October 26, 2021
Stanford releases annual financial results for investment return, endowment
Stanford University today announced a 40.1 percent investment return in its Merged Pool, net of all external and internal costs and fees, for the year ending June 30, 2021. The Merged Pool is the principal investment vehicle for the university’s endowment. Stanford’s performance surpassed the 33.4 percent median return for U.S. college and university endowments for the year, as preliminarily reported by Cambridge Associates, and represented $12.1 billion of net investment gains.
The value of the Merged Pool rose to $41.9 billion as of June 30, 2021. The fund also includes capital reserves of Stanford Health Care and Lucile Packard Children’s Hospital at Stanford, along with other long-term funds.
The value of the university’s endowment, which includes approximately 75 percent of the Merged Pool as well as other assets such as real estate, was $37.8 billion on Aug. 31, 2021, the end of its fiscal year. The endowment is intended to sustain university programs over the long term, and a payout each year provides critical support for current operations.
“These results have created a tremendous opportunity to advance Stanford’s mission,” said Stanford President Marc Tessier-Lavigne. “To that end, I am pleased to announce that the Trustees have approved using $500M of endowment, on top of endowment payout. These funds will be used to support our core academic mission and to accelerate our education, research, affordability, inclusion and outreach activities under our Long-Range Vision.”
In fiscal year 2021, the endowment disbursed $1.33 billion to support vital academic programs and financial aid and an additional $379 million to fund COVID-19 related expenses and revenue shortfalls. The combination was equal to 5.8 percent of the endowment’s value at the beginning of the fiscal year. Payout from the endowment is expected to fund 20 percent of the university’s operating budget expenses this fiscal year. The endowment must grow with inflation to maintain purchasing power and support the university’s and donors’ commitment to students, faculty and projects for decades to come.
“Over the last year and a half, the pandemic resulted in substantial turbulence in financial markets. The university’s disciplined investment approach during this time produced strong gains that will enable Stanford to continue delivering on its mission of teaching, research and patient care,” said Robert Wallace, chief executive officer of Stanford Management Company. “Although we are very pleased with last year’s results, we are mindful that periods of exceptional gains are often followed by intervals of more muted investment performance.”
Stanford’s five- and 10-year net annualized investment performance of 14.7 percent and 10.8 percent, respectively, compares with the median college and university endowment return of 11.9 percent and 8.4 percent over the same time periods.
The endowment includes more than 7,300 funds established by philanthropic donors over the years and designated for specific purposes. They support student scholarships and also advance particular fields of study through professorships, fellowships and research funds.
Stanford Management Company invests the endowment and other financial assets to provide long-term support to the university. Careful stewardship of endowed funds helps ensure that important resources, including financial aid, are equally available for present and future generations of students, faculty, staff and patients.
SMC invests capital in accordance with its Ethical Investment Framework and strives to work with the most capable partners pursuing disciplined long-term investment in the U.S. and across the world.