Endowment spending increased to $33.4 billion in fiscal year 2025 as colleges and universities navigated a historically challenging financial landscape, according to new data from the NACUBO-Commonfund Study of Endowments.
The 657 participating institutions withdrew 17% more from their endowments than they did in fiscal year 2023.
Reduced federal support, declining enrollment and the Trump administration’s widespread policy changes added significant pressure to institutions’ operating budgets, Allison Kaspriske, managing director of the Commonfund Institute, said in a press briefing.
Endowment dollars accounted for 15.2% of institutions’ annual operating budgets, up from 10.9% two years ago. Historically, endowments have covered around 4.5% of operating expenses, according to the report.
Your next read: 5 trends will reshape finance and operations in 2026
“Endowments are there when times are tough, but the increased reliance on endowments to fund operating expenses is a trend worth watching carefully,” said Kara Freeman, NACUBO president and CEO.
“Growing operational needs should be balanced against endowment spending rates to protect long-term sustainability and intergenerational equity, ensuring that colleges and universities can rely on their endowments in challenging times in the future.”
Nearly half (47.7%) of all endowment spending was directed toward financial aid. Other major allocations included:
- Academic programs and research (17.7%)
- Donor-funded academic positions (10.8%)
- Facilities (7.6%)
Despite the heightened reliance on endowments, “that additional spending benefited students, faculty, staff, research, operations and more,” Freeman said. “Endowments make college possible and more affordable, and contribute to better lives for all.”
How endowment assets are performing
The NACUBO study found relatively consistent investment performances across all seven institution sizes, which ranged from endowment valuations of under $50 million to over $5 billion.
The 10-year annualized return reached 7.7%, improving over fiscal year 2024.
Private capital—private equity, hedge funds, real estate and venture capital—made up more than half of institutions’ assets, but recent market trends have favored publicly traded equities. As a result, small institutions, which rely more on public markets, realized higher three-year annualized returns than wealthier schools with a higher commitment to private capital assets.
Smaller cohorts are relying less on internal talent to manage their money. The outsourced chief investment officer empowers financially modest institutions to “navigate increasingly complex markets and compete for stronger returns alongside their much larger peers,” Kaspriske said.
The median endowment size of survey participants was $253.6 million. Institutions with endowments below $500 million accounted for over 65% of the study but held just 7.5% of its total assets.
“While there are a small number of institutions that receive widespread public attention for the size of their endowments, the vast majority of colleges and universities operate with far more limited resources,” Freeman said.
While returns were strong, gift-giving decreased by 9.2% over last year. However, institutions with assets between $51 million and $100 million reported a 47% increase in gift giving. Those in the $501 million-$1 billion range reported a 28.5% gain.
