Notes on Endowment

An endowment is that portion of an institution's financial resources that is held in perpetuity. A portion of the total return generated by the endowment is used to fund current operations; the principal, however -- whether in the form of cash, bonds, equities or other investments -- is considered inviolate and, in general, cannot be spent.

The Johns Hopkins Institutions were founded on a bequest of $7 million from merchant Johns Hopkins. Under the conditions Hopkins specified for the university's half of that $7 million, the trustees were barred from using the principal of the bequest either for capital expenditures or operating expenses. The bequest was the university's first endowment; the bequest itself could not be spent, though the income it generated could.

Endowment is a university's financial bedrock. It allows an institution to be less dependent than it might otherwise be on unpredictable sources of revenue, such as research sponsorship or government aid. It allows an institution to charge students less in tuition than the full cost of an education. And it provides a research university, in particular, assurance about its financial future, enabling it to take the intellectual risks that can pay off in monumental leaps forward in knowledge. Today, Johns Hopkins University has a small endowment relative to many of its peer research universities. As of June 30, 1994, the end of fiscal year 1994, the market value of the Hopkins endowment stood at $746.777 million.

As of June 30, 1993, the latest date for which comparable figures from other universities are available, the market value of the Johns Hopkins endowment stood at $725.035 million. That ranked Johns Hopkins 21st in a survey of colleges and universities published in the Feb. 9, 1994, edition of the Chronicle of Higher Education.

Harvard University had by far the largest endowment, at more than $5.118 billion. Of the 20 schools ranking above Johns Hopkins on the survey, 10 had endowments more than twice as large as Hopkins'. A total of 14 had endowments above $1 billion.

Because of the endowment's relatively small size, Johns Hopkins University is able to generate only about 4 percent of its annual operating budget from endowment income. For many private research universities, that figure is 10 to 20 percent.

The Johns Hopkins Hospital and Health System's endowment as of June 30, 1994, was $178.666 million.

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