Northwestern University’s investment chief wants to increase cash reserves while scaling back private equity in the school’s $14.3 billion endowment as colleges across the country brace for market turbulence.
The cash allocation is set to rise to as much as 7% from no more than 5%, said Chief Investment Officer Amy Falls. Private equity holdings would be trimmed “at the margin,” she said, without quantifying the potential reduction.
“We want the option value of cash, we want the liquidity,” Falls said March 11 at a Bloomberg Future Investor event in Chicago. She added that a modest pullback in private equity would help “make sure that if something happens and we have to take money out of the endowment, we can.”
Northwestern’s investment plans underscore the rising caution in U.S. higher education as President Donald Trump’s trade tariffs stoke uncertainty in financial markets. Universities are also facing cuts in federal research funding as well as a potential tax increase on endowments. Schools including Stanford, Harvard and the Massachusetts Institute of Technology have announced hiring freezes.
“We have to think about how the university will manage declining resources,” Falls said. “These are real cuts and they will result in almost certainly less resources for research budgets.”
She said she saw a 50-50 chance of a recession this year as tariffs crimp corporate investment plans. About two-thirds of Northwestern’s endowment is equity oriented, according to its most recent report. That includes approximately 32% in publicly held shares, 13% in private equity and almost 21% in venture capital.
Trump has threatened to stop all federal funding to colleges that allow “illegal” protests, zeroing in last week on Columbia University by canceling $400 million in federal grants and contracts. The Ivy League school was one of the main sites of protests that engulfed US campuses after the attack by Hamas on Israel on Oct. 7, 2023, and the Jewish state’s ensuing retaliation in Gaza.
Northwestern, which negotiated a deal with pro-Palestinian protesters last year to avoid a police crackdown, is one of 10 colleges singled out for visits by a new federal task force to combat antisemitism. It’s also among 60 schools under investigation by the U.S. Department of Education, officials said this week.
“We’ve done a lot to be clear what our values are,” Falls said. “I don’t think we were ever tolerant of antisemitism, but I think efforts have been made to clarify what kind of protest is OK and what kind of protest isn’t OK and what are the consequences.”
