In the 2024 NACUBO-Commonfund Study of Endowments, a new area of inquiry was asked to participating institutions to identify their top two concerns from an inclusive list of 20 alternatives from which to select. Respondents were asked to select their top two without ranking them; the responses are equal-weighted. Consistent with data gathering throughout the Study, responses were sorted three ways: by total respondents, then segmented into seven size cohorts and four institutional types.
Overall Responses
The number one concern, cited by 23.2 percent of respondents, was student enrollment. That concern was singled out by respondents at nearly twice the rate of the number two concern, fundraising, selected by 12.0 percent of respondents in the FY24 study of endowments.
Beyond those, number three was increases in student aid/student scholarship expenses (chosen by 10.8 percent) and close behind at number four was not meeting targeted returns (10.5 percent). Number five was long-term volatility in financial markets (8.4 percent) and number six was inflation (8.2 percent). After that came special withdrawals due to college or university budgetary pressures (5.8 percent). Next were two closely related investment concerns: liquidity (4.7 percent) and asset allocation to alternatives/illiquid investments (4.5 percent).
When the data are parsed by endowment size, student enrollment stays the number one concern for institutions in five cohorts. It was not the leading concern for the two largest size cohorts; in fact, among the largest institutions none cited this concern and only 7.3 percent of the second-largest cohort did so. For endowments with assets over $5 billion, the number one concern was liquidity, while for institutions with assets between $1 billion and $5 billion it was not meeting target returns.
| Total Institutions | UNDER $50M | $51M - $100M | $101M - $250M | $251M - $500M | $501M - $1B | $1B - $5B | OVER $5B | |
| TOTAL INSTITUTIONS | 658 | 82 | 104 | 149 | 108 | 71 | 115 | 29 |
| RESPONDED INSTITUTIONS | 551 | 75 | 95 | 127 | 99 | 66 | 76 | 13 |
| Student enrollment | 23.2 | 28.2 | 29.1 | 28.2 | 25.9 | 17.7 | 7.3 | 0.0 |
| Fundraising | 12.0 | 20.8 | 11.1 | 10.7 | 12.2 | 10.8 | 8.7 | 4.0 |
| Increases in student financial aid/student scholarship expenses | 10.8 | 3.4 | 14.3 | 13.1 | 14.2 | 13.1 | 5.3 | 0.0 |
| Not meeting target returns | 10.5 | 3.4 | 5.8 | 9.9 | 11.2 | 15.4 | 19.3 | 12.0 |
| Long-term volatility in the financial markets | 8.4 | 11.4 | 9.0 | 7.9 | 6.1 | 9.2 | 8.0 | 8.0 |
| Inflation | 8.2 | 10.1 | 9.0 | 6.0 | 7.1 | 4.6 | 13.3 | 12.0 |
| Special withdrawals due to college or university budgetary pressures | 5.8 | 5.4 | 6.3 | 7.5 | 5.6 | 5.4 | 2.0 | 12.0 |
| Liquidity concerns | 4.7 | 2.7 | 3.2 | 5.2 | 4.1 | 3.1 | 8.0 | 16.0 |
| Asset allocation to alternatives/illiquid investments | 4.5 | 2.7 | 3.2 | 1.6 | 4.1 | 8.5 | 8.7 | 12.0 |
| Potential impacts of the elections and changes in higher education policy | 3.8 | 3.4 | 3.2 | 3.6 | 2.5 | 3.8 | 6.7 | 4.0 |
| Changes to spending policy | 1.8 | 3.4 | 1.6 | 1.2 | 2.0 | 1.5 | 2.0 | 0.0 |
| Investment management fees | 1.4 | 0.7 | 0 | 1.6 | 1.5 | 1.5 | 3.3 | 0.0 |
| Considering a change from active to passive or passive to active | 1.3 | 0.7 | 2.1 | 0.8 | 1.0 | 0.8 | 2.0 | 4.0 |
| Changes to board/investment committee membership | 1.0 | 1.3 | 0.5 | 0.4 | 0.0 | 1.5 | 2.0 | 8.0 |
| Impact Investing considerations | 0.7 | 1.3 | 0.0 | 1.6 | 0.5 | 0.8 | 0.0 | 0.0 |
| Negative screening/ESG considerations | 0.4 | 0.0 | 0.5 | 0.4 | 0.0 | 0.8 | 0.7 | 0.0 |
| Donors requesting changes to existing gift agreements | 0.4 | 0.7 | 0.5 | 0.4 | 0.0 | 0.8 | 0.0 | 0.0 |
| Advancing DEI efforts across the institution/portfolio | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.7 | 4.0 |
| Other | 1.0 | 0.7 | 0.5 | 0.0 | 2.0 | 0.8 | 2.0 | 4.0 |
| numbers in percent (%) | ||||||||
The number two concern for all respondents, fundraising, was consistently cited but was not the number one concern for any size category and was number two only for institutions with assets under $50 million. The number three concern overall, increases in student aid/student scholarship expenses, was number two for three size cohorts (and, like student enrollment, not a concern for any institution with assets over $5 billion).
Generally, three areas were of least concern: donors requesting changes to existing gift agreements, changes to board/investment committee membership and considering a change from active to passive or passive to active.
Top Concerns by Institution Type
Viewing the data by institution type, two cohorts identified not meeting target returns as their number one concern: 23.9 percent of combined endowment/foundations and 15.7 percent of public institutions. Fundraising, at 15.0 percent, was a close second for publics but it was concern number one for IRFs, at 17.7 percent. The number one concern for private institutions, selected by 30.7percent, was student enrollment.
Behind student enrollment for private institutions was increases in student financial aid/student scholarship expenses, selected by 15.3 percent of this cohort. After that, all in the 6 percent range, were: not meeting target returns, inflation, liquidity and asset allocation to alternatives/illiquid. Other frequently cited concerns were long-term volatility in the financial markets and aforementioned liquidity concerns.
Inflation: Lower … but Bears Watching?
It was somewhat surprising that inflation was not singled out by greater numbers of respondents given that it was a headliner when it came to economic news over the past three years, not to mention its direct challenge to the operations of educational institutions. That is not to say it was passed over: It ranked sixth among the most frequently cited concerns by all respondents. It was second among institutions with assets between $1 billion and $5 billion and tied for second among institutions with assets over $5 billion. It was the third leading concern for public institutions and combined endowment/foundations and missed by 0.2 percentage points from being third for private institutions. Inflation has eased over the past 12 months, perhaps taking some of the edge off it as a top concern in higher education.
