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Posted on Thu, Oct 13, 2011 : 5 p.m.

$7.8B University of Michigan endowment at highest level ever

By Kellie Woodhouse

The University of Michigan endowment increased by $1.2 billion this year to $7.8 billion— the seventh largest of any university in the nation.

"It's a huge year," U-M Chief Investment Officer Erik Lundberg said in an interview. "We did better than Harvard, better than Yale, better than Stanford, better than Princeton... in investment return."

The university's endowment had an investment return of 24.3 percent, one of the school's highest returns ever.

The school's endowment grew by 18.2 percent. In the past decade, the fiscal 2011 growth has been matched only by fiscal 2007, during which endowment increased from $5.6 billion to $7.1 billion.

But while U-M's endowment sits at $7.8 billion, Harvard's is above $30 billion.

"They started earlier than us," Lundberg said. "We're working hard to catch up with them."

The university's growing endowment was discussed at a U-M Board of Regents meeting Thursday in Flint. At that meeting, the regents voted to approve the school's 2011 financial report.

Over the past decade, U-M has averaged an investment return of 9.3 percent per year. That means that the endowment has doubled since 2001, when it stood at $3.6 billion.

The university allows itself to spend up to 4.5 percent of its endowment each year. This year, that meant that university got to utilize $266 million from its coffers.

"To the extent that the endowment gets bigger we spend more," Lundburg said.

Regent Katherine White said the university "expects the distribution levels to remain at a similar level next year."


Regent Katherine White

According to White, "the Board of Regents in 1999 established the investment office to be dedicated to managing the University of Michigan's endowment and investment pools."

Since 1999, the school's endowment has increased by $5.3 billion.

The endowment has not enjoyed a steady upward growth since then, however. In fiscal 2006, the endowment fell from $7.6 billion to $6 billion, due to the economic downturn.

"We took a hit for a while, but we recovered," Lundberg said.

In fact, some of this year's increase is due to "recovery from the financial crisis," he said.

The university expects its recent commitment to invest in its own start-ups to continue the endowment's growth trend in the future.

U-M President Mary Sue Coleman announced last week that startups would be eligible to receive up to $500,000 apiece from the university after they’ve secured venture capital from a separate private source.

"That will be contributing to our investment returns," Lundberg said. "But that will take time to pay off. Companies take a long time to mature."

"This is a win-win program for our endowment and inventors," Coleman said of the program during the regents meeting.

Kellie Woodhouse covers higher education for Reach her at or 734-623-4602 and follow her on twitter.



Sun, Oct 16, 2011 : 3:38 a.m.

Ugh oh, now the nurses are going to want a whole lot more in the mandated, state mediated, board governed, top secret, campaign funded, vote pandering, "negotiations".

Ethics Advocate

Fri, Oct 14, 2011 : 3:36 p.m.

The U-M endowment managers deserve tremendous praise for this record amount given the preformance of stock markets over the past three years. I wish I could have paid these excellent decision makers to handle my asset investments so I would I have had a net gain rather than a significant loss!

Joe Kidd

Fri, Oct 14, 2011 : 2:10 p.m.

Good to see the matching funds policy. To require that private investors have supported a company shows that the venture is seen as profitable. I wish the federal govt did this instead of putting tax dollars into companies they hope and dream will be successful, like Solyndra.

Charles Buck

Fri, Oct 14, 2011 : 1:22 a.m.

Google "Michigan Tech Ventures" for a look at one Michigan university's foray into venture capitalism that ended with people going to jail. Universities must be very careful about investing directly in the private sector and who they place in charge of approving proposals. Endowments are not tax dollars, but they are public funds, and public funds must be invested with the utmost responsibility.


Fri, Oct 14, 2011 : 12:34 a.m.

I just wish the University would pay more of its share of the cost of running the city and the county. I think it is wonderful they are here and have money.

Joe Kidd

Fri, Oct 14, 2011 : 2:04 p.m.

If the U were not here the city would be suffering like all others. I have issues with how it is run and how employees are being treated but the city problems are due to bad decisions by the city and the U should not have to bail it out.


Fri, Oct 14, 2011 : 11:31 a.m.

I think the U does plenty to support this area with the jobs and services that are provided. I have a lot worse neighbors living next to me that pay taxes...

John Sloat

Thu, Oct 13, 2011 : 11:15 p.m.

It seems to me that if you live in the Ann Arbor area, you'd be perfectly content with both the high tuition and the tax dollars going to the University. It means the $ of a lot of other people who live outside of the area is coming to support our local economy. Obviously Ann Arbor would be a shadow of itself (economically and in many other ways) without the University. (And no, I don't work for the University in any way, shape or form.)


Thu, Oct 13, 2011 : 10:31 p.m.

I've never understood the negativity toward U of M that I see on this site whenever a story is posted. Is it envy and jealousy at there success? I just don't get it.

Joe Kidd

Fri, Oct 14, 2011 : 2:02 p.m.

I'll give you a reason. They treat employees very badly. So badly it looks like they are pushing people out the door who have been their 20 to 30 years so that management can increase their own salary. Maybe you are correct about envy and jealousy by some but a lot of people have good reason. When they pay the administrators outrageous salaries, then try to strong employees like nurses with claims of budget issues, its a big slap in the face. The U of M just isn't run as well as it used to be. Many people I know who worked there agree with me on this.


Fri, Oct 14, 2011 : 4:02 a.m.

And I've never understood why all the U of M haters don't just move away from Ann Arbor!


Thu, Oct 13, 2011 : 9:48 p.m.

The comments on this kind of University news are always just so predictable.


Thu, Oct 13, 2011 : 9:23 p.m.

You paying attention Rick? They dont need our money anymore.


Thu, Oct 13, 2011 : 9:15 p.m.

"University of Michigan endowment at highest level ever" is their tuition.