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, or, the “Study”). 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 institutions that are less often in the spotlight: those with fewer than $250 million in endowed assets, which made up more than half of the study’s total participants. In the full Study, the cohorts are divided between those with fewer than $50 million, $51 to $100 million, and $101 to $250 million. Below, we break these cohorts down into even smaller size cohorts, providing more niche analysis of top-line results, and demonstrating the importance of participation across the endowment size spectrum. Note: Additional analysis across size cohorts and types of schools is included in the full report.
THE TOP-LINE RESULTS
Asset Size
In total, there were 335 institutions that participated in the Study with less than $250 million in endowed assets, representing 51 percent of the 658 total institutions that participated. For this analysis, cohorts with assets under $100 million are segmented into increments of $25 million, and those with over $101 million are segmented by increments of $50 million.
1-Year Returns
Trends in 1-year net annualized returns in fiscal 2024 reflect trends in the broader Study: institutions in the smallest size cohort outperformed the largest, on average. Those with assets under $25 million reported a 14.49 percent average return, while those with assets between $201 and $250 million reported 10.65 percent on average. The other size cohorts’ average 1-year returns ranged from 10.90 to 12.29 percent.
10-Year Returns
In many years of the Study, larger institutions reported stronger long-term returns compared with smaller institutions. However, this year’s strong 1-year returns contributed to this trend being muted, if not reversed in some instances. Ten-year returns across cohort sizes ranged from 6.21 percent for those with assets between $101 and $150 million, to 6.53 percent for those under $25 million – with no definitive correlation between size and performance.
Asset Allocation
Asset allocation among these size cohorts also tends to mirror trends in the broader report. The most apparent finding is the negative correlation between endowment size and allocation to Publicly-traded Equities: smaller institutions tend to over-weight this asset class relative to peers with larger endowments, on average. The other trend that holds true is that larger cohorts typically have a greater allocation to Alternative strategies2 relative to smaller cohorts, on average – most commonly due to larger institutions’ ability to take on illiquidity, and the availability of resources to effectively manage an alternatives portfolio.
Spending
Effective spending rates1 among these cohorts ranged from 4.6 percent for those under $25 million and between $200 and $250 million in endowed assets, and 5.2 percent for those between $51 and $75 million. But what was that spending for?
The smallest institutions reported that they spent more than two-thirds of their total endowment distributions on financial aid – a critical factor in student enrollment – compared with less than half of total distributions for the largest group, on average. The share of total endowment spending for financial aid declines with endowment size, while the share contributing to academic programs, research, and faculty, rise as endowment size increases, on average.
We hope these 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.
We also strive to continuously improve data quality and its value to your institution by boosting participation. If you are a higher education institution and interested in participating in the 2025 NACUBO-Commonfund Study of Endowments, please email ncse@nacubo.org to find out how you can be a part of this year’s research.
- We define effective spending rate as the dollar amount withdrawn from the endowment to support the institution’s mission divided by the beginning market value (endowment value on or around the beginning of the fiscal year), net of any fees or expenses for managing and administering the endowment.
- An illiquid portfolio consisting of private assets such as private equity, venture capital, marketable alternatives, private real assets, and private debt.
