The University released its financial report for fiscal year 2022 in a Thursday Today@Brown announcement from President Christina Paxson P’19. The annual report, which includes the University’s financial statements as well as reports on research, fundraising and the endowment, showed that Brown posted a $49.5 million surplus in net operating activities despite negative returns on its endowment.
“Despite a challenging national economic landscape, the University closed FY22 in a strong financial position,” Paxson wrote in the announcement, citing “thoughtful investment, vigilant financial planning, a series of strategic interventions and the truly inspiring generosity of the Brown community” as reasons for success.
According to the report, many University operations returned to their pre-pandemic state in 2022. But uncertainty around federal reimbursements and costs associated with surges in COVID-19 cases meant that the pandemic still affected budgeting for the year, Chief Financial Officer Michael White wrote in the report.
While the University concluded FY22 with a surplus, the “endowment and other managed assets generated a return of -4.6%, with the total market value dropping to $6.5 billion from an all-time high of $6.9 billion in FY21,” Paxson wrote in the report. “Significant market volatility, primarily due to inflation” contributed to the decrease.
The University aims to have endowment growth keep up with inflation and the endowment’s annual contribution to the operating budget, which averages about 5%, according to the report. Over the last 20 years, inflation has averaged around 3% in Commonfound’s Higher Education Price Index, which is designed to track the main cost drivers in higher education.
To keep pace with these expenses, FY22 would have required an 8% return, according to the report. While the endowment growth failed to meet this goal for FY22, average investment results have surpassed this hurdle over three-, five-, 10- and 20-year periods.
HEPI increased to 5.2% in FY22, which may raise the benchmark investment result goals in future years.
Despite negative returns, the University’s endowment surpassed all market-based benchmarks for FY22 and three-, five-, 10- and 20-year periods, but performed worse than the Aggregate Benchmark, which is internally determined to define potential endowment returns based on the endowment’s assets and market indexes that mirror those assets.
While the endowment grew by 51.5% in fiscal year 2021, the University finished FY21 with a $93.4 million deficit in operating revenue, The Herald previously reported. FY22 marked growth from FY21 in both operating revenue — from over $965 million to over $1.2 billion — and expenses — from over $1 billion to over $1.1 billion — shifting the University from negative to positive net operating activities.
The University also decreased its total debt by $179.9 million to $1.27 billion, with the decline driven by a $162.4 million paydown of maturing and callable debt, as well as the annual debt service payments. The University did not take on any new debt during FY22.
“These financial statements demonstrate that the responsibility to steward this exceptional institution is not one that is taken lightly, and reflects an enduring commitment to preserve the financial health of this great institution for generations to come,” the report reads.
The report also included a section outlining research expenditures, which was not included in the past three financial reports. This section highlights 20 of the 64 grants of $1 million or more awarded to Brown’s researchers in FY22.
According to the report, the BrownTogether fundraising campaign collected a record high of $476.1 million in new gifts and pledges, marking a $45.6 million increase in donations from FY21. The BrownTogether campaign exceeded its original $3 billion goal in September 2021 and set a new $4 billion target for 2024, The Herald previously reported. The campaign had raised $3.47 billion at press time.
The University raised $86.9 million in fundraising for undergraduate financial aid, according to the report. This includes $61.8 million toward international undergraduate financial aid, with a gift of $25 million marking the largest individual donation to international financial aid in University history. In line with its goal to become fully need-blind for international applicants by the class of 2029, the University has set a target of raising $120 million for international undergraduate financial aid, according to the report.
The Brown Annual Fund, a pool of immediate-use funds, also raised a record total at $50.1 million, according to the report.
Additionally, the total of endowed professors reached 119 by the end of FY22. Since then, the University has raised funds for four additional endowed positions, meeting the BrownTogether campaign goal of raising funds to establish a total of 123 endowed professorships, according to the report.
“Looking ahead, I am inspired by the opportunities and the trajectory we have mapped for fiscal year 2023,” Paxson wrote. “Through targeted investments in the people, programs and physical spaces that support our mission, we continue to build on Brown’s distinction.”
