Endowment is the missing pillar of university finance
This blog was kindly authored by Gordon Cox, Director at Philanthropy Company and former Director of Advancement at the University of Bath and Development Fellow at University College, Oxford.
For decades, debates about university funding in the United Kingdom have centred on public grants, tuition fees and research income. Yet one of the most important sources of long-term financial resilience remains largely underdeveloped outside a few UK institutions: the university endowment. This is not simply a fundraising issue; it is a question of strategy, governance and policy.
The central argument of my report is straightforward: universities that systematically build and manage endowments are better positioned to withstand financial shocks, invest in new priorities and support future generations. Endowments are not a substitute for public funding, but they can complement existing income streams and support a more balanced, sustainable funding model.
Endowment internationally – a strong, underused tradition in the UK
The contrast between the UK and international competitors is striking. The Council for Advancement and Support in Education (CASE) data show that outside Oxford and Cambridge, UK universities collectively hold around £5 billion in endowment assets and generate approximately £150 million annually, representing just 0.3 per cent of sector income. Moreover, only about 10 per cent of philanthropic income goes to endowments, compared with nearly 29 per cent in the United States.
This gap is not due to a lack of tradition, as Britain has one of the world’s richest histories of endowed education. Oxford, Cambridge and the Wolfson Foundation all demonstrate the transformative potential of long-term capital when supported by effective governance and disciplined investment. The problem is that much of the wider sector has not translated this historical legacy into a modern strategy.
Building strong endowments has been a hallmark of US institutions and has served as a foundation for many of these institution’s transformational ideas, (including named professorships and tuition reducing or eliminating scholarship programs). The case has been made why all institutions, especially those throughout the UK, should refocus their efforts on building strong endowments to support their future success.
Joshua R. Newton, Senior Vice President, Advancement and Alumni Engagement, Chair of CASE50.
How universities can build sustainable endowment income
The report identifies three recurring features of successful endowment systems: professional management, sufficient scale and close alignment between investment and fundraising. When these conditions are in place, institutions tend to achieve stronger returns, inspire greater donor confidence, and generate higher levels of long-term support.
There is a crying need for a centralised, well-run university endowment investment. There needs to be more of a long-term approach, and universities should be thinking along a time horizon, but many do not.
Paul Ramsbottom, CEO, Wolfson
Size drives performance and the opportunity for growth
Scale appears particularly important, with international and domestic evidence consistently showing that larger endowments generate stronger returns because they can access specialist investment expertise, diversify more effectively and manage costs more efficiently. Smaller and fragmented funds struggle to achieve the same outcomes. Oxbridge’s experience, along with the Wolfson Foundation and several international case studies, suggests that pooled investment structures can offer a practical route to overcoming this challenge.
Small endowments don’t have the scale … you’re not going to get the level of professional management … or access to the best managers.
Andrew Reid, Director of Finance, University of Cambridge, 2001-2018.
In the UK context, the independent colleges of the Universities of Oxford and Cambridge have pooled endowment assets over recent decades, providing a powerful example of how shared investment and administrative services can generate significant impact, reduce costs, and improve efficiency. A similar approach, with universities pooling endowments to manage them collectively, as they already do through shared pension arrangements, could be adopted more widely across the higher education sector. By achieving greater scale, institutions could strengthen investment performance, improve diversification and reduce management costs. (Universities UK (UUK), Transformation and Efficiency).
The implications are significant, and the report’s modelling with CASE and Higher Education Statistics Agency (HESA) data suggests that relatively modest improvements in investment performance and fundraising could substantially increase endowments’ contribution to university finances over time. Under current assumptions, endowment income remains a marginal contributor to sector revenues. However, higher investment returns and directing a greater share of philanthropic income into endowments could generate materially larger, more sustainable income streams. In many cases, such as at the National University of Singapore and to a lesser extent, all Singapore universities, endowments have grown remarkably quickly.
The power of compounding and aligning fundraising and investment strategies
The modelling is illustrative rather than predictive, but it highlights compounding’s power over long periods. One modest scenario suggests that the non-Oxbridge endowment base could grow from approximately £5 billion to around £38 billion over 20 years if fundraising and investment practices align and improve.
Learning from global experience and history
This report draws extensively on global case studies and evidence from across the higher education sector, examining historical trends and emerging practice in the stewardship, investment, and fundraising of university endowments. The analysis draws on sector insights from organisations including BUFDG, the Russell Group, and CASE, and is complemented by two virtual panel discussions featuring senior leaders from four continents.
Endowment has long been an important part of Newcastle University’s story and of the wider university sector. Yet in recent generations across the country, its potential has sometimes been overlooked. Strong leadership can play a crucial role in developing endowment as a source of long-term, diversified income that benefits future generations of students, researchers and university leaders. At Newcastle, we have recently embraced many of the changes highlighted in this report, and I hope others across will find it a valuable investment of their time and support.
Professor Chris Day, Vice-Chancellor and President, Newcastle University
The panels below bring together vice-chancellors, university executives, investment professionals, fundraising leaders, and philanthropy advisers, offering a broad international perspective on the opportunities and challenges of endowment development. Their collective experience highlights both the barriers to building endowments and the practical strategies institutions can adopt to enhance long-term financial sustainability and philanthropic support.
Key themes & recommendations
- Professionalised investment models
- Importance of scale
- Blended funding models
- Fundraising capability and culture
- Donor expectations: flexibility, impact and trust
- Governance as a key success factor
- Influence of the external environment
- Balancing restriction and flexibility
- Leadership and moments of change
- Redefining endowment purpose and time horizon
- Communication, collaboration and sector constraints
- Lessons from the Yale investment model
This is an important report raising awareness of how universities could increase the impact they can achieve through endowment funds. While progressing the proposals would be complex and require a long-term outlook, we would encourage the sector to take seriously the opportunity to increase funding to university endowments. Key to achieving success will be to deepen stakeholder understanding of what endowments are and what they are not. CASE looks forward to learning how this report is received more widely and to participating in future discussions.
Sue Cunningham, President and CEO of the Council for Advancement and Support of Education (CASE)
Panel 1: Leaders in higher education
Drawing on experience in university leadership, public policy, philanthropy, and investment management, the panel offers practical insights into the opportunities and challenges of building long-term institutional strength through endowments. Together, these perspectives help contextualise the report’s findings within the realities of contemporary higher education leadership and strategic decision-making.
Gordon Cox and Nick Hillman facilitate a discussion featuring Matt Cox, Director of Investment at University College London; Sir Ivor Crewe, former Master of University College, Oxford and Vice-Chancellor of the University of Essex; Carole Souter CBE, former CEO of the Heritage Lottery Fund and Master of St Cross College, Oxford; and Ian White CBE, former Vice-Chancellor of the University of Bath and Master of Jesus College, Cambridge. The discussion examines how university leaders approach endowment governance, investment strategy and stewardship.
Panel 2: Leaders in philanthropy and advancement
In this discussion, three leading advancement professionals from Asia, Australia and the United States explore with Gordon Cox international perspectives on endowment fundraising, investment governance and donor engagement.
Featuring Edi Fung, Vice President for Advancement at the National University of Singapore, Rosalind Ogilvie, Director of Advancement at the University of Sydney, and Josh Newton, Senior Vice President for Advancement and Alumni Engagement at Emory University, the panel draws on extensive experience of leading major fundraising campaigns, building philanthropic partnerships and strengthening long-term institutional support. Together, they share insights into global trends, emerging opportunities and the lessons universities can learn from successful approaches to philanthropy and endowment development.
Together, these discussions offered practical perspectives on how universities across jurisdictions approach endowment growth, governance and stewardship. The contributions complement the report’s evidence and international case studies and place the findings within the realities of contemporary higher education leadership and fundraising practice.
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