Top 15 Universities with the Largest Endowments

When the COVID-19 pandemic hit, the stock market took a dive. This directly affected the investments of colleges and universities all over the country. Things turned around in the 2021 fiscal year, thanks to significant stimulus efforts by the U.S. Federal Reserve and Treasury. During that year, many schools saw their endowments experience the best growth in 35 years, with an average increase of 27%. Based on data from the National Association of College and University Business Officers, AdmissionSight identified the 10 colleges and universities with the largest endowments.

• 15 Universities with the Largest Endowments
• What Are University Endowments For?
• How Are Endowments Managed and Invested?
• Why Do Universities with Large Endowments Still Increase Their Tuition?
• Frequently Asked Questions
• Takeaways

15 Universities with the Largest Endowments

College endowments, which consist of tax-exempt donations and investments that support an institution’s mission, can vary significantly. While some are in the millions, others, like Harvard University’s in Massachusetts, soar into the billions.

According to U.S. News ‘ annual survey, Harvard tops the list with an endowment of nearly $50.9 billion at the close of the 2022 fiscal year, making it the largest among National Universities. Yale University in Connecticut follows with an endowment of almost $41.4 billion.

These Ivy League giants have endowments larger than the entire GDP of some countries, such as Nicaragua, Iceland, and Senegal, according to World Bank data.

Here are the top 15 college endowment ranking for the 2023 fiscal year:

Here’s a closer look at the first 10 universities on the list:

1. Harvard University – $49.49 Billion

Harvard tops the list of universities with the largest endowments. The endowment is the biggest source of funding for the University’s budget. In the 2023 fiscal year, distributions from the endowment accounted for 37% of the University’s revenue. This ranged from 83% of the revenue for the Radcliffe Institute for Advanced Study to 20% for both Harvard Business School and the Harvard T.H. Chan School of Public Health.

Endowment funds are crucial in supporting almost every part of the university’s operations. The largest portions of these funds go toward faculty salaries, including professorships, and providing financial aid for undergraduates, graduate fellowships, and student life activities. Harvard also has endowments dedicated to academic programs, libraries, art museums, facilities, and many other initiatives.

2. University of Texas System – $44.96 Billion

In 2023, the University of Texas System is second on the list of universities with the largest endowments. This endowment is invested in a mix of oil, gas, and the state’s plentiful wind energy resources. However, the UT System has faced criticism for its reliance on fossil fuels, particularly its investments in fracking companies.

As of August 31, 2023, the UT System Board of Regents oversees more than 17,000 endowments approved by the Board, with a market value of $13 billion. These endowments offer a dependable, long-term funding source for various purposes, including student scholarships, faculty support, research, and other donor-designated initiatives. Additionally, over 1,900 endowments are managed by external fiduciaries to benefit UT institutions. Endowments are an excellent way to provide ongoing financial support for the long term.

3. Yale University – $40.75 Billion

Yale’s endowment is the university’s largest source of revenue, but much of it is earmarked for specific uses, just like the other universities with the largest endowments. Around one-third of Yale’s annual operating budget is funded by the endowment, which consists of thousands of individual funds.

Most of these funds are designated to support specific areas of the university’s core mission. In fact, about 75% of the endowment is restricted, meaning the university is legally obligated to use these funds only for the purposes specified by the donors.

Over the past few decades, Yale’s investment strategy has significantly increased the endowment’s value, adding tens of billions of dollars compared to a traditional 60/40 portfolio of stocks and bonds.

4. Stanford University – $36.49 Billion

At the start of the 2022–23 fiscal year, Stanford’s endowment was valued at $36.3 billion. A payout of $1.74 billion, representing 4.8% of the endowment’s value, contributed to about 23% of the university’s $7.66 billion operating budget.

As is with other universities with the largest endowments, this payout helps support nearly every aspect of the university, including more than 17,000 students, 2,300 faculty members, around 2,500 postdoctoral scholars, seven schools, and numerous centers, institutes, and programs.

Stanford’s endowment is actually made up of nearly 8,000 different funds established by donors. Most of these funds are earmarked for specific purposes, such as supporting first-generation college students or advancing certain fields of study. Stanford is legally and ethically obligated to use these funds according to the donors’ intentions.

5. Princeton University $34.05 Billion

The Princeton endowment plays an important role in supporting nearly every aspect of the university, including the ongoing expansion of Princeton’s generous financial aid program. Thanks to this program, most families with incomes up to $100,000 a year pay nothing for their student to attend Princeton, and even families with incomes up to and beyond $300,000 may qualify for grant aid.

Princeton’s endowment consists of more than 4,700 separate funds, often received as charitable donations from generous alumni and other donors. A significant portion of these endowment funds is dedicated to financial aid, with 70% of the undergraduate financial aid budget being covered by the endowment. This support has been crucial in Princeton’s efforts to increase the socioeconomic diversity of its student body. This practice is also observed in other universities with the largest endowments.

6. Massachusetts Institute of Technology – $23.45 Billion

MIT has been making it to the top 10 university endowment rankings in the last decade. MIT’s endowment consists of over 3,800 individual funds, all donated by generous supporters. These funds are invested to last indefinitely, and the income they generate is important for funding almost every aspect of MIT, including scholarships, fellowships, faculty salaries, student life, and various programs across its schools, departments, and labs.

Since 2012, MIT’s endowment has grown by about $3 billion, thanks to donations and strong investment performance. By 2016, the endowment’s value reached $13.4 billion and contributed $589 million to the university’s $2.2 billion in annual revenue. Investment income has become an increasingly vital part of MIT’s budget, growing from just 3% of revenue in 1961 to 32% today. It’s now the second-largest source of income for MIT, after research grants and contracts.

7. University of Pennsylvania – $20.96 Billion

Placing 7th among the universities with the largest endowments and university endowment rankings in the last decade, Penn’s endowment helps the university achieve its goal of being the most inclusive, innovative, and impactful institution in the world. As of June 30, 2023, the endowment was valued at $21.0 billion and is made up of more than 8,700 individual funds that support the University’s schools, centers, and the University of Pennsylvania Health System.

Each year, the endowment provides funding for a variety of purposes across the university, with most of the funds going towards instructional use and student financial aid.

In fiscal year 2023, the endowment contributed $976 million to the university’s budget, an increase of nearly $99 million from the previous year. Over the past decade, the endowment has distributed more than $5.9 billion to support the University’s mission.

8. Texas A&M University System – $19.28 Billion

Texas A&M has an estimated endowment per student of $279,460. The Texas A&M Foundation manages major gift endowments that support educational programs, both academic and leadership-focused. To establish this type of endowment, a gift of at least $25,000 is required. 

You can fund your endowment over a period of one to five years or through an estate gift. Multiple donors can contribute to the same endowment. The foundation offers a gift agreement to outline the purpose, structure, schedule, and administration of your gift.

9. University of Michigan – $17.87 Billion

The U-M endowment is designed to support the university’s mission for generations to come, similar to the practice of other universities with the largest endowments. With endowed gifts, the original amount donated is never spent; instead, it is preserved and permanently invested. The income generated from these investments is used to fund a specific purpose chosen by the donor, whether that’s a professorship, scholarship, or another objective. This is the core principle of any endowment.

In 2023, annual distributions from the endowment amounted to about $470 million, with projections to exceed $500 million in 2024. Of the 2023 distributions, around $134 million supported student financial aid, and $188 million was directed toward research and patient care at Michigan Medicine. The remaining $148 million primarily funded instruction, academic programs, and other university initiatives.

10. University of California – $17.69 Billion

The UC Endowment, which includes the General Endowment Pool and the Blue & Gold Pool, reached a total value of $23.4 billion as of June 30, 2023, up from $20.4 billion the previous year. The General Endowment Pool, which has been managed by UC’s investment office for 91 years, grew to $20.7 billion, with impressive long-term returns, including an 8.8% annualized net return over 30 years. This upward trend can also be observed in other universities with the largest endowments. 

The Blue & Gold Pool, launched in March 2019 with $250 million, grew to $2.7 billion by June 2023, up from $2.2 billion the year before. Despite a pandemic-related withdrawal in April 2020, the pool was re-launched in March 2021 with $200 million. It is a 100% passive investment pool with low management costs, and it posted a one-year net return of 13.3% as of June 2023. Moreover, the UC system has an endowment per student of $63,000.

What Are University Endowments For?

Charitable donations are the main source of funding for endowments, which support the teaching, research, and public service missions of colleges and universities. Endowment funds usually follow strict long-term guidelines that determine how assets are allocated to achieve the desired return while minimizing risk. The income generated by these funds helps cover part of the institution’s operating or capital needs.

In addition to a general university endowment, schools often have restricted endowments designated for specific purposes, such as funding professorships, scholarships, or fellowships. Sometimes, universities with the largest endowments combine multiple individual endowments into a single investment fund, allowing for a more consistent investment strategy. In this way, a university endowment can function similarly to a mutual fund.

Many endowments have rules about how much of the investment income can be spent each year, typically around 5% of the endowment’s total value. For large endowments, like those at Harvard, this 5% can represent a significant amount of money. In the U.S., endowment funds are often crucial to the financial stability of educational institutions.

How Are Endowments Managed and Invested?

University endowments are commitments from donors to ensure that students and faculty have ongoing resources for the future.

During the 2008 economic downturn, some colleges had to make significant budget cuts, while others increased spending to avoid raising tuition or reducing financial aid. Without much help from state or federal governments, many institutions relied more heavily on their endowments to cover annual expenses.

However, most endowment governing boards at the universities with the largest endowments aimed to keep any spending increases temporary and quickly return to more conservative spending practices. Donors choose trustees who are responsible for making wise decisions to preserve the endowment for future generations.

To maintain the value of the endowment, trustees set a spending rate that the institution must follow. They also oversee investments to help grow the funds over time. For example, if the endowment earns an 8% return in a year, after accounting for the typical spending rate of 5% and inflation of 1%, there is still 2% left to cover rising costs and continue growing the endowment.

Why Do Universities with Large Endowments Still Increase Their Tuition?

Critics often point out that even schools with large endowments continue to raise tuition, making college seem out of reach for many, except the wealthy and a few lucky scholarship recipients.

While there’s some truth to this concern, it’s important to understand that endowments usually make up only a small portion of a school’s overall budget. Plus, many donations are earmarked for specific purposes, meaning universities can’t use those funds to reduce general tuition costs.

In some cases, endowments can even create long-term costs for the school, such as when a donor funds the construction of a building but doesn’t provide for its upkeep.

The reality is that universities with the largest endowments rely on tuition as a critical source of revenue to support their growth or even just to maintain operations. Even if a school directed most of its endowment towards lowering tuition, the rising costs of running a university would quickly outpace the income from investments, eventually draining the endowment.

Frequently Asked Questions

Do all universities have endowments?

While many private colleges and universities have large endowments, most public universities either have very small endowments or none at all. Public universities typically rely on state government funding, which private institutions don’t receive.

Which university has the largest endowment?

In the college endowment ranking, Harvard University has the largest endowment of any university in the world. As of 2023, its endowment was valued at nearly $51 billion.

What do universities use endowment for?

Depending on the university’s charter and investment policy, endowments can fund various parts of its operations. The universities with the largest endowments use endowments to support teaching, research, student scholarships, campus maintenance and construction, and public service programs.

Takeaways

Endowments are a vital source of spending for universities. Some schools have endowments equivalent to a country’s overall GDP.

• Harvard has the largest endowments in the country at $$49,495,108,000. The University of Texas comes second at $44,967,186,000.
• Endowments are typically allocated for university spending, such as administrative salaries and student financial aid.
• Endowments are meant to last a long time, so universities use only a portion of them for specific university spending. The rest is allocated to investments and the donor’s intended avenue of spending.
• The universities with the largest endowments still impose tuition because endowments usually make up only a small portion of a school’s overall budget. Plus, many donations are earmarked for specific purposes, meaning universities can’t use those funds to reduce general tuition costs.
• If you want to learn more about endowments and how they can impact your college application, partner with a college admission consultant. They can help you identify the schools with high endowment per student and increase your chances of receiving financial aid.