Northwestern’s endowment grew to $5.8 billion as of September 30, 2009, university officials confirmed. This is a gain of 12.7 percent in the period from January to September 2009.
After reaching a peak of $7.4 billion in April 2008, Northwestern lost a significant portion of its endowment during the fall of 2008. By February 2009, the endowment was down 24 percent from its August 2008 value.
James Hurley, associate vice president for budget planning, analysis and allocation, said that the university is projecting modest returns for the current financial year ending in August 2010 but warned that economic conditions make the success of any investment hard to predict.
“The endowment has quite a big impact on the university’s spending. It accounts for 18 percent of the annual operating budget,” Hurley said. “We have taken steps to offset the decrease by cutting down on non-salary expenses and have asked vice presidential offices and schools to keep costs low.”
Northwestern relies less on its endowment for spending than other universities. Harvard and Yale draw up to 30 precent of their budgets from their endowment funds, compared to Northwestern’s 18 percent.
According to Will McLean, Vice President & Chief Investment Officer, Northwestern has stayed invested in its long-term targets and maintained a diverse portfolio.
“We have remained in the market and hence have been able to take advantage of market rallies,” he said. “We bet big on the credit markets and our strategy has paid off.”
The university’s total endowment losses during the financial year from September 2008 to August 2009 was a smaller percentage loss than that of many other wealthy universities. Harvard and Yale, the two wealthiest American universities, lost nearly a third of their endowments between July 2008 and June 2009 (other universities measure their financial years from July to June, opposed to September to August) while Princeton and Brown lost around 25 precent.
University of Pennsylvania had the best performing endowment fund in the top 10 wealthiest private universities for the fiscal year ending in June 2009, seeing a decrease of 15.7 percent to $5.1 billion. Columbia saw its endowment shrink to $5.7 billion from $7.2 billion.
After a miserable stretch for university finances, the recent growth of the endowment could be a sign of a slow recovery.
“Our endowment has grown from January ‘09 to September ‘09,” Mclean said. “We have already made up about a billion dollars and have another billion to go before we reach peak levels again.”
Correction: The original version of this article stated the endowment grew to $5.8 billion as of September 31, but it should have stated September 30. Thanks to commenter Nick for pointing it out.