Endowment Radar

What role does your endowment play in supporting your college or university?

The Cambridge Associates Endowment Radar is a visual tool that focuses on four key metrics to assess the endowment’s contributions to the financial health of your institution and the sustainability of that role.

Find out

Endowment radar: How it works

The Endowment Radar plots four metrics on the radar chart. Each metric measures the endowment's role as a component of financial health. Hover over each quadrant for explanation.

What Does Your Radar Look Like

Limited Role

Significant Role

Limited Role

When the endowment plays a significant role in supporting the budget, pricing, balance sheet, and sustainability, all four corners of the Endowment Radar are filled in.

When the endowment plays a minor role in supporting the institution, the Endowment Radar chart fills a limited area and has room for growth.

Endowment dependence

Endowment distribution to financial aid

Endowment to debt

Net flow rate

Click a quadrant to find out how your endowment supports key aspects of your institution’s business model.

Measuring the role of your endowment

Endowment dependence (Range: 2.6% to 26.7%)

Endowment distribution to financial aid (Range: 0.1 to 1.2x)

Endowment to debt (Range: 1.4x to 6.9x)

Net flow rate (Range: .-5.1% to -1.2%)

See real life examples of endowment radars from our clients. Click to read an explanation of their charts.

Case Studies

Institution A

Institution B

Institution C

The Endowment Radar tells us much about the role of your endowment today, but also seeds an important conversation about its future and actions that can be taken to expand that role. Receive a free, customized endowment radar chart and discover how to maximize the success of your endowment.

Plot the future course of your endowment

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Ratio:

Endowment distribution

Operating expenses

measures the role of the endowment in the annual budget

Ratio:

Endowment distribution

Financial aid and scholarships

compares endowment spending to the institution’s financial aid and scholarship discounts to students

Ratio:

Endowment market value

Total outstanding debt

focuses on balance sheet health and the ballast the endowment provides for borrowing

Ratio:

Inflows minus spending

Beginning endowment market value

is the net ratio of endowment inflows to endowment spending

Your endowment’s contribution to operating health is measured by endowment dependence: the ratio of the annual endowment distribution to the operating budget.

Endowment dependence: Role in annual budget

What percentage of your operating budget is funded by the endowment?

Greater than 25%

10%-24%

Less than 10%

Greater than 25%

10%-24%

Less than 10%

Endowment Dependence

(Range: 2.3% to 25.2%)

Your endowment provides a moderate level of support.

Endowment Dependence

(Range: 2.3% to 25.2%)

Your endowment plays a significant role in supporting the budget. Institutions with an endowment at this level often use a spending policy that provides predictable spending and stable operations support.

Endowment Dependence

(Range: 2.3% to 25.2%)

Your endowment does not play much of a role in funding the budget. Institutions like yours may heavily depend on student revenues for supporting the operating budget.

What is the ratio of your endowment distribution to total scholarships?

The ratio of total endowment spending to total financial aid spending can be an informative way to consider the affordability of the financial aid strategy.

Endowment Distribution to Financial Aid: Role in Pricing

Greater than 75%

25%-75%

Less than 25%

Your endowment likely plays a limited role in supporting pricing and affordability. Student revenues are highly competitive and can put pressure on the budget; providing more coverage from a larger endowment would contribute to sustainability of the pricing model.

25%-75%

Your endowment subsidy contributes to affordability of tuition and sustainability of the pricing model.

Greater than 75%

Endowment Distribution to finanical aid

(Range: .1 to 1.1x)

Your endowment plays a significant role in offsetting financial aid spending, therefore substantially contributing to a sustainable pricing model.

Endowment Distribution to financial aid

(Range: 0.1x to 1.1x)

Endowment Distribution to finanical aid

(Range: .1 to 1.1x)

What is the ratio of your endowment market value to your current outstanding debt?

In addition to providing annual revenue, your endowment offsets long-term liabilities and endowment capital is often a source of liquidity to support debt costs, ratings, and covenants.

Endowment to DEbt: Role in balance sheet health

More than 4x outstanding debt

2-4x outstanding debt

Less than 2x outstanding debt

Your endowment likely plays a minor role in your institution's balance sheet. Debt management and capacity issues can dominate your balance sheet and raise costs of borrowing; debt covenants may constrain portfolio construction.

2-4x outstanding debt

Your endowment provides moderate ballast for borrowing and contributes to your institution's balance sheet health.

More than 4x outstanding debt

Endowment to Debt

(Range: 1.1x to 5.7x)

Your endowment plays a significant role in the balance sheet. The endowment bolsters balance sheet health and supports affordable borrowing via strong debt ratings and covenant coverage.

Endowment to Debt

(Range: 1.1x to 5.7x)

Endowment to Debt

(Range: 1.1x to 5.7x)

How have additions (from gifts or other sources) to your endowment compared to spending?

Net flow measures the relationship of your endowment spending to inflows and assesses whether the combination of new gifts and additions and spending contribute to endowment growth.

Net FLow: Role in sustainability

Minimal

About half of spending

Equals or exceeds spending

Minimal

Your institution's net flow is dominated by spending outflows. When spending dwarfs additions, endowment growth is only attainable when investment performance exceeds spending and inflation. The role of the endowment is likely shrinking over time. Your insitution may consider focusing on funding, directing some excess operating cash to the porfolio, and/or decreasing spending.

About half of spending

Your institution is likely able to keep pace with enterprise growth and supporting the budget.

Equals or exceeds spending

Net Flow Rate

(Range: -4.7% to -1.9%)

Your institution can support additional programs and enterprise growth. New gifts to the endowment enable the portfolio to support a growing enterprise.

Net Flow Rate

(Range: .-4.7% to -1.9%)

Net Flow Rate

(Range: .-4.7% to -1.9%)

Find out

What Does Your Radar Look Like

Get your complimentary chart

Access the research

Institution C

The endowment plays a significant role at this institution, serving as the single largest revenue source that more than offsets financial aid spending. The endowment also meaningfully supports the balance sheet, improving the institution’s access to capital markets. This role is likely to persist as the net flow rate is sustainable at close to -1%.

Endowment plays significant role

Endowment dependence

(Range: 2.6% to 26.7%)

28%

Endowment distribution to financial aid

(Range: 0.1 to 1.2x)

1.5X

Endowment to debt

(Range: 1.4x to 6.9x)

5.7x

Net flow rate

(Range: .-5.1% to -1.2%)

-1.2%

The endowment currently plays a limited role at this institution, providing spending that makes up approximately 2% of the budget and offsets little of financial aid. The portfolio’s role in the balance sheet is limited, possibly constraining the institution’s ability to access capital markets further. However, the very strong net flow rate in 2020 will allow the endowment to take on more of a role going forward.

Endowment plays limited role

Institution A

Endowment dependence

(Range: 2.6% to 26.7%)

3.1%

Endowment distribution to financial aid

(Range: 0.1 to 1.2x)

0.2X

Endowment to debt

(Range: 1.4x to 6.9x)

1.1x

Net flow rate

(Range: .-5.1% to -1.2%)

-1.2%

The endowment plays a moderate role at this institution with spending that supports a sizable portion of the budget, but offsets less than one third of financial aid spending. The endowment is 3.5 times the size of the current debt portfolio, providing modest ballast for the balance sheet. The net flow rate of close to -3% suggests that this role is likely to persist or possibly decrease gradually over time as the budget grows.

Endowment plays Moderate Role

Institution B

Endowment dependence

(Range: 2.6% to 26.7%)

13.4%

Endowment distribution to financial aid

(Range: 0.1 to 1.2x)

0.3X

Endowment to debt

(Range: 1.4x to 6.9x)

3.5x

Net flow rate

(Range: .-5.1% to -1.2%)

-2.8%

Scroll to the bottom to get a complimentary endowment radar chart and explanation that's created for your insitution.

Endowment dependence (Range: 2.3% to 25.2%)

Endowment distribution to financial aid (Range: .1 to 1.1x)

Endowment distribution to financial aid (Range: 0.1 to 1.1x)

Endowment to debt (Range: 1.1x to 5.7x)

Net flow rate (Range: .-4.7% to -1.9%)

Endowment dependence

Endowment distribution to financial aid

Endowment to debt

Net flow rate

Endowment dependence

Endowment distribution to financial aid

Endowment to debt

Net flow rate

Endowment dependence (Range: 2.3% to 25.2%)

Endowment distribution to financial aid (Range: 0.1 to 1.1x)

Endowment to debt (Range: 1.1x to 5.7x)

Net flow rate (Range: .-4.7% to -1.9%)

10%- 24%

Greater than 25%

10%- 24%

Less than 10%

Greater than 75%

25%- 75%

Less than 25%

Greater than 75%

25%- 75%

Less than 25%

More than 4x outstanding debt

2-4x outstanding debt

Less than 2x outstanding debt

More than 4x outstanding debt

2-4 outstanding debt

Less than 2x outstanding debt

Equals or exceeds spending

About half of spending

Minimal

Equals or exceeds spending

About half of spending

Minimal

Endowment distribution to financial aid (Range: 0.1 to 1.1x)

Endowment to debt (Range: 1.1x to 5.7x)

Net flow rate (Range: .-4.7% to -1.9%)