By Libby NelsonThe Daily Northwestern

Northwestern’s endowment grew 22 percent during the 2005-06 fiscal year – the third largest increase among the 50 U.S. institutions with the largest endowments, according to a report released Monday.

The annual report, issued by the National Association of College and University Business Officers, showed an increase in NU’s endowment by nearly $1 billion, from $4.2 billion in 2004-05 to $5.14 billion.

Though the numbers seem dramatic, Eugene Sunshine, NU’s vice president for business and finance, said students shouldn’t expect immediate changes to the university. Spending is not determined on a year-to-year basis, he said.

“If you just relied each year on what the preceding year’s earnings were in the endowment, you could get extraordinarily wide swings,” Sunshine said. “You can’t run a budget like that.”

The majority of the money in the endowment was donated to fund a few specific projects, which range from increasing scholarship funds to cancer research. This leaves little discretionary money for the university, Sunshine said.

NU’s 22-percent gain is more than twice the national average of 10.7 percent for the 765 institutions studied.

The report listed Harvard University as the school with the largest endowment, at $28.9 billion. NU’s endowment is now the 12th largest in the country, climbing two places from its ranking last year.

Massachusetts Institute of Technology was the only school ranked above NU to experience a greater increase, with 24.7 percent growth.

The fund is now just behind the University of Pennsylvania’s endowment and just ahead of those of Emory University, Washington University in St. Louis and the University of Chicago.

This year’s growth came mostly from returns on investments, which accounted for 17.5 percent of the fund’s increase, said Chief Investment Officer William McLean, who manages the endowment. New donations made up the other 4.5 percent.

“It was just a good year for a lot of different markets,” McLean said.

NU also spends about 4.5 percent of its endowment every year, McLean said.

The Board of Trustees determines the amount the university spends each year with a formula intended to minimize the gap between increases and decreases in the markets. The board is responsible for ensuring the university has a manageable operating budget, even in years of decline for the fund.

At some institutions, including Stanford University – which holds the nation’s third-largest endowment, at $14 billion – committees of students and faculty examine the universities’ investment choices and make recommendations.

Kyle Schafer, a McCormick senior and president of NU’s Students for Economic Justice, said he would like to see a similar committee established at NU.

“If you’re not paying attention to what’s happening, you can be complicit in all sorts of things,” Schafer said. “I think it’s really important for students and the university to recognize that we have over $4 billion. That represents a lot of resources that can be leveraged for positive social impact while still benefiting the university.”

Schafer said that NU has refused to create a permanent committee to review the endowment because the university’s stock portfolio is confidential.

This year’s increase is the third of more than 17 percent in as many years, meaning that the university’s operating budget might increase, Sunshine said.

The operating budget funds financial aid, university maintenance and salaries, he said.

Reach Libby Nelson at [email protected].

Top 20 University Endowments

Institution 2006 Endowment Percent Change

1. Harvard U. $28,915,706,000 13.5%2. Yale U. $18,030,600,000 18.4%3. Stanford U. $14,084,676,000 15.4% 4. U. of Texas System $13,234,848,000 14.0% 5. Princeton U. $13,044,900,000 16.4% 6. Mass. Inst. of Technology $8,368,066,000 24.7% 7. Columbia U. $5,937,814,000 14.4% 8. U. of California $5,733,621,000 9.8% 9. U. of Michigan $5,652,262,000 14.6% 10. Texas A&M U. $5,642,978,000 13.7% 11. U. of Pennsylvania $5,313,268,000 21.6% 12. Northwestern U. $5,140,668,000 22.0%13. Emory U. $4,870,019,000 11.3% 14. U. of Chicago $4,867,003,000 17.6% 15. Washington U. $4,684,737,000 9.8% 16. Duke U. $4,497,718,000 17.6% 17. U. of Notre Dame $4,436,624,000 21.5% 18. Cornell U. $4,321,199,000 14.4% 19. Rice U. $3,986,664,000 10.4% 20. U. of Virginia $3,618,172,000 12.4%

Source: National Association of College and University Business Officers