Northwestern’s endowment has rebounded to about $6 billion this year, University President Morton O. Schapiro told THE DAILY Friday.
While still lower than its peak at $7.2 billion, the endowment shows notable increase from its fall to $5 billion last year, he said.
‘The NU numbers are really quite impressive compared to its peer group,’ Schapiro said. ‘We’re all going up together.’
According to The Chronicle of Higher Education, the average investment return of college endowments was negative 19 percent for the fiscal year ending in June 2009. NU’s rate of return for the same fiscal year, which ended in August, was about negative 17 percent. Cornell University had a rate of return of negative 26 percent.
‘But the real thing is how you’re doing over a five-year and a 10-year period,’ Schapiro said.
Over the past three years, NU’s rate of return on the endowment averaged positive 0.6 percent . And over the past five-year period, it averaged positive 7 percent . Harvard, in comparison, reported a 6.2 percent return on investment over the same five-year window.
NU is less vulnerable to fluctuations in its endowment compared to other universities because the annual budget relies less on endowment spending, administrators said.
‘We only get 18 percent of our $1.6 billion budget from the endowment, as opposed to 46 percent at Williams,’ Schapiro said.
NU’s endowment spending was 4.9 percent for the 2009 fiscal year, compared to the 4.3 percent average endowment spending of other universities. But the spending constitutes a smaller percentage of NU’s operating budget.
For example, even though Princeton has a larger endowment than NU, it is more susceptible to fluctuations because a larger portion of its operating budget comes from the endowment, said William McLean, NU vice president and chief investment officer. Instead of using its endowment, the University relies heavily on tuition money and research grants, University Spokesman Al Cubbage said.
McLean said being a large research university puts NU in a more stable position than liberal arts colleges, which don’t receive research grants, and smaller schools, which don’t receive the same influx of tuition money as NU.
‘The fact that we’re much less vulnerable, much less driven, by the endowment than peer institutions, then for once, that served us well,’ Schapiro said. ‘On the other hand, I’d rather be rich than poor.’ [email protected]
