The value of endowment funds at US colleges and universities rose by an inflation-busting average of 11.9 per cent last year, with Harvard University's fund worth the most at $.6 billion (?17.1 billion).

Data from 850 US institutions show big improvements in the year ending 30 June 2010, according to the National Association of College and University Business Officers (Nacubo)-Commonfund Study of Endowments. But last year's rises, coming as the world economy began to recover from the financial crisis, were not enough to cancel out the average 18.7 per cent drop in returns reported in 2009.

Endowments, gathered from corporate sponsors and alumni, give US institutions a reliable source of funding beyond student fees, and UK universities are keen to follow the American model.

John D. Walda, president of Nacubo, and John S. Griswold, executive director of the Commonfund Institute, say in a joint statement that they hope the results "can be repeated for the current fiscal year and thus return endowments to the solid footing needed to support the long-term missions of the institutions they support".

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They add: "The cautionary note is that three-, five- and 10-year returns remained below the level needed to fund missions for the long term after accounting for spending, inflation and expenses."

Harvard was trailed in the top-five endowments table by Yale University ($16.7 billion), Princeton University ($14.4 billion), the University of Texas system ($14 billion) and Stanford University ($13.9 billion). Performance last year varied among these institutions, with Yale recording a sluggish 2 per cent rise against Texas' 15.5 per cent.

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In total, 12.2 per cent of the institutions analysed had funds worth more than $1 billion.

The top US endowments dwarf their UK equivalents. The University of Cambridge has total endowments of about ?4 billion and the University of Oxford's are worth about ?3 billion. But the Oxbridge funds are way ahead of the UK pack: the University of Edinburgh, in third place, has a fund worth about ?165 million.

john.morgan@tsleducation.com.