(TNS) — College and university endowments in 2023 reversed a historically poor showing from the previous year by posting investment returns approaching 8% that favored institutions with less wealth over peers with billions of dollars in holdings.

The findings are from a study of nearly 700 institutions nationally that was released Thursday by NACUBO and Commonfund.

It found that endowments, including ones in Western Pennsylvania, on average saw a 7.7% return on investment after fees for the 12 months ending June 30. That compares to the previous year when endowment values declined by 4% and returns were down by 8%.

“What a difference a year makes,” said Mark Anson, CEO and chief investment officer at Commonfund. “2022 was the worst stock and bond year that any of us have experienced in our lifetimes. Go back 50 or 60 years, you will never find a year as bad as 2022.”

In a Zoom call with reporters, Anson said this year’s rebound shows the market is returning to normal.. But he also noted that unfavorable 2022 results will likely wash into three- and five-year returns for many institutions.

An endowment is an aggregation of assets invested by a college or university to help fund its educational and research mission in perpetuity, as described by the American Council on Education.

Schools have various formulas, often spread across multiple years, for determining what share to spend in a given year. Endowments fund scholarships, endow professorships, support athletic programs and other campus endeavors that are not covered by tuition or annual gifts.

The survey dates to 1974 and ranks institutions by criteria including endowment market value. This year’s study received responses from 688 colleges, universities and affiliated nonprofits spanning the Ivy League, elite public universities and regional private campuses and community colleges. Collectively, they reported $839.1 billion in endowment assets.

The median endowment size was $209.1 million, and nearly one-third of study participants had endowments that were $100 million or less.

In Western Pennsylvania, the highest ranked in the study by endowment market value was the University of Pittsburgh at $5.49 billion, down 0.7% (29th) in the overall survey.

Others in the region included:

Nationally, Harvard University led all others in total market value, at $49.50 billion, up by 0.1%. Second largest in market value was the University of Texas System at $44.97 billion, up by 5.4%.

Pennsylvania’s largest holdings were with Trustees of the University of Pennsylvania at $20.96 billion, up 1.2% (7th).

A sampling of other Western Pennsylvania schools included:

Participating institutions withdrew $28.4 billion from their endowments during the fiscal year, up by 8.4% from the previous year.

The idea that tax-exempt institutions can maintain massive financial holdings while raising tuition and fees yearly often draws the ire of students, parents and others.

University leaders counter that endowments are largely restricted by donors in what their gifts can be used for and are intended to drive the institution’s long-term financial health.

Kara Freeman, president and CEO of NACUBO, or the National Association of College and University Business Officers, seemed to hint at that defense in discussing this year’s study.

“Endowments are not lump-sum savings accounts,” she said. “They are made up of a large number of individual accounts, each with a separate focus in support of the institution.”

The largest share of endowment spending — 47.7% — went to student financial aid; other spending included academic programs and involved research at 17.5%, endowed faculty positions at 11.1%, campus operation and maintenance at 7.4%, and all other purposes at 16.4%.

Institutions with smaller endowments were more heavily invested in public equities, which had a strong year, and thus did better than institutions with larger endowments. Those were more heavily invested in private capital, private equity, venture capital and private real estate.

New gifts to endowments totaled $13.3 billion, down from $14.9 billion in FY22. The average new gift in FY23 for all 688 study participants was $20.4 million, while the median new gift was $4.7 million.