Finances & Endowment

As a truly global business school with no parent university, INSEAD has a unique business model. In 2020/2021, this enabled us to act with financial agility, flexibility and resilience. As a result, we are emerging from the crisis in a strong position.

There is no denying that Covid-19 has continued to have a major impact on INSEAD finances. As waves of the pandemic continued to cripple the world, ongoing restrictions, especially in Asia, delayed the financial recovery that we had initially hoped for. It will come as no surprise to our community that we finished 2020/2021 with another negative overall result and total revenues still 22% down on pre-pandemic levels.

The challenges continue, but many positives have emerged as the crisis abates. For example, revenues from Degree Programmes rose sharply over the course of the year, exceeding forecasts. This vindicates our long-term strategy of balancing income from Executive Education – which tends to thrive in times of economic prosperity – and Degree Programmes, which tends to become more popular during downturns.

Another positive is that fundraising income exceeded expectations in 2020/2021, again justifying our long-term investment in this component of our financial model and underlining the success and importance of our current campaign: A Force for Good.

Our healthy cash reserves and endowment income, both the result of careful financial management, have also proved major assets as our sector proceeds along the bumpy road to recovery. In particular, our long-term commitment to building a significant endowment paid off, as we were able to request a one-off increase in annual support from our supporting Foundations in 2020/2021 – up from the usual 4.2% to 7.1%.

Likewise, the investments of previous years have yielded significant returns, notably our GO-Live technology and Online Programmes. Both gave a much-needed revenue boost to Executive Education at a time when companies could not commit to sending participants to INSEAD campuses.

Fortunately, too, there were significant savings on expenditure associated with travel and events throughout the academic year. In addition, the cost-saving measures introduced during the previous year, such as hiring and salary freezes, along with the continued rollout of new, streamlined procurement processes, mean that our financial situation in 2020/2021 is far, far better than it might have been.

Looking to the future, we are upbeat, as Executive Education participants begin to return to campus and our Degree Programmes maintain a strong position in the market. We have already repaid around a quarter of our entire special pandemic-related loans, and the restrictions on recruitment and salaries imposed during the pandemic have now been lifted. As befits a world emerging from crisis, our forecasts remain conservative, but our unique business model and long-term strategy will help us seize the opportunities that will take us to a brighter global future.

For the second consecutive year, the Covid-19 crisis has marked the global economy, radically altering the macroeconomic environment – within which the INSEAD Endowment invests – and contributing to recordbreaking returns.

By the end of the academic year 2020/2021, the US and Europe had managed to reopen their economies – thanks to active vaccination campaigns – although many emerging economies were lagging in their response. As a result, the effects of the crisis remained quite visible, affecting international travel and causing disruptions to global supply chains.

Following the slump in GDP growth the previous year, 2021 saw a return to growth, accelerated by increased household savings and continued supportive monetary and fiscal policies of historic proportions. As a result, global equities rose by 28.2% over the course of 2020/2021, buoyed by strong liquidity flows. Worryingly, however, inflationary pressures started accumulating as a result of increased demand, disrupted supply, and higher commodity prices. By the end of our reporting period, the future course of central bank policies in the US and the EU had become uncertain, which in turn led to increased volatility in government bond markets.

The INSEAD Endowment returns for the academic year were in line with global equities, despite taking only two-thirds of the global market risk. Thanks to its private equity portfolio (which returned +69%), some tactical reallocations at the height of the pandemic, and overweight allocations to the technology and biotechnology sectors, the INSEAD Endowment posted its highest returns ever in 2020/2021: +28.3% in EUR terms and +28.1% in local currency terms.

The school, on the other hand, continued to be significantly impacted by the economic downturn and government-imposed restrictions on mobility and social interaction. The Endowment Management Committee therefore supported a request to increase the Endowment annual financial support of the school’s operating budget, on an exceptional basis, from 4.2% to 7.1% for 2020/2021.

At the same time, there was no compromise to our policy of investing responsibly. The ESG sub-committee, led by Professor Lucie Tepla, continued to refine our environmental, social and governance (ESG) investing framework. As a result, the Endowment made several new investments, particularly in global equity managers that reflect our own principles.