Colleges and universities had earned 9.3% on average in fiscal 2005. Over the last 10 years, average returns are 8.8%.

Large colleges and universities with endowments of $1 billion or more earned 15.2% during the year ending June 30, while colleges with less than $25 million earned just 7.8 percent.

In another new release, Harvard University, the world's wealthiest in terms of total assets, earned 16.7% last year and increased its endowment to $29.2 billion. 

Asset allocation data continue to show increases in hedge fund investing in addition to increases in investments in natural resources from fiscal year 2005 to 2006. 

• Endowments of $1 billion or more had less than half (44.9%) of their assets in stocks, 22.4% in hedge funds, 5.9% in private equity and 3.5% in venture capital. 
• By contrast, colleges with endowments of under $25 million had 58.9% in stocks, 2.6% in hedge funds and 0.7% combined in private equity and venture capital. 

University endowments need to earn 9% to support a typical 5% spend per year on operating costs and financial aid, 3% for inflation and 1% for management fees.  U.S. colleges and universities raised $25.6 billion in 2005, according to the latest data available from the Council for Aid to Education.

Sources:

• http://www.nacubo.org/
• NACUBO Press Release on 2006 Endowment Study Preliminary Results (pdf)
• Survey: College endowments top 10 percent returns