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Brown’s endowment grows to record $4.7 billion after 12.1 percent returns

Endowment exceeds five-year growth goals, updated itemized budget will not be released

The University’s endowment has reached an all-time high of $4.7 billion, seeing a 12.1 percent return for fiscal year 2020.

The endowment returns place the University within the top fifth percentile of growth for FY20 among 143 peer colleges and universities, according to Cambridge Associates Preliminary FY2020 Returns. Of the Ivy League schools who have released endowment returns — Harvard (7.3 percent), Yale (6.8 percent), Dartmouth (7.6 percent) and Penn (3.4 percent) — Brown had the largest growth. 

The growth also exceeded the University’s aggregate benchmark goal of a 3.1 percent return, according to a University press release

$171 million of the University’s operating budget came from the endowment in FY20.

Each year, between 4.5 and 5.5 percent of the endowment is withdrawn to support University activities based on the recommendations of the Corporation. In recent years, the University has withdrawn 4.8 percent.

With $100-$165 million in losses predicted for FY21 due to the COVID-19 pandemic, the University has increased its yearly withdrawal from the endowment to almost 5 percent, which is an additional $15-$20 million.

Still, the University plans to continue growing the endowment with further investments and smaller withdrawals — aiming to eventually reach a consistent 4.5 percent withdrawal each year — so “the University can rely over time less on tuition and fees and more on endowment returns as our peer institutions do,” Provost Richard Locke P’18 told The Herald.  

Despite higher return percentages than other Ivy League schools, Of the past five years, FY20 saw the second lowest return. But the endowment also showed an average five-year growth of 9.8 percent, which far exceeded the University’s goal, wrote Managing Director of the Investment Office Joshua Kennedy ’97 in an email to The Herald. 

“We've been very lucky that the endowment performance has been extremely good in the last few years because we have an excellent team in our investment office,” Locke said. “But the use of the endowment is also to help fund moments like the one that we're living.”

While the endowment data has been made publicly available, the University will not be releasing an updated itemized budget for FY21 because of rapidly changing circumstances and their effects on Brown’s finances, Locke said. The University will, however, release letters with financial updates roughly every three months. Locke and financial officers have been having regular meetings with a Corporation committee to update spending practices as the public health crisis evolves. For example, the University has an agreement with its COVID-19 testing provider so that the University’s costs will decrease if technological improvements cause testing prices to decrease.

The University’s preliminary budget, which was released in May, was written with many factors still unknown at the time; for instance, the University speculated that only 80 to 90 percent of students would choose to return for the semester in some capacity, but 97 percent of students ultimately chose to do so, Chief Financial Officer Michael White explained. 

The University also predicted low fundraising outcomes because of the economic crisis, but the amount of money ultimately raised ended up exceeding expectations.

“We don't know how the public health information is going to change between now and the spring and that could have a huge impact on what happens,” White said.



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