Georgetown University Endowment Performance: A Comprehensive Overview
Introduction
University endowments play a crucial role in supporting academic institutions by providing a stable source of funding for various operations, scholarships, and research initiatives. Georgetown University, with its $3.6 billion endowment, is no exception. This article delves into the performance of Georgetown's endowment, recent leadership changes, philanthropic efforts, and broader trends in university endowment management.
Leadership Transition in the Investment Office
Georgetown University recently appointed Kristin Agatone as its Chief Investment Officer (CIO), entrusting her with the oversight of its $3.6 billion endowment. Agatone succeeds Michael Barry, who departed to lead Johns Hopkins’ endowment. Prior to her appointment at Georgetown, Agatone served as the CIO for Lehigh University's $2.2 billion portfolio for nine years, during which the portfolio nearly doubled. She assumed her new role in September, taking over from Chris Gill, the investment office’s managing director, who served as interim CIO during the search for a permanent replacement.
Agatone's selection was partly based on her extensive financial experience in both higher education and the private sector. Her resume includes roles at Goldman Sachs and TPG. She expressed enthusiasm for contributing to Georgetown's mission, particularly as the university expands its global presence. She also aims to continue programs like the Investment Office’s internship program, which provides Georgetown undergraduates with pathways to careers in investment management.
Endowment Performance and Investment Strategy
For the fiscal year ending June 30, 2024, Georgetown’s endowment returned 11.2 percent, resulting in $360 million in investment gains. The marketable portfolio, constituting 70 percent of the endowment, generated a return of 14.2 percent, while private investments yielded 5.1 percent. The public equity portfolio performed particularly well, returning 17 percent for the year.
Georgetown’s investment and spending policies are structured to ensure a consistent flow of support for annual operations while safeguarding the endowment’s future purchasing power through asset growth. These policies align with the institution’s values and are designed to provide long-term financial stability. The spending rate policy is based on a trailing 5-year moving average of the endowment’s market value, calculated two years in arrears and approved by the Board of Directors.
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Philanthropy and Fundraising at Georgetown
Philanthropy plays a vital role in supporting Georgetown University's mission. The Office of Advancement, led by Vice President of Advancement R. Bartley Moore, manages the university’s relationships with donors and external partners. Georgetown's current philanthropic campaign, Called to Be, encourages supporters to contribute to the school's mission of "service to the common good."
The campaign focuses on funding scholarships, the Community Scholars Program, Counseling and Psychiatric Services, Residential Ministry, Associate Professorships, study abroad programs, and grants for the Earth Commons Institute. According to Moore, donors often prefer to support "people over bricks and mortar," emphasizing the importance of investing in students and faculty.
Gifts to Georgetown come in various forms, including cash, stocks, bonds, securities, and in-kind donations such as rare books or art. Stocks, bonds, and securities are typically sold and converted into usable cash. Donor support for affordable access to education has significantly increased in recent years. The Georgetown Fund, which benefits from unrestricted gifts through the Annual Giving program, directs 100% of its funds to 1789 Scholarships for undergraduate students.
Despite these efforts, students receiving financial aid may still graduate with significant student debt, contributing to economic disparities within the university. The median income of Georgetown families is $229,100 a year, with a significant portion of students coming from the top 20 percent of income earners in the United States. Students are actively involved in fundraising efforts, ensuring that their perspectives are considered in the allocation of resources.
Endowment Funds: Restricted vs. Unrestricted
Endowment funds are essentially repositories for gifts and operating surpluses generated by non-profit organizations. These funds are invested in a diversified portfolio of assets, including stocks, bonds, hedge funds, and private equity, to generate income for the parent organization. This income is then used to subsidize operating costs and capital expenditures.
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Endowments can be categorized as either unrestricted or restricted. Unrestricted endowments can be used for any purpose, typically supporting operating expenses or specific projects chosen by the university. Restricted endowments, on the other hand, are designated for a specific purpose by the donor, such as funding a particular department or scholarship.
Trends in University Endowment Management
In recent years, university endowments have faced increased scrutiny and evolving financial landscapes. Driven by strong performance in public equities, many top university endowments experienced higher returns in FY 2025 compared to FY 2024. This rebound is particularly significant given challenges such as federal funding cuts to university research and the implementation of a federal excise tax on certain elite universities.
Harvard’s $56.9 billion endowment, for example, achieved its best performance since 2021 in the year ending June 2025. Despite facing costly legal battles and distributing $2.5 billion to fund university operations, the endowment demonstrated resilience and growth.
However, broader research indicates that the performance of non-profit endowments can vary significantly. A study using IRS data from 28,696 organizations revealed that the median annual investment return for endowments was 3.75% between 2009 and 2016. This figure underperforms a 60-40 combination of equity and Treasury bond market indexes by approximately 5.53 percentage points annually. The study also found that the largest endowments tend to generate the worst performance.
Most endowments adopt conservative distribution policies, with payouts typically below their long-run expected returns. This cautious approach aims to ensure the long-term growth of the endowment. Additionally, there is a positive relationship between investment performance and future donations, suggesting that donors are more likely to contribute after successful investment years.
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The Impact of External Factors
Georgetown, like other universities, faces financial challenges that can impact its endowment strategy. Interim university President Robert Groves attributed recent hiring freezes and budget cuts to federal funding freezes on universities. These external pressures underscore the importance of effective endowment management and diversified revenue streams.
The tax bill passed in December 2017 imposed a 1.4% excise tax on the net investment income of certain private universities. This tax applies to institutions with at least 500 students and assets exceeding $500,000 per student, excluding assets directly used for exempt purposes. The implications of this tax necessitate careful financial planning and strategic investment decisions.
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