Independent School Endowments Down 11.3% for Fiscal 2022

This year’s Communfund Benchmarks Study reveals the largest year-over-year reversal in average annual independent school endowment returns since the study began.

Mar 17, 2023  |  By Commonfund Institute (adapted from press release)

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The Commonfund Benchmarks Study of Independent Schools, which annually identifies trends in school endowments, showed the past fiscal year was a sharp reversal from the previous year’s record gains. Released this week, the report indicated an average annual return of -11.3% on independent schools’ endowment assets. Fiscal 2021 saw a 25.8% gain, making this year-over-year reversal the largest since the study commenced for the 2005 fiscal year.

The fiscal 2022 return also represented the second greatest decrease in endowment assets in the history of the study; the largest, -18.0%, was reported for fiscal 2009 in the wake of financial crisis and great recession. The return for fiscal 2021 was the highest in the study’s history, meaning the year-over-year change totaled 37.1 percentage points.

While the FY2022 return hurt longer-term performance, which is of primary importance to the financial health and sustainability of perpetual institutions, good returns from prior years helped mitigate the impact. Average 10-year returns for participating schools declined to 8.1% from last year’s 8.2% and remained above FY2020’s 7.0% 10-year average. Three- and five-year returns fared less well, however. Three-year returns averaged 5.5%, less than half of last year’s 11.1%, but down only marginally from FY2020’s 5.7%. Five-year returns sagged to an average of 6.2% from last year’s 10.4%, but once again remained above the five-year average of 5.4% reported for FY2020.

George Suttles, executive director of Commonfund Institute, and Jeffrey Shields, NBOA’s president and CEO, noted in a joint statement that poor investment returns and rising inflation struck independent schools simultaneously. “The steep rise in inflation not only raises schools’ operating costs, but it is also the main cause of the decline in financial markets, which erodes the long-term assets on which endowed schools depend to support their annual budgets. Schools that had strong investment returns over the previous decade and that managed expenses prudently should have a buffer, but a prolonged market downturn or an economic recession would greatly heighten the pressure on the PK – 12 independent school community.”

NBOA members can download the report to learn more about investment returns, asset allocation, spending, gifts, operating budget support and responsible investing. 

Commonfund Institute develops proprietary data, analytics and best practices in financial management. The Institute provides a wide variety of resources, including conferences, seminars, roundtables, and online learning through Commonfund Institute Online. Insights cover topics such as endowments and governance; proprietary and third-party research, such as the Commonfund Benchmark Studies, and events, such as the annual Commonfund Forum and Investment Stewardship Academy.



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