Pitt endowment ranks 26th
Pitt was ranked No. 26 among 835 colleges and universities in an annual survey of university endowments released Jan. 28.
The 2013 National Association of College and University Business Officers (NACUBO)-Commonfund Study of Endowments found that the value of Pitt’s endowment grew 13.7 percent in fiscal year 2013.
The University’s endowment finished the fiscal year at nearly $2.98 billion, up $357.46 million from nearly $2.62 billion in FY12.
In the 2012 study, Pitt’s endowment ranked No. 25 with an increase of 3.6 percent, up from nearly $2.53 billion in FY11. (See Feb. 7, 2013, University Times.)
Harvard remained at the top of the list of institutions surveyed in the FY13 study. Its endowment grew 6.2 percent to stand at more than $32.33 billion in FY13.
Overall, 82 institutions had endowments greater than $1 billion, up from 68 institutions in FY12.
The average increase in market value for the institutions included in the survey was 10 percent and the median increase was 12.3 percent.
The change in market value represents the net effect of investment gains and losses, gifts and contributions, withdrawals and management and investment fees.
Endowment returns
The NACUBO/Commonfund study found endowments’ average rate of return was 11.7 percent for the fiscal year that ended June 30, representing a strong recovery from the average -0.3 percent return in FY12. For endowments worth more than $1 billion, the average return also was 11.7 percent, up from 0.8 percent in FY12.
The University’s investment return for FY13 was 9.5 percent. Ken Service, vice chancellor for communications, told the University Times the below-average result was “chiefly due to a higher allocation to emerging markets equities and the practice of not recognizing unrealized gains for certain types of energy investments.”
He noted that the University’s three-year investment performance — a compounded return of 11.25 percent — is among the top quartile of endowment returns.
The 835 institutions in the FY13 study averaged a three-year net return of 10.2 percent, with endowments worth more than $1 billion averaging a 10.5 percent three-year net return.
Spending rates
The average effective spending rate among the 835 institutions was 4.4 percent, up from 4.2 percent a year ago. Institutions with $1 billion-plus endowments reported the highest average spending rate, 4.8 percent, the FY13 study found.
Pitt’s endowment spending policy calls for a distribution each fiscal year of either 4.25 percent of the endowment’s three-year average fair market value or a “floor” amount equal to the prior year’s distribution, whichever is greater, provided that distributions are no less than 2 percent and no more than 7 percent of the three-year average.
Last April, trustees approved a FY14 distribution of 4.25 percent after invoking the floor for three consecutive years, which held endowment distributions flat at $3.80 per share. (See April 18, 2013, University Times.)
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In a prepared statement, NACUBO President and Chief Executive Officer John D. Walda commented: “Despite the improvements in investment returns over the past year, colleges and universities are in a period of rethinking their budget-setting strategies and priorities.
“We have gone through a great period of volatility in the financial markets over the past 10 years, along with deep cutbacks in government funding for higher education and declines in enrollment and tuition revenue at some schools. Thus, the strong performance of endowments this year, while gratifying, must be put in context of continuing stress on tuition, state government appropriations and other revenue sources.”
A link to the study can be found at www.nacubo.org.
—Kimberly K. Barlow