The Massachusetts Institute of Technology Investment Management Company (MITIMCo) reported that the university’s unitized pool of endowment and other MIT funds returned 8.8% during the fiscal year ending June 30, raising its total asset value to $17.4 billion, excluding pledges, from $16.4 billion at the same time last year.
It is the second straight year the endowment produced lower returns than the previous year. The endowmentreturned 13.5% in 2018 and 14.3% in 2017.
MIT’s annual report does shed some light on how the endowment is responding to pressure. MIT Treasurer Israel Ruiz also wrote that MITIMCo is “beginning to calibrate our budget for the impact of new federal tax laws,” including the anticipated reduction in investment revenue as a result of the 1.4% excise tax on net investment income, also known as the Endowment Tax. Additional budget needs are likely to drive more yield seeking in the endowment portfolio.
The school is also working to address recent protests by MIT students over donations accepted by the university from Jeffrey Epstein, the financier who had been arrested for sex trafficking before committing suicide in prison in August.
At a recent faculty meeting, MIT President L Rafael Reif said, “I understand that I have let you down and damaged your trust in me, and that our actions have injured both the Institute’s reputation and the fabric of our community. I made mistakes of judgment. I take responsibility for those errors. And I hope to take responsibility for the work that must begin now: repairing the damage and rebuilding trust.”
The university has launched an internal review of how it assesses donor relationships and gift agreements, and Reif said an outside law firm, Goodwin Procter, is “fully engaged in its fact-finding” of the review.
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Tags: Endowment Tax, Jeffrey Epstein, MIT, Returns