Dive Brief:
New gifts to college endowments fell 9.2% in fiscal 2025 to just under $14 billion, with some colleges suffering steeper declines in donations, according to a study of over 650 institutions from the National Association of College and University Business Officers and asset management firm Commonfund.
Annual returns of U.S. college endowments also dipped slightly in fiscal 2025, with average one-year growth falling from 11.2% in 2024 to 10.9% last year. The collective assets of the endowments reached $944.3 billion, up from $873.7 billion in 2024.
At the same time, colleges tapped their endowments more amid disruptions to federal funding and other financial pressures. Collectively, colleges in the study withdrew $33.4 billion in fiscal 2025, up 11% from the prior year.
Dive Insight:
The NACUBO-Commonfund survey highlighted the impact of a slowdown in donations to endowments. Not only did total donations decline, but average gift amounts also fell. That figure dropped from $24.8 million in fiscal 2024 to $22.6 million in 2025, Allison Kaspriske, managing director of Commonfund Institute, said Wednesday during a virtual press conference. The median gift came in at $5.2 million, close to last year’s figure.
For smaller foundations, the giving declines were even sharper. Endowments with assets under $50 million reported a drop in donations of 26.5% year over year.
“Declines in gift-giving are a concern for all institutions, but particularly for smaller ones that may be less resourced and vulnerable to changes in fund flows,” the report’s authors wrote.
As for the nation’s largest endowments, they had the highest one-year return rate among all size groups. Endowments valued at over $5 billion in total assets grew 11.8% during fiscal 2025. Those endowments — 30 of them in all — represented 58.2% of the total value of all endowments studied.
The largest endowments in the U.S. got even larger in 2025
Value and growth rates for the 30 largest college foundations
Many of those will now face a higher tax bill due to the big spending law Republicans enacted last summer. Under the new law, endowments with the largest values per student will pay an 8% tax. Already, some institutions, including Yale University, have cited the new taxes when making budget cuts on their campuses.
Yale specifically is bracing for a tax bill of around $300 million a year starting in 2026 — an amount larger than the combined annual budget of more than half of Yale’s 15 schools, senior officials said last year.
The tax isn’t the only financial pressure on endowments. One-year returns also dropped modestly, though the 10-year average annual return rose nearly a full percentage point to 7.7%.
The study, as well as speakers at Wednesday’s press event, described investment returns as relatively strong and stable. Kaspriske attributed investment growth to easing inflation, expectations of lower interest rates, “resilient” consumers, solid earnings and healthier real wages.
But at least at Princeton University — which had the fourth-largest endowment in fiscal 2025 — leaders are bracing for slower growth in investment income in the years to come. Those expectations, based in part on the research of a professor emeritus at the university, have Princeton preparing fresh budget cuts going into the year.
As in years past, nearly half — 47.4% — of endowment spending was on student aid in fiscal 2025, with the rest devoted to academic programs and research, faculty positions, campus operations and maintenance, and other areas.
Spending was up amid operational pressures. During the press conference, Kaspriske highlighted reduced federal support, enrollment challenges and policy uncertainty as the new spending law takes effect.
On average, endowments funded 15.2% of colleges’ annual operating budgets last year. That’s up from 14% in fiscal 2024 and 10.9% in 2023.
“Because of challenges in the economy, some institutions relied more heavily on their endowments — but that additional spending benefited students, faculty, staff, research, operations, and more,” NACUBO President and CEO Kara Freeman said in a statement.
