Endowment Reaches Nearly $10 Billion, Rises 19 Percent in 2007

MIT’s endowment increased by $1.6 billion, or 19.3 percent, during the 2007 fiscal year, reaching a total of $9.98 billion. The increase resulted primarily from investment returns of 22.1 percent, as reported by the MIT Investment Management Company.

“Other factors influencing the 19% increase were new gifts received minus funds distributed for support of the Institute’s mission,” Theresa M. Stone SM ’76, executive vice president and treasurer, said in an e-mail. For the past 10 years, the Institute’s endowment has returned an average of 15.3 percent per year.

During the 2006 fiscal year, the MIT endowment totaled $8.36 billion, increasing $1.7 billion over the previous year’s endowment. The rate of return on investments for the 2006 fiscal year was approximately 23 percent.

The endowment provides support for “scholarships, professorial chairs, student life, and other operating and strategic activities,” Stone said.

Over the 2007 fiscal year, which ended June 30, support from the endowment totaled more than $347.5 million (or 4.7 percent of the endowment), compared to $323.0 million in 2006, according to the treasurer’s report.

From MITIMCo’s diversified portfolio, investment gains were widely spread. Real estate, private equity, and domestic and international equities performed especially well, according to the MIT News Office.

During the 2007 fiscal year, MIT raised a total of $332 million through a variety of gifts, many of which “were directed toward the endowment, while others support current activities or building projects,” Stone said in the e-mail. “The overall total represented an all time high.”

As of June 30, MIT has the sixth largest university endowment in the nation. Harvard University has the largest endowment with $34.9 billion, followed by Yale, Stanford, and Princeton Universities and the University of Texas system. Harvard’s rate of return was 23.0 percent in 2007.

Yale saw the greatest return in 2007 with 28.0 percent, bringing its endowment to a total of $22.5 billion. In the realm of academic investments, Yale has led investment returns over the past decade with an average annual return of 17.8 percent. Amherst College came second in performance with a return of 27.8 percent to increase its endowment to $1.7 billion.

It is important to measure endowment performance relative to an internal benchmark, an expert told The New York Times. For example, the Wilshire 5000 or the S&P index could serve as benchmarks for equities. Just as important is an endowment’s performance in context of competing institutions.

MITIMCo, a division of MIT, manages and oversees the investment of the Institute’s endowment, retirement funds, and operating funds. By the end of the 2007 fiscal year, it had a total of $14.0 billion in assets under its management. MITIMCo’s president is Seth Alexander, a former director at the Yale Investment Office. Alexander is the company’s second president, following Allan S. Bufferd ’59 who became MITIMCo’s first president in July 2004.

“The Resource Development team always strives to increase the pool of donors who support MIT financially and the amount of resources raised, and aspirations for 2008 are no different,” Stone said in the e-mail.