The University of Illinois Foundation’s endowment returned 3.3% in fiscal year 2025, well below the foundation’s benchmark of 13.2% and significantly lower than the 11.1% return earned by the University of Illinois System.
The foundation’s active endowment grew to $3.06 billion during the fiscal year according to the foundation’s annual audit, making it one of the nation’s larger university endowments. But its return trailed many peer institutions’ returns.
For example, the foundation at the University of Iowa posted a return of 8.5%, the Indiana University foundation saw a return of 10.2% and the University of Wisconsin foundation exceeded 16%.
The return was also far less than the Illinois state pension fund return for 2025, which was reported at 9.7%, and it was far less than the foundation’s 10.6% return in 2024.
According to Pensions & Investments, which tracks institutional investments, the foundation’s 3.3% return was “the lowest recorded and far below the 10.9% median return among the 46 college and university endowments with at least $1 billion in assets whose most recent fiscal-year returns have been tracked by Pensions & Investments as of Oct. 31, [2025].”
On its website, the foundation attributed the lower return to a one-time impairment on legacy private market investments and the completion of a $245 million secondary sale of those holdings. According to the foundation, the sale generated $121.5 million in proceeds.
The annual financial report released by the foundation states “absent these actions, the endowment would have returned approximately 7.4 percent.” Its endowment consists of invested assets that help fund scholarships, research and other programs, and the annual return measures the investment portfolio’s performance.
The foundation’s endowment pool returned 10.6% in fiscal year 2024 and 9.0% in fiscal year 2023, before falling to 3.3% in fiscal year 2025, according to respective financial statements.
UI Foundation “confident” in investment strategy despite low return
The University of Illinois Foundation defines itself as “the official fundraising and private gift-receiving entity for the University of Illinois System and its three universities: University of Illinois Urbana-Champaign, University of Illinois Chicago, and University of Illinois Springfield.”
The foundation’s fiscal year 2025 audit said the carrying values of some legacy private investments were adjusted to bid prices reflected in executed letters of intent as of June 30, 2025. The adjustment resulted in a $119.8 million net loss that was recorded as a reduction in the net increase in fair value of investments.
Sue Johnson, spokesperson and assistant vice president of marketing and communications for the foundation, said the foundation remains confident in its current investment strategy. She said the portfolio has been reshaped since 2022 and new and retained investments generated a 10.8% return last fiscal year.
According to Johnson, the transaction was part of a broader review of the endowment portfolio that began after Chief Investment Officer Travis Shore joined the organization in 2022.
The review identified legacy private market investments, particularly in private equity, real assets and emerging markets, that the foundation said were no longer aligned with its long-term goals.
Johnson said the decision to pursue the secondary sale followed a 17-month due diligence process that included secondary market testing, input from external advisers and fund-by-fund reviews.
The foundation sold the investments through the private secondary market. According to the U.S. Securities and Exchange Commission, the market allows investors to buy and sell existing private securities rather than newly issued ones, providing a way to exit investments that are not publicly traded.
The foundation said on its website the sale reduced the portfolio’s exposure to higher-risk investments and positioned it for long-term growth. Johnson said the fiscal year 2026 endowment return will be reported in October.
Despite the lower return in 2025, the foundation has reported the distribution of $97.4 million to the UI System, including $76.6 million to Urbana-Champaign, $17.3 million to Chicago, $1.1 million to Springfield and $2.4 million to UI System offices.
The foundation said its distribution model uses a six-year moving average, which is intended to smooth changes in annual returns and make university budgeting more predictable.
By comparison, the UI System’s Long-Term Investment Pool returned 11.1% in fiscal year 2025, slightly exceeding its 10.9% benchmark.
Paul Ellinger, vice president and chief investment officer of the UI System, said in an email that the university and the UI Foundation maintain separate investment programs with different governance structures, investment oversight and portfolios.
The system’s investment pool includes funds used for university operations and other long-term purposes, while the foundation’s endowment consists primarily of donor gifts legally held by the foundation, Ellinger said.
Ellinger said the foundation’s 2025 endowment return did not directly affect the university’s investment portfolios and did not significantly alter budget planning. Both organizations use spending policies based on multi-year averages rather than a single year of investment performance.