Tufts University's endowment fund, boosted by record gifts from two wealthy alumni, grew more than any other major US college and university endowment last year.
The endowment increased 43.8 percent last year, driving up Tufts' rank to 51st -- $1.2 billion -- from 65th in 2005, according to a report on 765 endowments released yesterday by the National Association of College and University Business Officers.
It has doubled since the Medford university recruited president Larry Bacow from MIT in 2001. Its growth also has been fueled by his decision to bring on a professional investment manager to run the endowment's portfolio of stocks, bonds, and other investments. "Clearly, I'm delighted" by the report, Bacow said yesterday. "Who would not be?"
Among institutions with endowments of $1 billion or more, the second-strongest growth in the overall endowment was posted by the University of Wisconsin -- 26.7 percent -- followed by the Massachusetts Institute of Technology, with 24.7 percent growth after a year of strong investment returns.
Private universities since their founding have relied on donors, who are now mainly graduates who went on to amass or inherit fortunes. But, the phenomenon of megagifts -- Tufts in fiscal 2006 received a record $100 million donation from eBay Inc. founder Pierre Omidyar and his wife, Pam, and $40 million from Jonathan M. Tisch, chief executive of Loews Hotels -- is recent, said Terry Hartle, senior vice president of the American Council on Education, a trade organization for US institutions of higher education.
"As wealth has grown dramatically" in the United States, "it's been more and more possible for wealthy individuals to leave extraordinarily large gifts to universities," Hartle said.
The two main sources of endowment funds are these gifts and investments. Harvard University and MIT have much bigger endowments than Tufts, making it even more difficult for them to make huge leaps in overall size.
Despite that constraint, MIT's endowment grew to $8.4 billion, driven partly by its successful investments and a strong year of fund-raising. The report found that investment portfolios in university endowments, on average, posted returns of 10.7 percent. MIT far outpaced that with a 23 percent return in fiscal 2006, following a 17.4 percent return the prior year. In addition, MIT raised $301 million in pledges from donors. "That was our second-best year in terms of pledges," said Stephen Dare, director of resource development and fund-raiser for MIT, "and we're not in a major capital campaign."
Tufts' returns on its endowment investments was 13.9 percent in fiscal year 2006.
Harvard's endowment is by far the nation's largest: $28.9 billion, the report said. This put its endowment growth at 13.5 percent last year. In contrast, the Berklee School of Music in downtown Boston has a midsize endowment: $177.6 million. A 26.4 percent increase in its endowment size last year ranked its growth among the top 5 percent .
Tufts' Bacow, an economist , previously served as MIT's chancellor. When he became president of Tufts in 2001, he vowed to compete fiercely with the likes of MIT.
He said yesterday that large gifts are a natural dovetailing of Tufts' stated goal of training students for public service and the coming of age of alumni who attended college in the 1960s and 1970s and "had a highly developed social conscience." He added, "These people have made a difference in the world in their private lives by creating great companies and now seek to make a difference with their philanthropy." For example, Tisch of Loews (class of 1976) earmarked his $40 million gift for Tufts' College of Citizenship and Public Service, which was renamed the Jonathan M. Tisch College of Citizenship and Public Service.
Others are concerned large gifts can create potential conflicts of interest. In the late 1990s, the University of California, Berkeley, was criticized for accepting a $25 million gift from pharmaceuticals giant Novartis to its plant biology department in return for first rights to its research.
Universities "are working their way through" these issues, said Hartle at the education council.
Kimberly Blanton can be reached at firstname.lastname@example.org.