MIT net assets drop for the second consecutive year
The endowment fell by 4.4%, from $24.6 billion to $23.5 billion
MIT reported a loss in net assets for the fiscal year ending June 30, 2023. According to the Report of the Treasurer, the Institute’s return on pooled investments saw a 2.9% loss in the fiscal year.
The endowment fell by 4.4%, or about $1.1 billion, from $24.6 billion in 2022 to $23.5 billion. The endowment is the largest component of MIT’s overall investments and excludes pledges.
Executive Vice President and Treasurer Glen Shor attributed the endowment drop to the underperformance of venture capital firms, stating that “retrenchment in the valuations of venture capital portfolio companies affected [our] performance.” Shor acknowledged that MIT’s strategy “is heavily weighted toward less efficient markets.”
In the pool of peer institutions, MIT was among the few that experienced a dip in endowment value in the past fiscal year. Shor said that MIT’s investment policy “favors equity investments over fixed-income investments” in the report. Harvard “increased its allocation to fixed-income securities" according to the university's financial report for the fiscal year 2022. According to the same report, Harvard had investment returns of 2.9%. Stanford and Yale reported investment returns 4.4% and 1.8%, respectively.
MIT ended the fiscal year with a net gain of $317.1 million. Shor acknowledged that despite a challenging fiscal year, MIT experienced great success from philanthropic efforts, raising $553.3 million. Shor credited the success to “fiscal discipline and investment acumen, as well as support from alumni, friends, and partners.”
Shor also shared that operating costs increased by 8.6% — $344.9 million — from $3.993 billion in 2022 to $4.338 billion. These expenses include worker salaries and benefits, supplies, utilities, rent, and maintenance repairs. $44.1 million went towards expenses at the Lincoln Laboratory in Lexington, Massachusetts.
The financial report noted that the Institute holds its students in high esteem, as students bring “knowledge to the world and [advance] research and innovation.” MIT will continue to provide tuition to undergraduates whose families have less than $140,000 in household income for the 2024 fiscal year.
Furthermore, graduate students will receive 676 new beds for the Graduate Junction residential area, satisfying the promise made in 2017 of having 950 beds for graduate student housing. Additionally, the Institute spent $450 million on construction-related projects, with MIT working to maintain current buildings.
Shor concluded his report by saying that the Institute begins fiscal 2024 “energized by President Kornbluth’s vision and ever-excited about MIT’s present and future.”