Annual Financial Update
Dear members of the Northwestern community,
We hope your year is off to a happy, healthy and productive start. As has become our January tradition, we write to share the state of Northwestern’s finances now and looking forward.
This year’s update is the first since Northwestern unveiled a set of priorities and guiding principles that focus on the University’s commitments to global eminence in research, innovation and education, the strengthening of our academic community across our campuses, and investments in our world-class faculty and staff. These priorities provide a framework for planning our strategic efforts, and we look forward to tracking our progress toward these goals in the years to come.
We enter 2024 on strong financial footing. Northwestern ended Fiscal Year 2023 with a positive operating performance of $8.6 million on an expense base of more than $3 billion. The University’s diverse revenue base expanded, led by the continued growth in sponsored research, which topped $1 billion in awards for the first time in the institution’s history. The growth was fueled by an 9% year-over-year increase in funding from various sources, including federal agencies, foundations and corporate entities.
Other revenue growth was driven by an increase in our endowment payout rate and gifts from our generous donors. Turbulent financial markets continued to limit returns for the University’s endowment, leading to a decreased endowment value of $13.7 billion at the end of the fiscal year. Despite these pressures, support from the endowment contributed more than 20% of total revenues for the University. The endowment provides ongoing support for financial aid, faculty, academics and research, and aims to provide a stable source of revenue to our operating budget while ensuring it will continue to support future generations.
Philanthropic support, which is a critical driver in our pursuit of Northwestern’s priorities, remains strong. In fact, new gifts and commitments in the current fiscal year are the second-highest on record compared to previous years.
While the continued strength of Northwestern’s financial position is good news, we must be prudent in pursuing the efforts that speak to our institutional mission and priorities while remaining mindful of unpredictable pressures on our finances, such as pending litigation.
As we have repeatedly stated since the Supreme Court’s ruling on race-conscious admissions practices, we remain committed to investments that protect and enhance our progress toward providing access and opportunity to the most qualified undergraduate, graduate and professional students. The University awarded more than $250 million in undergraduate financial aid last fiscal year and welcomed its most diverse class of undergraduate students in the fall.
Over the past fiscal year, we also prioritized investments in targeted areas in response to community feedback and to support continued excellence across the University. We allocated significant resources to employee compensation and benefits as we continue to attract and retain talented faculty and staff. We are pleased that the staff vacancy rates that plagued the University in previous years have decreased, and we were successful across our schools in recruiting new faculty. Funds also were directed toward data science and research computing, enabling us to expand and enhance support for those important endeavors. Several academic capital projects on both the Evanston and Chicago campuses were completed in the past year, providing research spaces in Mudd Hall, the InQbation Lab at 1801 Maple and the Tarry Building, to name a few. Additionally, we continue planning toward new capital projects such as the Jacobs Center renovation, Ryan Field rebuild and the Norris University Center East Lawn renovation.
Northwestern is a community of caring, talented individuals. We are confident in our ability to work together to identify opportunities for investment, efficiency and collaboration that will continue to enhance the exceptional teaching, research and innovation that make Northwestern special.