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Bowdoin endowment returns 10.9 percent in weak year for colleges nationally

November 8, 2019

SOURCE: CAMBRIDGE ASSOCIATES

Bowdoin’s endowment posted a 10.9 percent return on the fiscal year that ended on June 30—a performance second nationally only to that of Brown University’s endowment, which delivered a 12.4 percent return. The return was lower than last year’s of 15.7 percent return.

According to the investment consulting firm Cambridge Associates, this past year’s median return for endowments was 4.9 percent nationally, while endowments with more than $1 billion in assets had a median return of 5.8 percent nationally. Bowdoin and Brown’s returns are noted to be outliers, with other peer institutions such as Harvard (6.5 percent), Dartmouth (7.5 percent), and MIT (8.8 percent) being much closer to the median figure.

As of June 30, Bowdoin’s endowment was valued at $1.74 billion, up from $1.63 billion last year. The College spent $67.7 million dollars from the endowment on annual operations. Nearly half of this figure, $31 million, supported financial aid. The average grant for all aided students is currently $47,000 a year.

Despite the endowment’s impressive performance, there are still some lingering concerns, said Scott Hood, senior vice president for communications and public affairs. Fiscal year 2018-2019 marks the first time that Bowdoin, with an endowment of about $900,000 per student, will be subject to the 1.4 percent endowment tax on net investment returns established by the 2017 Tax Cuts and Jobs Act.

In an email to the Orient, Hood explained that though the endowment tax will diminish the College’s investment returns, the College does not expect student aid to be affected this year. $46.2 million have already been allocated from the 2019-2020 fiscal budget for financial aid, three-quarters of which will be funded by the endowment.

“This is a tax on the endowment, so the funds to comply with the tax will come from the endowment, not the operating budget,” wrote Hood. “That said, every dollar paid out of the endowment is one dollar less that can be invested for student aid, for faculty research, scientific equipment, library purchases, technology and all the other items supported by the endowment.”

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