for the Period Ended December 31, 2025
Introduction
A well-managed endowment fund is a cornerstone of financial stability and long-term success for any institution of higher education. At Pratt Institute, the endowment plays a vital role in advancing our mission, providing critical resources that enhance the student experience, supporting faculty excellence, and maintaining and improving our facilities. By generating a reliable stream of income, the endowment ensures that we can continue to offer competitive scholarships, attract and retain exceptional faculty, and sustain a learning environment that fosters creativity, innovation, and academic excellence.
A strong and well-managed endowment also enhances the college’s liquidity, allowing us to maintain a favorable bond rating and secure financing at competitive rates. This financial strength provides long-term stability, enabling strategic investments in cutting-edge programs, expanded student opportunities, and our commitment to social justice and sustainability. Through the continued generosity of our donors, the endowment strengthens our ability to adapt, grow, and lead in an ever-evolving educational landscape.
A prudent investment strategy, conservative spending policy, and the generosity of donors have steadily increased the value of our endowment fund over the years, growing from less than $20 million in 1985 to approximately $371 million at the end of 2025.
Fiscal Year 2025 Gifts to the Endowment
During the 2025 fiscal year, generous donors contributed more than $12 million in new gifts and commitments to the Institute, an increase of over 30 percent from the previous year’s total funds raised. Of that total, more than $800,000 was restricted by the donor to the endowment, with all additional gifts supporting current-use programming, capital projects, research, and scholarships.
Ted Shaine, one of our key benefactors, contributed over $500,000 to the Ted Shaine Scholarship in Memory of Leon Friend, which supports students from Brooklyn, New York—this endowment now funds a full-tuition scholarship annually. We are grateful for benefactors like Ted Shaine, who provide our talented students with the resources they need to create, succeed, and thrive—opportunities that Pratt is proud to offer.
A Board Mandate: Reducing Fossil Fuel Exposure in the Portfolio
In fulfilling its mission to achieve the highest risk-adjusted returns, Pratt has also sought, where possible and advisable, to align our investments with our shared institutional values, including long-term environmental sustainability. A decade ago, in response to the existential threat of climate chaos, the Board of Trustees decided to dramatically reduce our fossil fuel exposure. We believed that this determination was both a moral determination and financially wise. This commitment has in fact very modestly improved our returns over the past decade, and we believe it will protect us from serious financial risk as the climate crisis worsens and a global shift toward a clean energy future accelerates. In addition, the Investment Committee has also sought to make investments in social goods such as affordable housing and renewable
energy where we believed that we could achieve market returns. This approach not only upholds our fiduciary responsibility but also positions our portfolio to thrive in a rapidly evolving global economy. We have also sought out investment managers from historically disadvantaged and under-resourced groups who bring new perspectives and opportunities for financial success.
In 2016, when the Board of Trustees approved the resolution, the endowment fund was valued at approximately $150 million, with just under 3 percent of the portfolio invested in fossil fuels. Today, the endowment has grown to more than $370 million and includes less than 0.90 percent invested in fossil fuels.
Management and Oversight of Endowment Funds
Our endowment portfolio is managed with the goal of generating income while preserving or enhancing the purchasing power of these assets over time. The Investment Committee of the Board of Trustees is responsible for the oversight of the endowment, working in close collaboration with external consultants with significant expertise in endowment management. This partnership ensures that our investment strategy aligns with best practices and supports the long-term financial health of the Institute.
The Committee is guided in their work by an Investment Policy Statement (IPS), which is a written document that outlines how the endowment fund will be managed. It serves as a guide for making investment decisions and helps ensure that the fund is managed in a way that aligns with the goals, values, and financial needs of the Institute. The IPS describes investment objectives, performance benchmarks, risk tolerance, guidelines for asset allocation, and the Board-established endowment spending policy.
Historical Market Value of the Endowment
The market value of the endowment portfolio was $370,637,469 on December 31, 2025. The following chart tracks the market value of the endowment from June 30, 2015, to June 30, 2025.
Asset Classes and Allocation
To achieve its investment objectives, the endowment uses a multi-manager structure of complementary investment styles and asset classes to invest portfolio assets. An asset class is a category of investments that share similar characteristics and behave in a similar way in the market. For example, stocks, bonds, and real estate are different asset classes. Each class has its own level of risk and potential return. The purpose of allocating among a variety of asset classes and strategies is to ensure a proper level of diversification, enhancing total return while avoiding undue risk and concentration. The Institute’s Investment Policy Statement provides targets for asset allocation as well as lower and upper allocation limits for each asset class.
In fiscal year 2024/2025, the Investment Committee made a strategic decision to replace a number of actively managed U.S. and ex-U.S. developed equity fund investments with comparable index funds. In highly efficient, heavily traded markets such as large-cap U.S. equities, long-term outperformance by active managers has been fairly rare, while index funds offer comparatively low fees. The portfolio will retain smaller satellite positions with a limited number of high-confidence active managers. Additionally, the Committee has developed a plan to increase the portfolio’s exposure to private equity and venture capital investments. While these investments are less liquid than other components of a diversified portfolio, incorporating them enhances long-term growth potential, reduces overall volatility, and provides access to unique investment opportunities before they become public. Prudent implementation of this shift in exposure will take several years.
On December 31, 2025, the actual asset allocation was aligned with the parameters specified in the Investment Policy Statement. The allocation percentage and market value are included in the following chart:
| Market Value (millions) | Asset % | |
| Domestic Equity | $159 | 43% |
| International Equity | $90 | 24% |
| Total Equity | $249 | 67% |
| Fixed Income | $31 | 8% |
| Flexible Capital | $38 | 10% |
| Private Equity | $12 | 3% |
| Real Assets | $34 | 9% |
| Cash + Equivalents | $7 | 2% |
Asset Classes Within Pratt’s Endowment Portfolio:
Domestic Equities refers to investments in publicly traded stocks of companies that are based and operate primarily within the United States. This asset class provides investors with ownership in U.S. businesses across various sectors, such as technology, healthcare, financial services, consumer goods, and industrials.
International Equities refers to investments in publicly traded stocks of companies headquartered outside the United States. This asset class provides diversification by giving investors exposure to a broad range of economies, industries, and currencies across developed and emerging markets.
Fixed Income investments refer to securities that provide regular interest payments and return of principal at maturity, offering a predictable stream of income with lower risk compared to equities. This asset class includes instruments such as government bonds, corporate bonds, and other debt securities issued by various entities to raise capital.
Flexible Capital refers to investment strategies that provide endowments with the ability to dynamically allocate capital across a broad range of asset classes and market opportunities. Examples of flexible capital investments include hedge funds, multi-asset strategies, private credit, and opportunistic investments that seek to capitalize on market dislocations or evolving trends.
Private Equity refers to investments in privately held companies that are not publicly traded on stock exchanges. This asset class provides endowments with the opportunity to achieve higher long-term returns by investing in businesses at various stages of growth, including startups, expanding companies, and mature firms undergoing restructuring or ownership transitions. Private equity investments are typically characterized by long investment horizons, lower liquidity, and higher risk compared to traditional asset classes.
Real Assets refer to tangible investments in physical assets that provide essential goods and services, such as real estate, infrastructure, and natural resources. The Institute’s Investment Policy prohibits direct investments in fossil fuels.
Cash plays a critical role in an investment portfolio, offering liquidity and flexibility to meet immediate financial needs and respond to short-term opportunities. Incorporating cash into an investment portfolio enhances the endowment’s ability to meet short-term obligations, manage capital calls, and navigate changing market conditions.
Spending Policy
The Board of Trustees authorizes total annual spending from the endowment. The approved spending policy appropriates 4.5 percent of the twenty-quarter average market value of the overall endowment investment portfolio for spending. From that total amount, income equal to 5 percent of the twenty-quarter average market value of endowed scholarships and other restricted investment funds is expended for awards, unless otherwise explicitly stipulated by the donor or by the Board, with the balance (Board-designated endowment earnings) allocated to support general operations. The Board believes that this spending policy balances the need to provide consistent financial support for current operations, such as scholarships, faculty support, and facilities maintenance, while ensuring the fund’s long-term sustainable growth.
For the 2025/26 fiscal year, approximately $4.3 million has been appropriated for spending primarily in support of student scholarships. An additional $6.9 million provides support for the unrestricted operating budget and priorities established by the Board of Trustees.
Performance
The performance of the endowment (at June 30, the Institute’s fiscal year-end) is provided below. The benchmark is a blended composite of capital market indices that represent the target asset allocation and risk profile of the endowment.
| 1 YR | 3 YRS | 5 YRS | 10 YRS | |
|---|---|---|---|---|
| Total Fund | 13.5% | 12.2% | 8.8% | 7.5% |
| Benchmark | 11.9% | 12.7% | 10.1% | 7.7% |