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Endowments rebound, but will tax law stymie future gains?

Endowments at North Carolina colleges and universities posted strong gains in the most recent fiscal year, mirroring a national trend. Higher-education endowments reported an average 12.2% return, a sharp increase over the 1.9% decline reported in 2016, according to the results of the annual NACUBO-Commonfund study. (NACUBO stands for National Association of College and University Business Officers, a nonprofit organization that represents chief administrative and financial officers at more than 1,900 colleges and universities.)

The report, released last week, is based on information provided by 809 colleges and universities and related foundations for the fiscal year that ended June 30.

Most North Carolina-based schools reported double-digit gains, including Duke University, which has the largest endowment in the state with a market value of $7.9 billion, a 15.7% increase over the previous year. Exceptions were UNC Chapel Hill and Wake Forest University, which reported smaller increases of 4.8% and 5.6%, respectively. Harvard University’s $36 billion endowment, the largest in the U.S., gained 4.3%.

Over the last decade, endowments at most American universities have underperformed, while falling short of the typical goal of a 7% annual long-term return. Despite last year’s improvement, the 10-year average annual return slipped to 4.6% from 5% a year ago.

“Continued long-term growth of 5% or less, along with the coming changes to tax and charitable giving laws under the recently passed Tax Cuts and Jobs Act, will make it much more difficult for colleges and universities to increase endowment dollars to support their missions,” warns NACUBO President and CEO John D. Walda. Many nonprofits, including colleges, fear the new federal tax law could reduce taxpayers’ incentive to donate money because fewer filers will itemize deductions.

College endowments, which provide funding for everything from campus construction to research to student financial aid, also bumped up spending last year. The median spending increase among U.S. schools was 6.5%.  Average debt fell to $208.1 million, from $230.2 million a year ago, according to the study.

North Carolina’s 15 largest college and university endowments
For the fiscal year ending June 30, 2017

Rank among U.S. and Canadian institutions

No. 14  Duke University, $7.9 billion, +15.7%

No. 31  UNC Chapel Hill, $3 billion, +4.8%

No. 87  Wake Forest University, $1.2 billion, +5.6%

No. 94  N.C. State University, $1.1 billion, +12.4%

No. 145  Davidson College, $716 million, +10.4%

No. 265  UNC Greensboro, $276 million, +17.5%

No. 288  Elon University, $231 million, +14.5%

No. 317  UNC Charlotte, $203 million, +11.7%

No. 333  East Carolina University, $186 million, +13.3%

No. 384  Campbell University, $151 million, (previous year not reported)

No. 443  Queens University, $111 million, +10.1%

No. 455  Lenoir-Rhyne University, $106 million, +9.1%

No. 461  Meredith College, $104 million, +11.2%

No. 469  Appalachian State University, $100 million, +11.1%

No. 481  UNC Wilmington, $94 million, +15.7%

source: 2017 NACUBO-Commonfund Study of Endowments


Cathy Martin
Cathy Martin
Cathy Martin is the managing editor at Business North Carolina magazine. She can be reached at

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