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PROVIDENCE — Brown University’s leadership announced Thursday that its endowment generated a 51.5 percent return during fiscal year 2021. The university closed the year with an endowment market value of $6.9 billion compared to its $4.7 billion endowment just the year before.

The university’s endowment was built on a collection of charitable gifts by donors to be spent on specific purposes, such as scholarships for students from low-income backgrounds and high-impact scientific research. Over the last fiscal year, Brown’s endowment contributed $194 million — or about 15 percent — of the university’s operating budget, according to spokesman Brian Clark.

The increase in the endowment will allow the school to continue with several initiatives.

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The university said it plans to further build out full scholarships for US military veterans who attend Brown, doubling the number of student veterans enrolled as undergraduates by 2024. The initial gift was worth $20 million from US Army veteran and Brown parent Joseph P. Healey (who is also the co-founder of investment management firm HealthCor Management).

Clarke said the university will also continue to permanently endow the Fund for Education of the Children of Providence, which will provide support for the city’s pre-K through grade 12 students.

The “Brown Promise,” which launched in 2018, replaced loans with scholarships in all university-packaged undergraduate financial aid awards.

And a new Center for Alzheimer’s Disease Research, which was launched through two gifts totaling $30 million, will build a world-class research program focused on early detection and treatment of Alzheimer’s disease and related dementias.

The endowment has also created a funding stream for the proposed merger between Brown, Lifespan Corporation, and Care New England. The state’s two largest health systems say they have the “Rhode Island solution” to create an integrated academic health system for the state. Brown has promised to contribute at least $125 million toward the new system, if it’s approved by state and federal regulators.

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Provost Richard M. Locke, who chairs the committee that develops the university’s annual operating budget, said each of the endowment’s designated funds is “instrumental” in supporting students, service to the community, research, and the residential educational experience at Brown.

“The success of our investment team in ensuring the endowment’s ability to enable Brown to address critical and complex problems in the world is nothing short of remarkable,” said Locke.

Locke went on to say that the gains in the university’s endowment are important as Brown seeks to close a “persistent structural deficit in the university’s budget.”

The deficit, Locke said, has been challenged by the negative financial impact of COVID-19, which reduced Brown’s revenues and required “new investments” to protect students and employees during the pandemic.

Pandemic-related expenses tallied more than $55 million, which included testing, personal protective equipment, and emergency funds to allow students to study remotely. Revenue declines exceeded $30 million due to the cancellation of some programs. Locke said Brown closed fiscal year 2021 with a $52.2 million deficit in its operating budget.

The endowment’s contribution to the operating budget is based on the endowment’s market value over the previous three years, so Locke said the $194 million contribution in the last fiscal year is expected to steadily increase in each of the coming years with an annual payout rate ranging from 4.5 percent to 5.5 percent of the average market value.

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At the same time, this past fiscal year marked “an extraordinary single-year return for the Brown endowment,” the university said. The 51.1 percent return surpassed both the preliminary return of its benchmark portfolio of 43.1 percent and Cambridge Associates’ preliminary mean of 35.6 percent and median of 34 percent returns for colleges and universities. Jane Dietze, vice president and chief investment officer, said rising financial markets played a role in the university’s return, as it did for several endowments for higher education institutions across the county.

“Stewardship of the Brown endowment should not be evaluated on any single-year return — instead, our success should be measured entirely through long-term growth of the endowment’s role as an enduring financial resource, providing support for students, and advancing Brown’s mission of research and teaching,” Dietze said in a prepared statement.

Over the last decade, Brown’s endowment had produced $5.1 billion in investment gains and provided $1.6 billion to support the “educational mission” of the university.


Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her on Twitter @alexagagosz.