University of Michigan's endowment grew 41% to $17 billion during pandemic

Kim Kozlowski
The Detroit News

The University of Michigan's endowment climbed $4.7 billion to a market value of $17 billion in the 2021 fiscal year that ended June 30, officials announced Thursday during the Board of Regents meeting.

The increase represented a 41% growth, said Geoffrey Chatas, executive vice president and chief financial officer for the school.

The endowment makes up the majority of the university's long-term investment strategy, Chatas told the board.

"We are very pleased with the strong performance," Chatas said. "But we also know that investment income, particularly in the short run, can be very volatile and investment performance needs to be understood in the context of looking at those returns over time."

He noted that UM's endowment fell in value in 2016.

“The university’s long-term investment strategy combined with its endowment spending policy serves to insulate operations from expected volatility in the financial markets and provides for a stable and predictable level of spending distributions over the long term,” said Chatas.

The university’s long-term investment portfolio, which is largely its endowment, has had a median annual return of 9.5% in the last 20 years, compared to 7.3% among college and university endowments, the school said in a release.

Each year, he said, the university moves some of the money from the endowment to its operating budget.

University of Michigan Regent Denise Ilitch, right, addresses the board as fellow Regent Michael Behm, left, listens on Thursday, Oct. 21, 2021 at the Board of Regents meeting. The school's endowment climbed 41%, or $4.7 billion, to a market value of $17 billion in the 2021 fiscal year that ended June 30, officials announced Thursday during the meeting.

During the last fiscal year, Chatas said, $404 million from the endowment was distributed to support student scholarships, faculty, research, libraries, infrastructure and critical care.

Annual endowment distributions have totaled about $5.2 billion in the last 20 years, the school said in a release.

UM's endowment was ranked 92nd among colleges and universities on a per-student basis, according to a report by the National Association of College and University Business Officers, Chatas said.

President Mark Schlissel said that the university's endowment provides more funds annually for the university than the school receives in state revenue sharing.

“UM’s financial strength is inextricably linked to our ability to deliver on our public mission through excellence in all we do,” Schlissel said. “(The endowment) enhances our academic programs and other activities, allows us to provide large amounts of financial aid to keep a Michigan education affordable and helps to set us apart in public higher education.”