Endowment Assets Nationwide Climb to Nearly $600-Billion, New Study Finds

Assets in endowments total nearly $600-billion and are expected to grow at an average annual rate of 6 to 8 percent over the next five years, a new study has found.

Colleges and universities have the largest endowments, on average, according to the study,

which was conducted by the Spectrem Group, a financial-consulting and research company in New York. The average size of a college or university endowment is $69-million, the study found.

Hospital endowments average $35.5-million, while those at human-service organizations average $22-million, according to the study. Religious organizations hold endowments that average $14-million.

The study is based on telephone interviews with 1,024 organizations that hold endowment assets. Researchers did not interview institutions that do not have endowments. Most, but not all, of the organizations in the study are non-profit institutions.

Based on information gathered in the telephone survey, the Spectrem Group estimates that 21,700 organizations have endowments that total $577-billion in assets.

Most of that money is held in big funds at a relatively small number of institutions, according to the study. Organizations with endowments of $100-million or more account for only 6 percent of the institutions with an endowment, but those groups hold more than 70 percent of total endowment assets — an estimated $410-billion, the study found.

While colleges and universities have the largest individual endowments, human-service organizations account for the largest share of aggregate endowment assets — an estimated $163-billion, or about 28 percent of the total, the study found. The second-highest share — 24 percent, or $137-billion — is held by a combination of cultural, environmental, and foreign-affairs organizations and other groups. Colleges and universities account for 17 percent — or $97-billion — of total endowment assets.

Institutions in the Northeast hold the biggest proportion of endowment assets, at 28 percent — or about $162-billion — the study found. Organizations in the central United States hold 23 percent of total endowment assets ($133-billion); those in the Southeast, 21 percent ($121-billion); the Midwest, 16 percent ($92-billion); and the West, 12 percent ($69-billion).

The Spectrem Group’s report focuses heavily on the investment practices of endowment managers. On average, it says, 60 percent of endowment assets are invested in stocks, 29 percent in bonds, 7 percent in cash, and 4 percent in other instruments.

Sixty percent of endowed institutions use a single investment company to manage their endowment assets, but 90 percent of organizations with endowments of $100-million or more use more than one investment company, the study says.

For more information on the study, contact Gerry O’Connor, senior consultant, Spectrem Group, 8 Griffin Road North, Windsor, Conn. 06095; (860) 688-8821; e-mail: goconnor@spectrem.com.