America’s Wealthiest Business Schools

INSEAD's endowment of $206.6 million puts it more than $3.1 billion behind Harvard Business School

INSEAD’s endowment of $206.6 million–best among the top European business schools–puts it more than $3.1 billion behind No. 1 Harvard Business School

It’s also fascinating to examine U.S. business school endowments compared to the funds raised by non-U.S. schools. INSEAD has the largest endowment of any of the top European schools, but at $206.6 million the size of that fund puts the institution just above the University of Wisconsin’s Business School and just behind Cornell University’s Johnson School. London Business School’s $65.2 million endowment places the school just above the University of Arizona’s business school.

By and large, the spirit of university giving in Europe and other parts of the world lags far behind that of the U.S. At one business school after another, the endowments are significantly lower for schools that have risen to prominence in global rankings by The Financial Times and The Economist. IESE Business School in Spain has an endowment of $56 million, while IMD in Switzerland boasts just $24.6 million and ESADE in Spain of $7.0 million.


While the overall size of a school’s endowment is important, the size of the institution also matters. Larger programs have larger networks but they also require higher expenses and greater investments to stay on par with smaller rivals. That’s why we are examining the numbers not merely by overall endowment but also by endowment per student. We are ranking them by endowment and by endowment per student.

Looking at the numbers per student, Harvard may still rule the roost but things get switched up fast when accounting for the size of a school’s enrollment including undergraduate, graduate and doctoral programs. Harvard has nearly $1.7 million in endowment funds for each enrolled student, compared with No. 2 Stanford which sits at just under $1.4 million. Then, there’s a gap before you come upon Yale SOM at third with $968,709 per student, while Dartmouth Tuck is fourth with $585,538 per student, and Vanderbilt University’s Owen School is fifth with $527,915 per student. The highest public university is Virginia’s Darden School which has an endowment per student of $511,737, placing it sixth overall (see table here).


How does an endowment work? It’s like a treasure chest that throws off cash each year to cover part of a school’s operating costs. No school uses its endowment as a checking account, but rather as savings that throw off some cash each year while preserving the base capital of the fund. At Harvard Business School, for example, the targeted annual payout goal is between 5% and 5.5% of the total $3.3 billion endowment. So in 2015, when the payout was 5.1% of the endowment, this treasure chest produced $127 million, accounting for 18% of the school’s total revenues.At Stanford GSB, in contrast, is even more dependent on its endowment for cash. In 2015, some $75.9 million in endowment income contributed just over a third—34% to be exact—of the school’s $225.1 million operating budget. In fact that endowment income more than covered the cost of the faculty, teaching and research, which came to $71.2 million, according to Stanford’s investors report. Still, it costs a lot more to keep a business school running: Stanford’s student tuition and fees, amounting to $110.4 million in 2015, accounted for only 49% of the expenses to run the school.

The year-over-year increase in Harvard’s endowment from $3.2 billion a year earlier reflects a 5.8% net appreciation in the endowment’s market value, the subtraction of the year’s distribution of $127 million, offset by $69 million in endowment gifts received by HBS during the year.

How much a school taps into its endowment for cash is dependent on university guidelines, the market appreciation or depreciation of the funds, as well as a school’s needs. In 2015, HBS’ endowment took a hit on the appreciation side, with the market value of the fund increasing by only 5.8%, versus the 15.4% rise of a year earlier. But the $69 million increase in endowment gifts also was just part of the $166 million in gifts and pledges to Harvard Business School last year.

Ultimately, the size of a school’s endowment amplifies its ability to carry out its mission and to enable and support growth and development for the school and its community.

Author Daniel Bonsoms

Author Daniel J. Bonsoms, CFA

Daniel J. Bonsoms, a CFA, is undecided on which MBA offer he will ultimately accept. He’s worked in private equity for the past four years and currently lives in Los Angeles.

(See following page for the current endowments for top business schools)

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