The richest business schools in the world with the largest endowments

Richest business schools in the world
Ratan Tata, Nitin Nohria (HBS Dean), Drew Faust (Harvard-President) | credit

The magnificent seven-story building that houses Harvard Business School’s executive center in the northeast of the HBS campus expresses the grace and gratitude of an alumnus to his alma mater. The donor in question: Ratan Tata, who attended an Advanced Management Program at HBS in 1975. The donation for the building: $50 million. “Those 13 weeks were the most important time of my life in the way they transformed me and increased my perspective,” Tata said at the dedication of the building.
 

Richest business schools in America

One could say that HBS alumni are probably more blessed with the financial resources and a giving nature than the former students of any other business school in the world. The school’s endowment crossed the one-billion-dollar mark in the late 1990s. In 2015, its endowment fund was worth $3.3 billion, a figure bigger than the GDP of Maldives by over $250 million.

HBS has some good company in the rich club. Coming closest to it is Stanford GSB, which has an endowment of $1.39 billion, nearly $2 billion less than HBS’. The only other school with a one-billion-plus endowment is University of Pennsylvania’s Wharton School of Business, which has a kitty of $1.289 billion.

Top on the list of b-schools with sub-one-billion endowments, and fourth on the overall list, is Northwestern University’s Kellogg, which has a fund of $866 million. In the fifth place is MIT’s Sloan School of Management, with $812.8 million, and in the sixth, Yale School of Management with $743 million.

Although Chicago Booth is in the seventh place overall, with $734 million, this is so only if you don’t take into account David Booth’s naming gift of $300 million in 2008, points out Poets&Quants.

In the endowment per student, too, HBS is in the top slot, with $1.65 million (2,012 students), followed by Stanford GSB with $1.39 million (1,000 students). The third spot is taken by Yale SOM with $968,709 (endowment $743 million, 767 students), fourth by Dartmouth Tuck with $585,538 ($332 million endowment, 567 students), and fifth by Vanderbilt University’s Owen Graduate School of Management with $527,915 ($299.3 million endowment, 567 students). Wharton (4,962 students), Kellogg (2,500 students), and MIT Sloan (1,607 students), which are the third, fourth, and fifth spot holders in the total endowment list, are relegated to the tenth, ninth, and seventh spots, respectively, in the endowment-per-student rankings.

How wealthy are the other top-rated b-schools? Columbia Business School, rated the sixth-best MBA program globally by FT in 2015 (and also in 2016, after INSEAD, HBS, LBS, Wharton, and Stanford GSB), has an endowment of $680.2 million (2015) and is eighth on the total endowment list and also on the endowment-per-student list with $443,705 (1,533 students). UC Berkeley Haas, rated seventh-best by FT in 2016 (tenth in 2015), has $307.2 million (2015) and is 16th on the total endowment list and 15th in the endowment-per-student list (2,230 students).
 

Richest business schools in the rest of the world

The best b-schools elsewhere in the world may match the intellectual capacity of their US counterparts but not the size of their endowments. The richest b-school outside the US is INSEAD, with $213.9 million in its kitty, which would fetch it only rank 21 if it was placed on the US list. It would figure right after UCLA Anderson ($220.2 million) and just before Cornell Johnson ($209 million). The European School of Management and Technology ($154 million), Berlin, gets second rank, University of Toronto Rotman School ($107 million), third, EDHEC Business School, France, fourth ($106 million), and HEC Montreal ($91 million), fifth.

Other European b-schools that rich by the continent’s standards are the London School of Business ($65.2 million); IESE Business School, Spain ($56 million); IMD, Switzerland ($24.6 million); and ESADE, Spain ($7 million).

Raising funds seems to be an art better practiced by US b-schools than by European schools. As the MBA degree is more valued in the US, MNCs and other companies seem more ready to sponsor b-school programs. Schools in the US are able to tap not only alumni but also corporations, sponsors, and other donors to build up their funds, whereas those in Europe are not so successful. The result is, for European b-schools, greater dependence on government grants and tuition, which deters them from launching new programs, says P&Q, adding that educational philanthropy seems more common in the US than elsewhere.

Asian schools are also steeping up their endowment collection drives. They include HKUST Business School, ranked 14th in FT’s 2016 global rankings, the top Asian school on the list. The school’s university, Hong Kong University of Science and Technology, has launched a campaign to increase its alumni endowment fund from $2.5 million to $3.25 million by 2017 to celebrate the university’s 25th anniversary. The China Europe International Business School, ranked 17th in FT’s global list, the second-ranked school from Asia, has formed the CEIBS Educational Foundation, which has collected $15 million.

In India, IIM—Ahmedabad (24th on the FT 2016 global list) has collected Rs. 16 crore, or about $2.5 million (as per the then conversion rate), according to media reports from 2013. Of this, Rs. 14 crore came from alumni contributions. The fund was to be set apart for research and scholarships.

The ISB, with campuses in Hyderabad and Mohali and ranked 29th in the FT 2016 list, collected Rs. 48 lakh from its Class of 2014 (worth about $76,000 at that time). In 2015, an alumnus pledged a contribution of Rs. 1.5 crore (about $230,000) to the school over three years. The Hindu Business Line reported in the same year that the ISB had raised Rs. 3.5 crore in alumni contributions over the preceding six years.

Obviously, big endowments help schools improve facilities on their campuses, adopt technology, and hire top faculty and staff. It also allows them to grant scholarships to the most talented students, and thereby attract the best applicants. The size of endowments is also an indication of how well the alumni are doing and how obliged they feel toward their old school.

A P&Q analysis of endowment figures of 49 leading b-schools shows that their endowments have increased from $6.9 billion in 2001 to $10.3 billion in 2009 around the Great Recession to $17.2 billion in 2015. The average increase is 7.7 percent annually. The prediction is that the total endowment of b-schools will probably touch $24.3 billion by 2020.

Among the elite M7 schools, Wharton has the highest endowment growth figures of 11.4 percent since 2010, followed by Stanford GSB at 11 percent. Among the slowest in endowment growth are UC Irvine’s Merage (3.1 percent annual growth rate), Vanderbilt’s Owen (4.6 percent), Syracuse’s Whitman School (5.2 percent), and Michigan Ross ((5.5 percent). Of course, schools with slow endowment growth rates may either be failing in collecting funds or be using the fund for development.
 

How well are universities of business schools doing?

The universities of the rich b-schools are even richer. Harvard University had a treasure chest worth $37.6 billion at the end of fiscal 2015, according to US News and World Report. Yale University (Yale SOM’s university) was second on the list, with $25.5 billion (Princeton University with $22.291 billion is next, but it needn’t be counted here as it doesn’t have a b-school), followed by Stanford University (GSB) with $22.222 billion.

Other universities with huge endowments include MIT (Sloan’s university), with $13.4 billion; Northwestern (Kellogg), with $10.19 billion; University of Pennsylvania (Wharton), with $10.133 billion; University of Michigan (Ross), with $9.8 billion; Texas A&M (Mays Business School), with $9.7 billion; Columbia University (Columbia Business School), with $9.6 billion; University of Notre Dame (Mendoza College of Business), with $8.7 billion; and Chicago University (Booth), with $7.5 billion.

Harvard University tops the list in fund collections: in 2016, it raised the highest amount among all US universities, $1.19 billion. Stanford University managed $951 million, according to a survey by the Council for Aid to Education. Other universities tried to catch up: the University of Southern California made $666.6 million that year, Johns Hopkins $657.2 million, and the University of California San Francisco $595.9 million.

Universities elsewhere in the world are no pushovers when it comes to endowments. The King Abdullah University of Science and Technology, Saudi Arabia, has an endowment of $20 billion, and the King Saud University, also in Saudi Arabia, $2.7 billion. The University of Cambridge had $9 billion as of 2014 and the University of Oxford $7.2 billion in 2015. The National University of Singapore has banked $2.2 billion, Nanyang Technological University, also in Singapore, $1.63 billion, Japan’s Osaka University $2.3 billion and Kyoto University $2.2 billion, so far.

Also read:
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Management Consulting Salaries and Career growth after MBA
What average MBA salaries can you expect after 10 – 20 years
Master’s degree specialisations that pay the highest salaries
 
Resources: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16


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1 Comment

  1. Chandan says:

    Good article about the endowment fund. Not a great comparison (referring to the GDP thing) to make though ;)

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