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U. annual endowment return tops other Ivies’

Nassau Hall
Marcia Brown / The Daily Princetonian

The University announced Monday that its endowment earned 14.2 percent for the fiscal year ending in June. Now, the endowment is valued at $25.9 billion, up $2.1 billion from last year, when the University reported a 12.5 percent return. The University’s most recent endowment return figure is the greatest out of the seven Ivy Leagues that have announced their returns so far.

“The number is really strong,” Princeton University Investment Company president Andrew Golden told The Daily Princetonian Monday morning. He explained that over the last 10 years, the endowment has earned a rate of return large enough to meet the needs of University spending, despite financial downturns like the 2008 recession.

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According to the University announcement, the endowment’s annual return during the past decade is 8 percent, putting the University in the top percentile of the 458 institutions ranked by the Wilshire Trust Universe Comparison Service.

Overall, Golden said focusing on 8 percent growth over 10 years is more important than looking at this year’s gains.

“People complain about the short-term view of capitalism, yet they focus on the short term,” Golden said. “For an institution whose time horizon is perpetual, one year is the blink of an eye.”

He compared looking only at the 2018 endowment return to watching only four minutes of a college basketball game. While it is important to score during that time frame, Golden said, it represents very little about the game or season as a whole.

“You don’t get prizes for outscoring the opponent in any four minutes,” Golden said.

That said, the University’s endowment return was larger than that of any other Ivy League university that has announced this year. Columbia’s endowment return information has not yet been released.

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Harvard University announced its returns in late September, noting only a 10 percent return for fiscal year 2018. That brought Harvard’s endowment to $32.9 billion, which was considered a significant improvement by N. P. Narvekar, the CEO of Harvard Management Company, which is analogous to PRINCO.

Brown University reported a 13.2 percent return on its endowment, the University of Pennsylvania reported 12.9 percent return, Yale reported a 12.3 percent return, Dartmouth posted a 12.2 percent return, and Cornell University reported a 10.6 percent return.

“I suspect there won’t be many schools that top [the University’s] number,” Golden said on Monday.

The more than 4,000 funding sources of the endowment are include permanently restricted net assets, temporarily restricted net assets, and unrestricted net assets, with many accounts dating as far back as the University’s founding. Most accounts are dedicated for financial aid purposes.

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The endowment also supports funding for masters and Ph.D. students, over 200 endowed professor positions, athletics, religious life, and faculty teaching and research.

“It’s not how much you have; it’s how well you spend it,” said Golden. “The endowment distributions pay for a little more than half of everything.”

Golden also noted that unrestricted University giving goes straight into the operating budget and is not part of the investment return figure.

The University’s annual giving for the 2017–18 year was $69,554,597 — the second highest total in annual giving history.

PRINCO will certify the results of the endowment’s returns during its directors’ meeting on Oct. 18, 2018.