Brown’s endowment returns and financial health

October 16, 2021

October 14, 2021

Throughout the pandemic, we have provided periodic updates to the Brown community on the financial health of the University. Today, Brown is announcing some of the strongest investment returns in the institution’s history, aligned with unprecedented performance being experienced by many college and university endowments across the country. We are writing to share the ways in which the future availability of increasing payouts from the endowment is shaping Brown’s planning for investment in our community and our mission, as well as how it shapes our goals for addressing the University’s long-term financial sustainability.

Buoyed by strong performance among financial markets across the globe, the Brown University endowment generated a 51.5% return during Fiscal Year 2021. Brown closed its fiscal year on June 30, 2021, with an endowment market value of $6.9 billion. The success of our investment team in ensuring the endowment’s ability to enable Brown to address critical and complex problems in the world is nothing short of remarkable.

Over the course of the fiscal year, Brown’s endowment contributed $194 million to the University’s operating budget, which represents 15% of the total. Because the endowment’s contribution to the operating budget is based on the endowment’s average market value over the previous three years, the $194 million contribution for FY21 is expected to steadily increase in each of the coming years, assuming that there is not a downturn in the market. The annual payout rate ranges from 4.5% to 5.5% of the endowment’s average market value.

Over time, the positive impact of this year’s historic return is likely to have a transformational effect on Brown’s financial support for the work of current students, faculty and staff, for future generations of scholars, and the impact we can make on some of the most pressing challenges facing society.

We know that the way the endowment functions is not always clear to some in our community. Brown’s endowment is a collection of charitable gifts designated by donors to be invested by the University, with returns spent for specific purposes. Among more than 3,300 individual endowed funds that comprise the Brown endowment are funds that support financial aid for our low- and moderate-income students; professorships to recruit leading researchers and educators; labs and public health space to help develop treatments and cures and address health crises; community engagement initiatives; academic programs to prepare the next generation to address societal challenges; and teaching and high-impact research in areas such as climate change and vaccines to fight viruses. As just a few examples:

-- An endowed fund is enabling full scholarships for U.S. military veterans who attend Brown, supporting a plan to double the number of student veterans enrolled as undergraduates by 2024.

-- Another is fueling annual financial support from Brown to Providence Public School District, providing critical investments in programs aimed at strengthening teaching and learning in local K-12 classrooms.

-- A new fund is launching the Center for Alzheimer’s Disease Research, which brings together biomedical scientists with world-class physicians to work toward early detection and treatment of the disease.

-- And a fourth is ensuring permanent implementation of The Brown Promise, an initiative that replaced loans with scholarships in all University-packaged undergraduate financial aid awards beginning in 2018-19.

Each of the endowment’s designated funds is instrumental in supporting individual students, research, service to the community or the residential educational experience at Brown. Collectively, they ensure that students from every socioeconomic background can access a Brown education, and support critical scholarly endeavors of students, faculty and staff. Endowed funds for financial aid are particularly crucial, with the largest share of the endowment’s annual budget contributions (32%) designated for scholarships, fellowships and prizes.

The endowment also provides funding support for major University initiatives, such as the Brown’s plans to contribute $125 million toward forming an integrated academic health system serving Rhode Island with the Lifespan and Care New England health systems.


The success of the endowment is particularly important now as Brown seeks to close a persistent structural deficit in the University’s budget. That deficit has been challenged further by the negative financial impact of COVID-19. Pandemic-related expenses exceeded $55 million for the fiscal year — for important priorities such as routine COVID-19 testing, personal protective equipment and emergency funds to allow students to study remotely. In addition, revenue declines from the cancellation of numerous residential high school and athletics programs for safety reasons resulted in a reduction of more than $30 million in revenue. In October 2020, Brown projected a $118.5 million budget deficit for FY2021.

This is where the performance of Brown’s endowment makes a significant difference. The endowment protects the University in times of crisis, as it did over the past year. To mitigate the significant revenue declines and expense impacts, the University increased the endowment payout last year by $22 million, in addition to the expense-control measures we put in place last year. These included implementing department spending limits, close management of the hiring process, and temporarily reducing retirement contributions. These efforts helped reduce the forecasted deficit while protecting our community from the layoffs that other institutions and other industries pursued to address budget challenges. We’re proud that we made it through the worst of the pandemic together. Our foremost priority was to ensure that the effects of the public health crisis did not fall disproportionately on the most vulnerable members of our community.

Nevertheless, Brown finished FY21 with a $52.2 million deficit in the operating budget, which is much lower than the $118.5 million forecasted in the approved budget last year, but still significant in light of the University’s FY20 deficit of $8.9 million. We are currently projecting a FY22 deficit of $36.8 million, largely due to increases in COVID-19 testing costs and declines in revenues from the Summer at Brown program.

Success in fundraising will help Brown fund a range of priorities, although, similar to the endowment, the full budget impact of successful fundraising usually isn’t realized for several years, depending on the time period over which gifts pledged to Brown are paid to the University. Donations made to the endowment, in particular, contribute to the budget far into the future in the form of investment returns over time. We expect to share an update on the status of BrownTogether campaign fundraising before the end of October.

Earlier this month, we announced a new Program on Innovation and Financial Sustainability, which is designed to help ensure Brown’s financial health over the longer term. The program will bring together faculty and staff to collaborate in work groups that will oversee an array of changes in Brown’s academic and administrative operations that aim to yield real and lasting impact on the University’s financial sustainability. As President Paxson shared in the announcement on Oct. 6, we will build on the lessons learned from teaching innovations developed during the pandemic, with a focus on access, flexibility and equitable assessment in the educational opportunities Brown provides to students.


While the full budget impact of the FY21 endowment performance and Brown’s fundraising success will not be felt all at once, the larger payouts that Brown is likely to see over the next few years will offer a range of opportunities.

In the coming weeks, we expect to announce plans for new investments in providing access to a Brown education through new financial aid and other initiatives we can phase in over time. We also have opportunities to strengthen the ways that we partner with the Providence community. A set of initiatives in each of these areas will be discussed in upcoming meetings of Brown’s governing body, the Corporation of Brown University.

As we remain in the midst of an unprecedented pandemic, we remain proud to lead such an amazing community of faculty, staff and students. We are grateful for the work we continue to do together as teachers and learners to fulfill Brown’s mission of education, scholarship and research, and service to the world and society. It is only possible through the caring and support for your work and one another that so many of you demonstrate every day.

Thank you for being part of this extraordinary community.


Christina H. Paxson, President 

Richard M. Locke, Provost