2021 Financial Update
Dear Northwestern community members,
As in previous years, we write to share the state of Northwestern’s finances and our outlook for 2021.
In response to the global pandemic and a disrupted economy in 2020, Northwestern had to adapt swiftly to new realities with trajectories that were, and continue to be, difficult to plot with certainty. Although the pandemic impacted most revenue streams, the Northwestern community shifted rapidly to a remote learning, teaching, research and working environment. We successfully brought many functions back to campus over the summer, as well as a portion of our students in the fall, through the hard work of faculty and staff with an unrelenting focus on health and safety.
You may recall that in spring 2020 we estimated a shortfall of $90 million. We accordingly planned for a higher payout rate from the endowment in recognition of the circumstances, reduced pay for senior leaders, halted discretionary spending and most capital projects, paused almost all hiring, suspended contributions to retirement plans, implemented furloughs, offered voluntary staff separations and instituted involuntary staff reductions.
As a result of these actions and reduced activity on campus, our expenditures were lower than anticipated. Many revenue sources also were not as impacted as we initially estimated. Northwestern was thus able to generate a $83.4 million surplus in fiscal year 2020. This surplus was due to significant sacrifice and hard work by our University community.
Despite the economic pressures, Northwestern was able to solidify its position among the country’s top 10 research universities in 2020. This is a testament to our community’s enduring commitment to excellence and access. Fiscal year 2020 saw research awards grow 11% over the prior year to reach a record $887.3 million in support of pioneering innovation. As of Aug. 31, 2020, the “We Will” Campaign hit its expanded goal of $5 billion, raised from more than 168,000 donors, and our endowment ended the fiscal year at $11.1 billion. This strong financial performance — and the sustained generosity of our donors — positions our University well for future growth.
Last year’s surplus represents short-term ballast against various operational impacts of the pandemic that cannot be fully anticipated. The University’s budget is approved by the trustees in June of each year, and in the early summer, we had not yet fully incorporated significant emerging costs for our COVID-19 testing infrastructure, fall tuition discounts and reduced housing occupancy.
Therefore, as we look ahead to the rest of 2021 and plan for 2022, sustained vigilance will be necessary to achieve balanced operations as planned. We are developing goals for fiscal year 2022 that prioritize the faculty and staff compensation pool to attract and retain the world’s best talent, support for our physical and technological infrastructure, and strategic investments that support research growth.
We also will continue rededicating ourselves to urgent institutional changes in pursuit of social justice. As we said in our fall quarter update on initiatives, we acknowledge both the magnitude of the work that remains and commit to doing better.
This year we look forward to welcoming impactful new leaders to our University. On Feb. 1, Robin Means Coleman will join us in the newly elevated vice president and chief diversity officer position, and will serve on the president’s senior staff. She will bring deep experience in advancing diversity, equity and inclusion as we continue to grapple with the inequitable effects of systemic racism and anti-Blackness. Also on Feb. 1, we will welcome Garrett Gilmer as the new executive director of Counseling and Psychological Services. In this role, he will lead our critical mental health services for the Evanston and Chicago campuses.
We continue to make progress on key leadership searches including for the vice president for athletics and recreation, vice president for investment and chief investment officer, dean of the Northwestern Pritzker School of Law and the University ombuds.
We thank everyone at Northwestern for the extraordinary ingenuity and resiliency you have demonstrated over the last year. You have all risen to meet this global challenge, and it is because of all your efforts that a great university will emerge stronger yet. Thank you for all you do to ensure that Northwestern can fulfill its ambitious mission for our community today and for generations to come.