MIT’s Endowment Over the Past Ten Years

2381 endowment 1
Left, MIT’s endowment investment return versus the Standard & Poor’s 500 index from 2000 through 2009 (present).
2382 endowment 2
Center, the market value of MIT’s endowment in real dollars (not inflation-adjusted); market value includes new gifts added each year.
2383 endowment 3
Right, sources of research revenue on the MIT campus (excluding Lincoln Laboratory and the Singapore-MIT Alliance for Research and Technology). Health and Human Services revenue has been a significant component of increased federal research revenue more than tripling.

MIT’s Endowment Over the Past Ten Years

MIT’s endowment investments lost 17 percent of their value in the fiscal year ending June 30, 2009, while the Standard & Poor’s 500 index dropped 28 percent of its value over the same period. This was the first fiscal year since 2003 that net investment return to the endowment was negative. In the 2000s, MIT’s endowment has always outperformed the S&P 500. MIT released the Report of the Treasurer on Friday last week.

The last time endowment investments had a net negative return, MIT cut the amount of money it distributed from the endowment. It is poised to make a similar but more drastic cut next year.

MIT reduced the “funds per unit” amount (a sort of dividend) by about three percent, from $42/share in FY2003 to $41/share in FY2004. This was the first decrease in history, according to the 2002–3 Report to the President.

The current payout, $51.91/share for FY2009, is expected to drop by about 18 percent in FY2010 and will represent the second decrease in the history of endowment payouts. Endowment payouts constitute about a quarter of MIT’s General Institute Budget (which is in total almost a billion dollars). The drastic reduction in endowment payouts helps explain the urgency of MIT’s need to reduce its budget and may explain why MIT chose to reduce its GIB spending by $150 million over two years, instead of over three. Seth Alexander of MITIMCo declined to comment for this article.

Campus research is doing surprisingly well — total research revenue grew by 10.4 percent to $1.375 billion in fiscal year 2009, according to the 2009 Treasurer’s Report.

Meghan Nelson, Michael McGraw-
Herdeg, and John A. Hawkinson