Yale University finished the year ending June 30, 2014, with strong financial results, including a surplus of $51 million from
operations, a solid improvement relative to the small deficit reported in the prior year. The University’s net assets increased
to $25.8 billion, $3.3 billion or 15% above the prior year based on the strength of a 20.2% investment return for the Yale
Endowment where the University’s long-term results remain in the top tier of institutional investors.
Highlights from the Year
The 2013–14 academic year was Yale’s first under the leadership of President Peter Salovey, and the year was full of exciting
accomplishments. Two Yale faculty members were awarded Nobel Prizes: Jim Rothman ’71, the Fergus F. Wallace Professor
of Biomedical Sciences, and professor and chair of the Department of Cell Biology, was co-winner of the Nobel Prize in
Physiology or Medicine; and Bob Shiller, Sterling Professor of Economics, was co-winner of the Nobel Prize for Economic
Sciences. Seven Yale students or recent graduates received Rhodes and Marshall scholarships.
In September 2013, Yale announced a historic gift of $250 million—the largest gift the University has ever received—
from Charlie Johnson ’54 for the construction of two new undergraduate residential colleges. By June, the University had
secured final amounts needed to enable the construction of the two colleges to commence this winter. The new residential
colleges, which represent the first major expansion of Yale College since co-education began in 1969, will allow the addition
of 200 students in each Yale College class beginning in 2017–18.
The Yale School of Management moved into its new home at Evans Hall (a spectacular building featured at the end of
this financial report), and the School of Nursing moved into its new home on West Campus.
Yale also announced one of the most significant changes in several decades to the governance of the Faculty of Arts
and Sciences, which includes Yale College and the Graduate School; these institutions are at the core of Yale’s mission,
success, and financial strength. On the recommendation of a faculty committee, Yale established a new position of dean of
the Faculty of Arts and Sciences to work together with the existing deans for Yale College and the Graduate School. Three
new deans were announced and took their positions this summer: Lynn Cooley, Dean of the Graduate School; Tamar
Gendler ’87, Dean of the Faculty of Arts and Sciences; and Jonathan Holloway ’95 ph.d., Dean of Yale College. The new
decanal structure shifts certain administrative responsibilities so that the Office of the Provost can now focus more fully and
efficiently on issues relating to strategic and long-term planning for the entire university.
Information on other news about Yale is updated regularly at news.yale.edu.
Strong Financial Results
For the year ending June 30, 2014, Yale generated a surplus of $51 million from operations, which was an encouraging
turnaround relative to the prior year when Yale reported a small deficit. This turnaround in performance resulted in large
part from the School of Medicine where clinical activities grew at a healthy pace and from investment income as a result of
strong market performance. Also, in Fall 2013 the University announced a five-year plan to reduce administrative costs by
9% in order to free up resources to invest in academic priorities, and the Fiscal Year 2014 operating results benefited from
actions taken to that end by schools and units during the year.
Yale’s balance sheet was strong entering the year and grew significantly stronger. Net assets grew by $3.3 billion or
14.9% during the year, fueled by a 20.2% investment return for the Yale Endowment. The Yale Endowment finished the
year with a value of $23.9 billion, surpassing the previous peak set in 2007–8 in nominal terms while still 8% below the
peak on an inflation-adjusted basis (which equates to roughly $2 billion in lower relative market value or approximately
$100 million in lower annual revenue support for the operating budget on an ongoing basis). Yale also paid off $250 million
in debt during the year. From a balance sheet perspective, this was another terrific year, and Yale remains a place with the
resources to support its varied and important mission.
Looking Ahead
We are heartened by the improved operating performance, and it represents Yale’s measured and successful response
to the financial shock from the sudden and dramatic $6.5 billion decline in the value of the endowment in 2008–09.
While this was a significant shock, Yale continued to invest in its core programs and has emerged from the economic
downturn as an even stronger institution. We are enormously grateful to all who helped navigate the University through
the challenging waters of these past several years: all of the faculty, students, and staff around campus for their inspiring
work; and for the incredible generosity of alumni and other friends who have continued to support Yale University with
their time, talents, and treasure, as so many do each year. This inspiring network of supporters, both within and outside
the great city of New Haven, are what has allowed Yale to deliver on its academic mission and generate strong financial
results this past year. Many thanks to all of you.
New challenges lie ahead, however: the Fiscal Year 2014 surplus, while encouraging, is still relatively small (1.6%
of revenues) for a university where ambitions and ideas are in abundance. And so, in the coming months and years,
Yale will need to make many choices–both exhilarating and difficult–about how to invest its resources. That is the work
ahead of us.
We have reflected on the choices made at Yale over the last fifteen years. In the Faculty of Arts and Sciences
(including Yale College and the Graduate School) revenues increased by approximately $400 million since the turn of the
21st century, on an inflation adjusted basis. Yale invested over three-quarters of that increase in just three areas: faculty,
financial aid, and buildings. Encouragingly, those choices are in line with what it takes to provide the highest quality
education and research in the world: an exceptional faculty; the finest students, irrespective of their financial means; and
quality buildings to inspire the mind and spirit.
What about the choices ahead of us? First, we will focus on investing in Yale’s core mission–teaching and research.
As Provost Ben Polak has noted, “Teaching and research isn’t what we do, it’s who we are.” We will also rely on the
principles that continue to guide financial management at Yale, which I have written to you about in previous years:
intergenerational neutrality; sustainable finances; and transparent economics. Even with these clear guideposts of the mission
and our financial management principles, the ideas and ambitions are certain to outstrip our resources, and we will
be further informed by the need to align our choices to advance President Salovey’s vision of a “more unified, more
innovative, more accessible, and altogether more excellent Yale.”
I look forward to updating you on the exciting choices of the years to come, guided perhaps most importantly by the
phrase that has served Yale so well for centuries: Lux et Veritas: Light and Truth.
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