The Missed College Endowment Opportunity |
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Anne T. & Robert M. Bass Library, Yale University
The economic headwinds have been pushing against America's higher education institutions since the pandemic: Enrollment is trending downward, while federal funding is uncertain. The result is that many smaller schools have begun shutting their doors. More than a dozen schools closed or announced mergers last year, adding to the at least 20 colleges that shuttered in 2024. And it's not just small schools with operational challenges anymore: Columbia University's operating surplus fell by nearly two-thirds in 2025, while Harvard is running at a $113 million deficit.
The irony for schools is that this emergency financial moment is unfolding amidst a largely healthy period for the U.S. stock market – recent market downturns excepted. That has largely benefited the millions (and sometimes billions) of dollars schools have in their endowment funds, whose returns have ranged from steady to skyrocketing. Large endowments had an 11.5% average return rate in 2025.
So as more and more schools face a "break-glass-in-case-of-emergency" situation, endowment funds are becoming a tempting resource for schools to tap. This prompts the existential question that boards and foundation leaders must........