Northwestern’s endowment — the chief source of funds for major university expenditures — soared in 2004 for a second straight year, swelling to an all-time high of $3.7 billion as of Aug. 31, according to NU’s chief investment officer.
The jump was fueled by returns on NU’s investments, primarily in real assets — real estate, energy and timber — and in international markets, said William McLean, vice president and chief investment officer. NU’s private investments also experienced strong growth.
“It was a good year,” McLean said.
NU’s endowment grew by 16.7 percent — almost double last year’s 8.1 percent increase. In the past five years, NU’s endowment has grown by a rough average of 7.2 percent per year.
This year’s growth makes NU’s endowment the sixth-strongest performing fund in the past fiscal year when compared to the top 30 endowments at colleges and universities across the country, McLean said.
The growth also makes NU’s endowment the 13th-largest among all educational institutions, just behind Washington University in St. Louis and just ahead of the University of Chicago. Among private institutions, NU has the 10th-largest endowment. Harvard University leads the pack with a $22.1 billion endowment, dwarfing second-place Yale University, which has a $12.7 billion.
In a 2003 survey of university endowments conducted by the Council for Aid to Education, NU’s endowment size ranked 12th.
One noteworthy money-maker involved NU striking oil — literally. Roughly $90 million entered the endowment this year after NU sold its assets in a London-based energy company that discovered oil in the North Sea in 2001, McLean said. That investment yielded more than a 200 percent rate of return.
A university’s endowment is the sum of its financial investments and serves as its economic foundation. Endowment money funds everything from financial aid to new buildings to additional investments.
The endowment growth is good news for NU, said Eugene Sunshine, senior vice president for business and finance. But the single jump alone means little for NU. Only if the endowment continued to grow at such a robust pace would NU’s financial standing be affected.
Sunshine said he is optimistic that NU will continue to see high returns in the coming years, “but no one has a crystal ball.”
“In and of itself, one good year does not materially impact the university’s financial situation,” Sunshine said. “You need to look at the long haul to get a perspective on things.”
College endowments across the country likely grew in the past fiscal year, said Ann Kaplan, director of the Voluntary Support of Education survey at the Council for Aid to Education.
The New York-based Council for Aid to Education publishes a yearly compilation of college and university financial figures, including endowment. The 2004 publication has not been released, Kaplan said, but “just looking at economic indicators you’d think there was a small increase.”
Reach Dan Strumpf at [email protected].
Where NU falls in endowment race
Harvard $22,143,649
Princeton (as of Mar. 31, 2004) $9,585,700
University of Michigan $4,163,382
NU $3,668,405
University of Chicago $3,620,728
Source: CAMBRIDGE ASSOCIATES/June 30, 2004
