Bowdoin’s endowment performed comparatively well in fiscal year (FY) 2012, with a 2.6 percent return on investments as of June 30, 2012. The endowment stands at $902.4 million, down from $904.2 million in FY 2011, when Bowdoin reported returns of 22.3 percent.
Though 2.6 percent is significantly lower than the College’s projected return of 7 percent, Bowdoin fared much better than most peer institutions; Cambridge Associates, a firm that tracks endowment performance in the U.S., found that the mean for college and university endowment returns nationally was -1.0 percent in FY 2012, according to the Bowdoin Daily Sun.
“In our projections we assume a higher annual return, but we are projecting that return over the long term, so looking at one year’s return is not necessarily instructive,” wrote President Barry Mills in an email to the Orient. “I would say that given the economy and the returns of other schools, the return on the endowment last year is very impressive.”
Paula Volent, the senior vice president for investments at the College, echoed Mills’ comments.
“Our endowment did what it was supposed to do in a volatile market. We protected capital while generating a return that is top decile,” she wrote in an email the Orient.
According to Inside Higher Ed, universities across the board are reporting investment returns that fall significantly short of both FY 2011 and pre-recession growth rates. This fiscal year, Harvard reported a 0.05 percent loss on its $30.7 billion endowment, and Stanford, Yale, Duke, and the University of Pennsylvania all reported returns of less than five percent. Massachusetts Institute of Technology saw its endowment grow $600 million after an 8 percent return, Inside Higher Ed reported. Endowment returns from other NESCAC schools have not yet been released.
“Lower returns in any one year do put stress on the system, but we are well situated because of the returns generally over the past few years,” wrote Mills. The College does not expect the low return to affect its budget in the coming years.
“There are no changes anticipated in the budget, salaries, or tuition outside of the College’s regular budgeting process,” wrote Volent.
The three-, five- and ten-year annualized returns for Bowdoin’s endowment were 11.4 percent, 3.1 percent and 9.6 percent respectively, according to the Bowdoin Daily Sun.
In FY 2010, the College reported an endowment increase of 10.3 percent, which, combined with the FY 2011 gain—the sixth-highest single-year increase in the last 30 years—helped the College recover from the recession’s 17 percent drop, when the endowment plunged from $831.5 million to $688.5 million.
The College received roughly $15.3 million in endowment gifts and additions in FY 2012. Approximately 45 percent of the endowment is restricted for financial aid use, with 29 percent—$38.9 million—delegated to the school’s 2011-12 operating budget.