonprofit Organizations, any of its affiliates or any of its or their affiliates, trustees, directors, officers, employees or advisers (collectively referred to herein as “Commonfund”) or any other person as to the accuracy or completeness of the information in any third-party materials. Accordingly, Commonfund shall not be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in, or omission from, such third-party materials, and any such liability is expressly disclaimed.

All rights to the trademarks, copyrights, logos and other intellectual property listed herein belong to their respective owners and the use of such logos hereof does not imply an affiliation with, or endorsement by, the owners of such trademarks, copyrights, logos and other intellectual property.

To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated herein. Forecasts of experts inevitably differ. Views attributed to third-parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Market and investment views of third-parties presented herein do not necessarily reflect the views of Commonfund, any manager retained by Commonfund to manage any investments for Commonfund (each, a “Manager”) or any fund managed by any Commonfund entity (each, a “Fund”). Accordingly, the views presented herein may not be relied upon as an indication of trading intent on behalf of Commonfund, any Manager or any Fund.

Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Fund. Such statements are also not intended as recommendations by any Commonfund entity or any Commonfund employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information or statements. Past performance is not indicative of future results. For more information please refer to Important Disclosures.

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Disclaimer

Certain information contained herein has been obtained from or is based on third-party sources and, although believed to be reliable, has not been independently verified. Such information is as of the date indicated, if indicated, may not be complete, is subject to change and has not necessarily been updated. No representation or warranty, express or implied, is or will be given by The Common Fund for Nonprofit Organizations, any of its affiliates or any of its or their affiliates, trustees, directors, officers, employees or advisers (collectively referred to herein as “Commonfund”) or any other person as to the accuracy or completeness of the information in any third-party materials. Accordingly, Commonfund shall not be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in, or omission from, such third-party materials, and any such liability is expressly disclaimed.

All rights to the trademarks, copyrights, logos and other intellectual property listed herein belong to their respective owners and the use of such logos hereof does not imply an affiliation with, or endorsement by, the owners of such trademarks, copyrights, logos and other intellectual property.

To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated herein. Forecasts of experts inevitably differ. Views attributed to third-parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Market and investment views of third-parties presented herein do not necessarily reflect the views of Commonfund, any manager retained by Commonfund to manage any investments for Commonfund (each, a “Manager”) or any fund managed by any Commonfund entity (each, a “Fund”). Accordingly, the views presented herein may not be relied upon as an indication of trading intent on behalf of Commonfund, any Manager or any Fund.

Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Fund. Such statements are also not intended as recommendations by any Commonfund entity or any Commonfund employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information or statements. Past performance is not indicative of future results. For more information please refer to Important Disclosures.