Fiscal Year 2020
Brown University Financial Report

Financial Statement Overview

Letter from the Chief Financial Officer

Despite the extraordinary operational and financial challenges presented by the COVID-19 pandemic, Brown University closed Fiscal Year 2020 in continued strong financial health. Brown extended its impact and reach globally by further investing in key areas laid out in its strategic plan, Building on Distinction: A New Plan for Brown.

When the University moved to remote operations in March 2020, leadership took decisive action to protect the health and safety of our community. These early steps included ensuring that Brown students continued to have access to the high-quality education for which Brown is known, providing much-needed financial assistance to students and supporting the Providence community by providing meals to hard-hit families and housing to first responders. Since then, Brown has invested millions of dollars to make resumption of research and educational operations possible, including setting up a sophisticated COVID-19 testing program, training contact tracers, installing touchless devices and ensuring that the air quality of our buildings is safe. All of these actions, although essential, have resulted in meaningful increases in expenses that have carried over to the current fiscal year. At the same time, Brown has incurred significant losses in revenue due to providing partial room and board refunds and the need to cancel our residential summer programs.

Steps to protect the health of our community and ensure academic continuity were paired with decisive decisions to shore up the University’s finances. Brown leadership quickly imposed spending limits, instituted a hiring freeze, eliminated staff and faculty salary increases and accepted voluntary reductions in senior administrators’ salaries, all of which will offset tens of millions of dollars in expenses and lost revenues for FY21. With financial markets in freefall, the University made certain to ensure sufficient liquidity to sustain our mission of education and research. This resulted in the issuance of a new tranche of $300 million in debt in May, followed by another issuance of $400 million in September. These actions, and others, will ensure that Brown emerges from the pandemic in a strong position financially.

As challenging as this time has been, as of the fiscal year ended June 30, 2020, Brown’s net assets grew to $5.5 billion, an increase of $405 million over the prior year, and up 8% from the FY19 result. Total debt at the end of FY20 stood at just over $1 billion. The current portfolio of debt has an average maturity of 22.5 years and carries a 2.79% blended cost of capital, one of the lowest in higher education. Even with the new issuance of debt, Brown’s credit rating remained at AA+/Aa1 with S&P and Moody’s respectively, which is a testament to the ever-strengthening financial health of the University.  

The endowment continues to play a vital role in supporting the University’s operations. The Brown University endowment and other managed assets generated a remarkable $504 million in investment gains in FY20, equating to a 12.1% return, and bringing the endowment and other managed assets to an all-time high of $4.7 billion. Spending totaled 4.9% of the endowment’s value. In light of the significant financial impact of the pandemic, the University will temporarily increase its draw from the endowment in FY21. Fundraising has also been critically important to the University’s financial health, and last year Brown experienced a record year for contributions from its generous donors and alumni.

As we look toward the future with optimism, we have to acknowledge there is uncertainty ahead. With significant declines in University revenues and the increase in costs related to operating during the pandemic, Brown is expecting a substantial deficit in FY21 that will carry over into FY22. Even with the actions already taken, we anticipate a FY21 deficit ranging from $100 to $165 million, representing roughly 8% to 13% of the total operating budget. University leadership has developed a plan for FY21 that proportionately shares the deficit across the institution. With the use of newly acquired debt, philanthropy and temporarily increasing endowment distributions, as well as a host of other cost savings and revenue-generating measures, Brown will without a doubt weather this difficult period.

I invite you to explore the FY20 results that follow regarding the financial health of the University.

Michael White

Michael White
Chief Financial Officer, Brown University

Review of 2020 Financial Statements

The following sections outline the Fiscal Year 2020 financial performance of Brown University. The University’s financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and audited by our independent outside auditors from the firm KPMG LLP. The GAAP financials have been summarized for presentation purposes in the charts and tables presented below.

Summary of GAAP Financial Statements

dollars in thousands
Balance sheet 2020 2019 $ Change
Assets $6,894,193 $6,209,293 $684,900
Liabilities $1,415,362 $1,135,774 $279,588
Net assets $5,478,831 $5,073,519 $405,312
Total liabilities and net assets $6,894,193 $6,209,293 $684,900
Statement of activities 2020 2019 $ Change
Operating revenues $997,868 $967,564 $30,304
Operating expenses $1,006,764 $992,926 $13,838
Net operating activities -$8,896 -$25,362 $16,466
Nonoperating activities $414,208 $462,390 -$48,182
Total change in net assets $405,312 $437,028 -$31,716
Net assets, beginning of the year $5,073,519 $4,636,491 $437,028
Net assets, end of year $5,478,831 $5,073,519 $405,312
Cash flow 2020 2019 $ Change
Change in net assets $405,312 $437,028 -$31,716
Adjustments -$560,877 -$562,043 $1,166
Net cash used in operating activities -$155,565 -$125,015 -$30,550
Cash flows from investing activities  
Additions to land, buildings and equipment -$151,785 -$156,223 $4,438
Net investments $65,672 $88,453 -$22,781
Other $26,808 $41,935 -$15,127
Net cash used from investing activities -$59,305 -$25,835 -$33,470
Cash flows from financing activities  
Gift related activities $185,939 $152,324 $33,615
Proceeds and payments on debt instruments $272,772 -$35,789 $308,561
Net cash used from financing activities $458,711 $116,535 $342,176
Change in cash $243,841 -$34,315 $278,156
Beginning cash balance $208,926 $243,241 -$34,315
Ending cash balance $452,767 $208,926 $243,841

GAAP financials summarized for presentation purposes.

Net Assets

The University ended Fiscal Year 2020 with net assets of $5.5 billion, an increase of $405 million (8%) despite recording a modest operating loss of $8.9 million. This marks the fourth straight year of substantial growth in net assets with the cumulative change totaling approximately $1.3 billion over that period. Endowment performance and gifts were the most substantial contributors. Net investment returns, after the endowment appropriation, totaled $322 million, while gifts were $236 million.

GAAP statements summarized for presentation purposes.

Operating Revenue

The University’s total operating revenues grew by 3.1% to $997.9 million in 2020, up from $967.6 million in 2019. The change in total revenue was driven by growth in net tuition and contributions, endowment appropriations and grants. However, there was a decline in auxiliary revenue related to COVID-19.

Total Revenue $997,868 (dollars in thousands)

GAAP statements summarized for presentation purposes.

Gross tuition grew by 5.8% ($34 million) to $615.9 million in FY20, while University scholarships grew by 3.8% to $216.9 million. Scholarships grew at a slightly slower pace as a result of the allocation of scholarship to room and board revenue, an accounting requirement as a result of room and board refunds related to COVID-19. In aggregate, net tuition and fees grew by 7% year-over-year to $399 million.

GAAP statements summarized for presentation purposes.

Grants and contracts revenue from government and private sources increased $8.4 million to $209.3 million, a 4.2% increase over FY19. The percentage of revenue from federal funding sources, such as the National Institutes of Health, the National Science Foundation and the Department of Defense, decreased slightly by one percent to 88% in FY20. This decrease translated into a slight decline in the University’s effective indirect cost reimbursement rate from 34% in FY19 to 33% in FY20. Indirect cost reimbursement, which allows the University to recover certain overhead expenses related to grants, is a critical component of the operating budget as it broadly supports research at the University.

Operating revenue for current-use gifts increased by $8.2 million to $100.5 million in 2020. The strong increase in revenue is attributable to the generous cash and pledges received to support the President’s Response Fund, created as a result of the COVID-19 pandemic.

For 2020, the Corporation approved an endowment appropriation distribution reduction to 4.85% from 4.90% in 2019. This payout rate is applied to the average market value of Brown’s endowment over the most recent three-year period. This reduction was more than offset by investment gains and additional gifts, resulting in a $6.1 million increase in endowment returns appropriated in 2020 versus 2019. This appropriation of $159.9 million represents approximately 16.0% of the University’s Operating Revenue. 

Auxiliary revenue decreased significantly by 16.2%, to $86.0 million for 2020. Housing, dining and student health fees constitute just over 80% of these revenues. The decrease was driven primarily from room and board refunds to students due to the move to remote instruction in spring 2020 because of the pandemic. 

Operating Expenses

Total operating expenses for the University increased 1.4% to $1 billion in 2020, from $992.9 million in 2019. Salaries, wages and benefits expenses, which represent over 50% of the operating expenses of the University, grew by 3.9% to $537.2 million. Graduate student support, including scholarships and stipends, increased by 9.3% to $89.4 million. Non-compensation expenses declined by only 3.6% to $380.2 million as a result of a reduction in travel and discretionary expenses. 

Total Operating Expense $1,006,764 (dollars in thousands)

GAAP statements summarized for presentation purposes.

Total salaries and wages increased by 4.8%. The growth in compensation expense was a result of modest increases in both additional faculty and staff positions as well as merit-based increases to compensation for existing employees. The University was able to reduce the cost of benefits per employee in 2020 as a result of a reduction in health insurance claims such that benefits expenses grew at a marginally low rate of 0.9%.

Depreciation grew 4.8% to $86.9 million as a result of approximately $120 million of new capital assets put into service in 2020. Despite the increase in the capital assets in service, utility expenses remained fairly consistent at approximately $35 million in 2020, due to favorable utility contracts.

Balance Sheet

Fiscal Year 2020 ended with increases to both assets and net assets when compared to Fiscal Year 2019.

Balance Sheet Summary

dollars in thousands
Balance Sheet 2020 2019 $ Change
Cash and cash equivalents $452,767 $208,926 $243,841
Accounts receivable and other assets $61,165 $76,262 -$15,097
Contributions receivable, net $279,082 $277,443 $1,639
Notes receivable, net $19,667 $23,928 -$4,261
Funds held in trust by others $53,439 $62,886 -$9,447
Investments $4,766,897 $4,368,716 $398,181
Land, building and equipment, net $1,261,176 $1,191,132 $70,044
  $6,894,193 $6,209,293 $684,900
Accounts payable and accrued liabilities $91,564 $89,562 $2,002
Liabilities associated with investments $6,344 $24,423 -$18,079
Student deposits and grant advances $49,754 $74,286 -$24,532
Other long-term obligations $111,859 $98,176 $13,683
Retirement obligations $85,896 $61,618 $24,278
Bonds, loans and notes payable $1,069,945 $787,709 $282,236
  $1,415,362 $1,135,774 $279,588
Net assets
Without donor restrictions $1,143,271 $1,125,901 $17,370
With donor restrictions $4,335,560 $3,947,618 $387,942
  $5,478,831 $5,073,519 $405,312
Total liabilities and net assets $6,894,193 $6,209,293 $684,900


During Fiscal Year 2020, Brown investments grew to $4.8 billion. The endowment and other managed assets generated a 12.1% return in FY20. Additional information on the endowment can be found elsewhere in this report, in the section prepared by the Brown University Investment Office.


Total bonds, loans and notes payable increased from $787.7 million in 2019 to nearly $1.1 billion in 2020. The $282 million increase was driven by the $300 million issuance of the Series 2020 taxable bonds offset by annual principal payments. The Series 2020 taxable bonds were issued at an effective interest rate of 2.59%, reducing the University’s average cost of debt to 2.73% for 2020. It also resulted in a 6.6% decrease in interest expense year-over-year. The University has maintained its current ratings of AA+ by S&P Global Ratings and Aa1 by Moody’s Investor Services. 

Capital Expenditures

Brown invested $152 million in capital projects, building and equipment in 2020, which is comparable to the $156 million spent in 2019. These investments have contributed to a number of significant projects, including completion of the new 22,500 square-foot Center for Lacrosse and Soccer, and continued construction efforts for the Performing Arts Center and the Wellness Center and Residence Hall. 


The financial strength of the University continued to flourish this year through the many contributions of our community. The key to Brown’s success lies within that community, and is tangibly represented through the generosity of our donors and the University’s exceptional leaders, faculty and staff, and within the world-class academic and research programs that bind us together. It is our responsibility to protect and steward these people and programs that positively impact innumerable lives around the globe every day. These financial statements are a measure of that commitment and the desire to preserve the long-term financial health of Brown.

Financial Statement Overview contributed by Brown University’s Finance Division