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Endowment terms explained
An endowment value needs a date, a currency and a reporting scope. Those three labels tell you what the number describes before you compare it with another institution. A $1 billion managed pool can include reserves and other invested funds, while an endowment-only figure can exclude them. The terms below explain the measures used in the institution profiles and survey tables.
Endowment and fund structure
Endowment
An endowment is a collection of funds invested to support an institution over time. Individual gifts can carry restrictions governing their use. The institutional total can combine donor-restricted funds with amounts a governing board has designated for long-term investment. A permanent gift's purpose can remain specific even when its investments sit in a common pool.
Donor-restricted endowment
A donor-restricted fund carries terms set by the donor. Those terms can identify a scholarship, academic position, research purpose or other charitable activity. Some restrictions concern the fund's duration, while others concern how support can be used. Investment gains and original gifts can be accounted for separately within the restricted fund.
Quasi-endowment
A quasi-endowment is an amount the governing board has designated to function as endowment. It can have a long investment horizon without having the same permanent donor restriction as an original endowed gift. The board's authority over the designation and its financial commitments determine how it can be changed. A quasi-endowment balance should retain its label when compared with restricted principal.
Investment pool
A pool combines investments for participating accounts. Units record each account's share of the vehicle. A long-term pool can hold endowment assets alongside operating reserves or other invested resources. A pool's total and the university's endowment value therefore need not be equal. The pool's own portfolio name is part of any performance claim.
Net assets
Net assets measure assets after liabilities. Endowment net assets can include accounting categories that differ from investment market value, such as related receivables. Total institutional net assets can also include buildings and operating resources. The account named in the financial statement determines which resources belong in a comparison.
Performance and size
Market value
Market value is a balance at a particular measurement date. NACUBO's public respondent table reports it in thousands of U.S. dollars. The directory pages divide those figures by 1,000 to present millions. Canadian respondents follow the currency-conversion convention described in the workbook, while their own annual reports can present Canadian dollars.
Change in market value
The difference between opening and closing balances reflects more than investment performance. Gifts, spending and transfers can change the value of an endowment. Reporting changes and currency conversion can affect it too. NACUBO expressly warns that its percentage change in market value is not the investment rate of return.
Annualized return
An annualized return expresses compound performance as a yearly rate over a multi-year period. A five-year figure and a one-year figure ending on the same date overlap. Adding them would count some periods twice. The horizon and ending date stay attached to the return in every comparison.
Gross and net returns
A gross return precedes the costs specified by the report. A net return deducts the costs identified in its fee convention. Institutions can differ in their treatment of external managers, internal investment operations and other expenses. NCSE's published average returns are net of external management fees and expenses. A matching period does not erase a difference in fee basis.
Benchmark and peer average
A policy benchmark combines indices to represent an institution's investment policy. A peer average summarizes other respondents. Neither is the same as the institution's actual return. The survey's average is also different from its median, which identifies the middle observation. The $1 billion to $5 billion group's FY2025 average one-year net return is 11.0%; the meaning of that figure depends on the survey group and date.
Spending and portfolio exposures
Spending policy and smoothing
A spending policy determines the support an institution authorizes from endowed funds. A smoothing formula can use several years of market values or combine a prior-year draw with a market-value component. Its percentage applies to that formula's denominator. It should not be silently applied to the latest closing balance.
Appropriation and distribution
An appropriation authorizes resources for use. A distribution transfers support from the investment account. Actual beneficiary spending can occur at a different time. An audit's appropriation line, a donor report's payout and a budgeted draw may therefore differ. Each retains its original accounting label.
Asset allocation
Asset allocation describes how a portfolio is divided among investment categories. Actual weights measure exposures at a date. Target weights describe a policy decision. A complete allocation totals 100%, with any published rounding difference identified. A survey's broad Alternatives category can combine strategies with different liquidity and risk.
Liquidity and capital calls
Liquidity concerns the ability to obtain cash when needed. Public securities, restricted funds and private partnerships can have different sale or redemption terms. A private fund can also call previously committed capital. A high closing asset value does not itself show the cash available for an upcoming appropriation.
Student-adjusted endowment
For the federal private-college excise tax, this statutory measure uses prior-year assets other than those used directly for exempt purposes, divided by the statutory student count. Related-organization rules can affect the base. The 2025 law's 1.4%, 4% and 8% tiers apply to net investment income of applicable institutions. A headline endowment divided by fall enrollment does not reproduce every part of the calculation.
The institution profiles show these distinctions in actual reporting. Wesleyan identifies invested working capital, MCV Foundation includes endowment-related receivables, and McGill reports in Canadian dollars with an April fiscal year-end.
Definitions and examples follow NACUBO reporting notes, NCSE return conventions, NCSE spending measures and Public Law 119-21, Section 70415.
