Brown will face a 4% tax rate on its endowment in the coming year, an increase from its current 1.4% endowment tax rate, according to the University’s annual financial report for fiscal year 2025 released early Thursday morning.
The larger tax rate results from a growth in the endowment that has pushed the University’s endowment past the $750,000 per student threshold required to trigger a 4% endowment tax — a new limit established under the “One Big Beautiful Bill Act” passed by Congress in July.
According to the report, Brown ended fiscal year 2025 with an operating surplus of $2.6 million and 7.2% growth in net assets to $8.9 billion. This fiscal year, the University’s endowment contributed $370 million to the University’s operating budget, with endowment returns of 11.9%.
Over 32,500 donors gave just over $351 million in new gifts and pledges to Brown this year. The Brown Annual Fund, which provides immediate-use funds for the University, raised an all-time high of around $54 million, a 5.5% increase from the previous year.
Current-use gifts summed to $55.4 million, with general contributions comprising 3.7% of Brown’s total operating revenue. The University prioritized current-use gifts during the last fiscal year so the University could “use these funds immediately to address fiscal uncertainty around sponsored research, federal Pell grants and tuition from international students,” President Christina Paxson P’19 P’MD’20 wrote in the report.
The report noted Brown faced “unprecedented financial challenges and tremendous fiscal uncertainty resulting from federal government actions” this past fiscal year.
In the report, Paxson wrote that federal threats in the past year — actions like reductions in federal research funding, proposals to limit indirect cost reimbursements for research grants, an increased endowment tax and policy shifts affecting federal financial aid and international students — mostly did not negatively impact the University’s financial position in fiscal year 2025. But she expects that federal threats will “adversely affect Brown’s financial health in fiscal year 2026 and beyond.”
In April, the White House announced plans to freeze $510 million of Brown’s federal funding, pausing reimbursements on existing grants from the National Institutes of Health and halting the awarding of new grants or routine grant renewals.
Several active grants were terminated, including grants focused on diversity, equity and inclusion initiatives, gender, climate-related health impacts and “other topics no longer in alignment with articulated federal priorities,” according to the report.
Existing grants from the NIH comprised more than 70% of the University’s federal research funding, and totaled over $50 million in overdue payments by the end of the fiscal year on June 30. Brown is around 10 percentage points more reliant on federal funding than peer institutions, according to the report.
Sponsored research is the largest source of research funding for Brown, encompassing grants and contracts from federal agencies, foundations and corporations and accounting for 20.5% of the University’s revenue.
This past fiscal year had the highest-ever research expenditures from Brown of $309.5 million, a 5.6% increase from the previous year. Researchers received nearly 1,400 awards from sponsors like the NIH, the Department of Defense, the Department of Energy and the National Science Foundation.
The report contains a list of all sponsors with active awards during FY25, totaling to 338 unique sponsors.
The University purposefully took measures “to conclude FY25 in the strongest possible financial position,” to prepare for expected financial uncertainty in the coming years, Paxson wrote.
Over the past year, Brown took out a $300 million loan as well as a second $500 million loan in July, after the conclusion of fiscal year 2025. The University also implemented a hiring freeze, reduced growth in operating expenses, lowered Ph.D. admission targets, limited faculty and staff growth and developed new revenue streams.
Some of Brown’s frozen research funds were restored following the University’s agreement with the federal government in July, The Herald previously reported. Nevertheless, funding opportunities from the U.S. Department of Health and Human Services have significantly declined in recent months, dropping to 80% to 90% of pre-January levels, the report states.
Net tuition and fees brought in nearly $444 million, accounting for 29.4% of the University’s total funding in the last fiscal year as “the single largest source of revenue supporting academic and administrative operations,” according to the report. This comes after a 4.5% increase in undergraduate tuition for the 2024-25 academic year.
Nearly half of all undergraduates received a University scholarship for the 2024-25 academic year, with the average scholarship award being around $61,000.
Total debt for the University stood at $1.66 billion at the end of fiscal year 2025, rising from $1.28 billion in the previous year.
Spending on new capital expenses — the purchase, construction or renovation of enduring assets such as buildings — totaled to $202 million and supported projects such as the construction of the William A. and Ami Kuan Danoff Life Sciences Laboratories and the Indoor Turf Facility.
Roma Shah is a senior staff writer covering University Hall and higher education. She's a freshman from Morgan Hill, CA and studies Neuroscience. In her free time, she can be found doing puzzles, hiking or curled up with a book.
