Vanderbilt reported an annual endowment of $9.7 billion in its 2023 financial report, down from $10.2 billion in 2022. The university experienced its second year of negative returns on its endowment following a 4.4% decline the year prior.
Vice Chancellor for Investments Anders Hall attributed the decline to valuation adjustments and increased spending.
“The endowment returned -2.0% largely due to short-term valuation adjustments in the venture capital and private equity portfolios,” Hall said. “The second contributor was spending, as the endowment distributed $416 million to the university over the course of the year. These distributions support the university’s education, research and public service missions.”
Hall also pointed out that endowment distributions make up a significant portion of Vanderbilt’s budget, particularly for financial aid for undergraduate and graduate students.
“In fiscal year 2023, endowment distributions comprised 23% of Vanderbilt’s operating budget, including financial aid,” Hall said. “In the academic year 2022-23, more than 65% of undergraduates and more than 86% of graduate and professional students received financial assistance.”
According to the financial report, the negative return may also result from a $26 million increase in endowment distributions — up from $244 million in 2022 to $270 million in 2023 — due to payouts from additional investments in the endowment.
Despite Vanderbilt’s negative return for fiscal year 2023, Hall said that such a decline is not unusual given similar trends observed among peer institutions.
“Endowments, like Vanderbilt’s, with larger allocations to venture capital and private equity generally underperformed last year,” Hall said. “Bowdoin returned 0.6%, Duke returned -1.0%, Princeton returned -1.7%, Washington University in St. Louis returned -2.3% and the Massachusetts Institute of Technology returned -2.9%. The median return for endowments with assets greater than $3 billion was less than 4%.”
Although Vanderbilt’s endowment saw its second year of negative returns, Hall reaffirmed the importance of perspective when assessing the university’s financial growth.
“One year is too short a period to measure endowment performance, particularly for an institution celebrating its 150th anniversary,” Hall said. “For the three years ending June 30, 2023, the endowment’s investment return was 13.7% per year or a gain of 47% on a cumulative basis. Across the last decade, Vanderbilt’s endowment has grown by more than $6 billion, a 167% increase.”
Following two years of negative returns, the university expressed its commitment to fundraising efforts that aim to increase its endowment in future years. Chancellor Daniel Diermeier cited several achievements of fiscal year 2023 in his opening letter of the report.
“We publicly launched our $3.2 billion Dare to Grow campaign, the most ambitious fundraising campaign in Vanderbilt’s history,” Diermeier said in the report. “Fiscal year 2023 was a tremendous success, raising a record $323 million in new commitments and surpassing the fundraising goal of $195 million.”
Hall emphasized the importance of the Dare to Grow campaign, citing its pivotal role in the university’s continued success.
“Vanderbilt’s commitment to education and research continues to define us as we pursue [the campaign],” Hall said. “This philanthropic support for the endowment, paired with long-term appreciation, should help the endowment grow to continue to support future generations at Vanderbilt.”
