(AP) The investment portfolios of colleges, universities and other educational institutions enjoyed their best year since the stock market downturn began, according to a new survey that shows educational nonprofits recovering in fiscal 2004 after several years of losses or meager gains.

The 707 endowments surveyed by the research arm of Commonfund, which helps manage money for 1,600 nonprofit institutions and foundations, earned an average of 14.7 percent in the 12 months ending June 30.

That compared to investment gains of 3.1 percent in 2003, and losses in the two years prior to that. Since most educational nonprofits use about 5 percent of their assets per year to support operations, many institutions had spent several years treading water at best.

“It certainly is a helpful rebound. It doesn’t put nonprofits out of the woods yet because their budgets were severely tested and squeezed during the bear market,” said John Griswold, executive director of the Commonfund Institute.

Respondents to the survey included colleges and universities as well as independent secondary schools and private education foundations.

The survey, released yesterday, also found that the best-performing endowments have generally been shifting money away from hedge funds, suggesting the “smart money” that led the charge into these investments several years ago may be looking elsewhere now that they have become trendy.

Overall, however, the survey revealed few dramatic changes in how nonprofits are investing their money. Average allocations to domestic stocks (31 percent), fixed income (15 percent), international stocks (16 percent) and cash (4 percent) were all within a few percentage points of the figures in last year’s survey.

The best-performing endowments were more heavily concentrated in investments such as real estate and energy, the survey found.

Some of the wealthiest educational endowments have already reported their results for last year. Harvard University, the world’s richest, earned a 21.1 percent return on its investments to bring its endowment’s total value to $22.6 billion in the year ending June 30. Yale, the No. 2 private university endowment, earned 19.4 percent and stands at $12.7 billion.

For universities and colleges, much of the money is set aside and can only be used for specific purposes — scholarships, for instance, or endowed professorships.

The surveyed institutions continued to spend about the same percentage of their endowment on operating costs — 4.8 percent last year, compared to 4.9 percent in fiscal 2003 and 5.1 percent in fiscal 2002. Some public schools dipped more aggressively into their savings to help weather state budget cuts.

The institutions surveyed said they don’t expect to do as well in fiscal 2005, predicting investment gains of 7.9 percent.

Forty-two percent of responding institutions reported an increase in gifts received during the year.

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