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UW-Madison's endowment grew 29% during pandemic, a record 1-year gain
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UW-MADISON | RISING TIDE FROM STOCK MARKET

UW-Madison's endowment grew 29% during pandemic, a record 1-year gain

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Science Hall

A cyclist passes Memorial Union, at right, on UW-Madison's campus last summer.

UW-Madison’s endowment grew 28.7% in the most recent fiscal year, joining a number of colleges across the country reporting record returns because of the soaring stock market.

The one-year return rate for the year ending June 30 brought the total endowment to an all-time high market value of $3.98 billion, UW Foundation spokesperson Tod Pritchard said. Past one-year returns over the previous four years have ranged from 1.2% to 14.2%.

Endowment graphic

The UW Foundation hasn’t historically highlighted return rates beyond including them in annual reports, but officials provided data ahead of publishing their fiscal year 2021 report at the Wisconsin State Journal’s request.

Large universities and highly ranked colleges nationwide are celebrating record-setting endowment gains in recent weeks, according to news releases and media reports. The University of Minnesota‘s endowment gained 49%, the University of Michigan‘s endowment grew 41% and University of Illinois posted a 34% return. Massachusetts Institute of Technology and Duke University both reported a 56% gain in the past year and Harvard University saw a 34% rise.

Afsaneh Beschloss, RockCreek Group chief executive officer, says upward movement in the markets is coming to an end. She says the next 10 years for investors will be tough. She sits down with David Westin on "Bloomberg Wall Street Week." (Source: Bloomberg)

UW-Madison’s endowment gain trails slightly behind some of its peer universities, which UW Foundation president and CEO Mike Knetter attributed to having a lower tolerance for risk in its investments compared to some other schools. That means the endowment experiences a little less upside when the market is up and a little less downside when the market is down.

“A year like we just had is a great tailwind,” he said. “But we’re really long-term investors.”

Over a 10-year period, the UW Foundation is averaging a nearly 9% return. “That’s really the number we tend to focus on,” Knetter said.

Michael Stohler started last month as the foundation’s new chief investment officer. He came from Washington University in St. Louis, which has a larger endowment than UW’s and posted a 65% return.

UW’s endowment portfolio is made up of more than 6,300 funds from donors, many of whom have specified how they want their gifts spent. The foundation each year moves some of the money from its endowment — about 4.5% — to UW-Madison.

During the 2021 fiscal year, a record amount of more than $300 million was distributed to support student scholarships, faculty, research and other programming, Knetter said. The rest remains invested in stocks, bonds and other assets to keep the fund going in perpetuity.

When the COVID-19 pandemic hit, UW Foundation officials initially worried about transferring the same percentage of the endowment it has historically distributed to UW-Madison.

“We weren’t sure we could maintain the 4.5%,” Knetter said. “There were more conversations about does this need to be dialed back a bit?”

The markets, however, recovered quickly. But concerns remain about what’s to come.

“Many feel we’re at precarious point right now,” Knetter said, noting inflation is on the rise. “We’re always trying to be invested in a way that we can ride the ups and downs without too much volatility in the underlying distributions.”


Know Your Madisonian 2021: Profiles from the Wisconsin State Journal's weekly series

They're your neighbors, co-workers or friends you may not have met yet. And they all have a story to tell.

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John Adams and Michael Moody founded the nonprofit Catalyst for Change in January 2020 to eliminate human suffering one life at a time by placing human dignity and development at the forefront of poverty, addiction and homelessness.

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Matt Reetz has spent years studying birds, doing postdoctoral research around the United States, Australia, the Caribbean and southern Chile.

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Tony Gomez-Phillips' prairie-inspired planting connects Frank Lloyd Wright's architecture with a garden style that embodies his views of nature and how it interacts with humans.

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Since 1962, the McCann family name led efforts to make sure Hilldale shopping center is clean and safe. Now Tom McCann has retired to fish, hunt turkeys and catch Dungeness crabs.

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Out Health, run by Dr. Kathy Oriel, is in a former dentist's office on University Avenue.

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Teresa Holmes became Madison Rotary Club president in July.

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This month, Magney announced he will be departing from the WEC to join VoteRiders, a nonpartisan nonprofit organization with the goal of ensuring that voter ID laws don't prevent qualified citizens from voting.

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American Family Children's Hospital's first facility dog was trained in Georgia and likes snuggling and Goldfish crackers.

"A year like we just had is a great tailwind."

Mike Knetter, UW Foundation president and CEO

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