Endowment Growth Projections

Dear Colleagues,

 

At their recent meeting, the Trustees approved endowment payout rates for the upcoming year (FY 21/22).  I’m writing to pass along this information, and to also give you the currently projected growth rates for future years.  Please keep in mind that growth rates for FY22/23 and beyond are only planning estimates, and will not be finalized until Trustees approve rates for that year.

 

In the current fiscal year (FY 20/21), separate rates of growth for student support and non-student support endowments were established:  non-student support endowments decreased 10%; student support endowments increased 3.1%.  This student support payout increase required the sale of shares in FY 20/21.  Since payout is calculated as the payout rate multiplied by the number of shares, the reduced number of shares resulted in an effective growth rate of only 2.7%  This lower, effective rate should be used when projecting the amount of student support payout that will be available. 

 

The two separate growth rates continue in FY 21/22 and beyond.  Student support endowment shares will continue to be sold in order to fund the 2.5% approved growth rate, resulting in an effective growth rate of only 1.9%.  The 1.9% growth rate should be used when calculating the student support funding available. 

 

 

FY 20/21

FY 21/22

FY 22/23

FY 23/24

FY 24/25

Non-Student Aid Endowments

<10.0%>

6.0%

4.5%

3.5%

3.5%

Student Aid Endowments

3.1%

2.5%

2.5%

2.5%

2.5%

Student Aid Endowments – Effective Rate

2.7%

1.9%

2.0%

2.1%

2.1%

 

Please let the Finance team know if you have questions or want to discuss endowment payout projections.

 

Thanks

Jim

 

 

Jim Henry, Director of Finance

School of Humanities & Sciences, Stanford University