ML25337A143
| ML25337A143 | |
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| Site: | 07000938 (SNM-0986) |
| Issue date: | 06/30/2025 |
| From: | Massachusetts Institute of Technology (MIT) |
| To: | Office of Nuclear Material Safety and Safeguards |
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For the year ended June 30, 2025 2025 Report of the Treasurer
Report of the Treasurer for the year ended June 30, 2025
The MIT Corporation 2024-2025 As of June 30, 2025 Chair: Mark P. Gorenberg*
President: Sally Kornbluth*
Executive Vice President and Treasurer: Glen Shor*
Secretary of the Corporation: Rachel J. Donahue Life Members Ursula M. Burns Patricia R. Callahan*
Gururaj Desh Deshpande David L. desJardins Leslye Miller Fraser*
Mark P. Gorenberg*
Diane B. Greene Susan Hockfield Brian G.R. Hughes Mohammed Abdul Latif Jameel John W. Jarve Abigail P. Johnson Charlene C. Kabcenell Barry Lam Paul R. Marcus*
Fariborz Maseeh*
Robert B. Millard Phillip T. Ragon Neil E. Rasmussen L. Rafael Reif Megan J. Smith Alan G. Spoon Martin Y. Tang John A. Thain Kenneth Wang Susan E. Whitehead Mark Wrighton Members Noubar Afeyan*
Nancy Andrews Lindsay Androski Armen Avanessians Stephen D. Baker Kate A. Bergeron Eran Broshy Wesley G. Bush*
José Antonio V. Fernández Carbajal Dedric Carter R. Erich Caulfield*
Fiona Chen Yu Jing Chen Kevin Churchwell Heather Cogdell Grace E. Colón Rafael del Pino David Fialkow Orit Gadiesh*
Danielle A. Geathers William A. Gilchrist Bennett Golub Jeffrey S. Halis Diane J. Hoskins Pearl S. Huang Tope Lawani Michelle K. Lee Nelson P. Lin Adrianna C. Ma Kiran Mazumdar-Shaw Michael Mick Mountz Adedoyin Olateru-Olagbegi Lubna S. Olayan Charles T. Ong Darryll J. Pines Ray A. Rothrock*
David M. Siegel*
Anna Waldman-Brown Annalisa L. Weigel Jeannette Wing Janet C. Wolfenbarger*
Elaine H. Wong Anita Wu Songyee Yoon President of the Association of Alumni and Alumnae: R. Robert Wickham Representatives of the Commonwealth Governor: Maura T. Healey Chief Justice of the Supreme Judicial Court: Kimberly S. Budd Secretary of Education: Patrick Tutwiler Life Members Emeriti and Emerita Roger C. Altman Denis A. Bovin John K. Castle James A. Champy Morris Chang Brit J. dArbeloff Mark R. Epstein Lawrence K. Fish Norman E. Gaut Edie N. Goldenberg Shirley Ann Jackson L. Robert Johnson Michael M. Koerner Barry Lam Judy C. Lewent Bob Metcalfe Robert A. Muh A. Neil Pappalardo DuWayne J. Peterson, Jr.
John S. Reed Kenan E. Sahin Jeffrey L. Silverman Richard P. Simmons Raymond S. Stata Theresa M. Stone Diana Chapman Walsh Mark Wrighton Barrie R. Zesiger
- Member of the Executive Committee
n TABLE OF CONTENTS Report of the Treasurer............................................................................................. 1-7 Report of Independent Auditors............................................................................... 9 Consolidated Financial Statements Consolidated Statements of Financial Position..................................................... 11 Consolidated Statement of Activities.................................................................... 12 Consolidated Statements of Cash Flows............................................................... 13 Notes to Consolidated Financial Statements......................................................... 14-45 Additional Information Five-Year Trend Analysis (Unaudited) - Financial Highlights............................. 47-49
1
SUMMARY
- Expenses include all components of net periodic benefit costs.
Report of the Treasurer To the Members of the Corporation The Institute generated strong financial performance in fiscal 2025, though emerging fiscal burdens are a source of challenge. We achieved net results of $425.9 million, and our pooled investments yielded a return of 14.8 percent as measured using valuations received within one month of fiscal year-end. Our net assets of
$37,675.7 million at fiscal year close were 12.3 percent higher than last years.
MIT experienced 6.0 percent growth in operating revenues and 7.0 percent growth in operating expenses (including depreciation and interest). Excluding reimbursements for COVID-era expenses received in fiscal 2024, these trends were closely aligned.
Philanthropy was a significant contributor to strong growth in revenue. Total philanthropic contributions -
including gifts for current use and in support of our endowment - were $677.9 million in fiscal 2025, representing an increase of $79.2 million from fiscal 2024. Expense growth reflected elevated health care cost trends affecting businesses and consumers more broadly and the impact of the Institutes multi-year program to renew and improve its classrooms, laboratories, and student residences.
Strong endowment performance, deployed responsibly, supports our commitments to innovative research, transformative education, and generous student aid. I am pleased to report the Institute made significant progress in these areas throughout fiscal 2025.
The MIT Health and Life Sciences Collaborative (MIT HEALS) is accelerating innovation in human health through cross-disciplinary ventures such as the MIT-MGB Seed Program, launched in June, which brings together researchers from MIT and Mass General Brigham to develop next-generation diagnostics, therapies, and digital tools.
In February, the MIT Generative AI Impact Consortium (MGAIC) invited researchers to submit proposals for high-impact uses for artificial intelligence (AI). Nearly 250 faculty members from all five schools and the college took part. At a kickoff event last spring, funding recipients presented on topics that highlighted positive societal impacts of generative AI, such as how it can be used to decrease literacy disparities in children.
The MIT Initiative for New Manufacturing (INM),
announced in May, aims to transform the U.S.
manufacturing base through new technology, higher productivity, and job creation. Its industry members are funding seed projects proposed by MIT researchers, just as our Climate Project is doing to catalyze research related to the state of climate and the planet.
All of these efforts are rooted in the extraordinary talents of MITs faculty. Over the course of the past year, several faculty members received accolades for achievement and leadership in their fields. MIT economists Daron Acemoglu and Simon Johnson PhD 89 shared the Nobel Prize for making a positive impact in the world through their work on the relationship between economic growth and political institutions. And MIT faculty members were awarded the nations highest honors for scientists and innovators: Angela Belcher and Emery Brown received the National Medal of Science, and Paula T. Hammond 84, PhD 93 and Feng Zhang received the National Medal of Technology and Innovation.
MIT students are thriving as well. For the fifth consecutive year, the Institute swept all five top spots in the prestigious William Lowell Putnam Mathematical Competition. Three MIT students and one alumna were selected as 2025 Rhodes Scholars and are beginning fully funded postgraduate studies at Oxford University this fall, and the women's cross-country team made history by winning a national championship for the first time.
SUMMARY
OF KEY FINANCIAL HIGHLIGHTS (10-YEAR TREND)
(in millions of dollars) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Revenue 3,439 3,566 3,641 3,932 3,931 3,945 4,265 4,655 5,071 5,373 Expenses*
3,319 3,430 3,536 3,711 3,744 3,729 3,993 4,338 4,586 4,947 Net Results 120 136 105 221 187 216 272 317 485 426 Net Assets 16,929 19,125 21,517 22,769 24,217 36,446 33,231 32,183 33,551 37,676 Endowment (excludes pledges) 13,182 14,832 16,400 17,444 18,382 27,394 24,601 23,453 24,573 27,366 Net Borrowings 2,892 3,288 3,259 3,168 4,194 3,929 4,657 4,484 4,430 5,160
MIT REPORT OF THE TREASURER 2025 2
As part of our commitment to making MITs transformative educational experience available to the most talented students, whatever their financial circumstances, we have made a significant enhancement to our financial aid policy. Beginning this fall, undergraduates with family incomes below $200,000 -
which is 80 percent of American families - attend MIT tuition-free. Families with incomes below $100,000 -
nearly half of American families - pay nothing at all for their students MIT undergraduate educations. To start fiscal 2025, we opened the new Graduate Junction residence on the west part of our campus for our graduate students. And as I write this letter to close fiscal 2025, we are reopening the parallels, a renewed student residence on our East Campus that mixes new features with a respect for community traditions.
While I am always inspired to be able to highlight the talents of our community and our progress in enabling their contributions, I do so this year with accompanying caution and concern. In July, the tax rate for the so-called endowment tax - which diverts investment returns on gifts from supporting cutting-edge research and the costs of education - was increased by nearly a factor of six for MIT starting in fiscal 2027. In parallel, there have been efforts to ask us to continue the work of research and exploration on causes important to our nation without adequate funding for the laboratories, equipment, computing, and staff that are indispensable to these endeavors. These developments, as well as other policy and funding changes actively under consideration in Washington, D.C., hinder our efforts to advance national security, energy production, and the beneficial use of artificial intelligence; curtail the job creation and other positive, nationwide impacts of our educational and research activities; and endanger our generous financial aid to students and families. We are considering how best to respond to the substantial increase in the endowment tax and will continue advocating to maintain our decades-long partnership with the federal government to advance the nations interests through scientific discovery.
The following sections provide additional details regarding MITs fiscal 2025 financial statements:
Consolidated Statements of Financial Position, Consolidated Statement of Activities, and Consolidated Statements of Cash Flows. Net results, as presented in MITs Consolidated Statement of Activities, is the measure by which the Institute manages its annual budget and is used in financial reports presented to MITs leadership, including the Executive Committee and the Corporation. It is a comprehensive measure of MITs annual financial performance, including operating activity and all components of our annual retirement benefit costs that serve as a basis for cost recovery.
Consolidated Statements of Financial Position The discussion in this section highlights key elements of MITs financial position: net assets; investments; land, buildings, and equipment; postretirement benefit assets and liabilities; and borrowings.
Net Assets Total net assets increased to $37,675.7 million, or 12.3 percent, from fiscal 2024. Net assets are presented in two distinct categories to recognize the significant ways universities differ from profit-making organizations. The two categories reflect the nature of the restrictions placed on gifts by donors.
In fiscal 2025, net assets with donor restrictions increased $1,978.1 million, or 10.5 percent, to $20,736.1 million. The increase was primarily due to a positive net return on total donor-endowed pooled investments and new donor-endowed gifts and pledges. Net assets without donor restrictions increased $2,146.7 million, or 14.5 percent, to $16,939.6 million. The increase was due to positive net returns on quasi-endowed and non-endowed investments, an increase in the funded status of both postretirement benefit plans, and positive net results. In each case, increases were offset by distributions of investment gains and income to support operations.
3
SUMMARY
Investments Investments at fair value were $35,790.3 million as of fiscal year-end 2025, an increase of $4,038.5 million, or 12.7 percent. The consolidated financial statements include both realized and unrealized gains and losses on investments, as well as dividends and interest income, all net of investment expenses. These amounts yielded a net return of $4,298.9 million in fiscal 2025 and $2,155.7 million in fiscal 2024. The increase in the value of investments in fiscal 2025 was principally driven by net gains on pooled investments.
MITs investment policy is based on the primary goal of generating high real rates of return without exceptional volatility. To reduce volatility, the portfolio is broadly diversified. To generate high real rates of return, MITs investment policy favors equity investments over fixed-income instruments and is heavily weighted toward less efficient markets. MIT primarily invests through external fund managers, allowing the Institute to access the best investment talent globally. By identifying a wide variety of top-tier investment managers with specific competencies, MIT can construct a broadly diversified portfolio while accessing deep sector expertise. Decision authority for the selection of managers, direct investments, and asset allocation resides with the MIT Investment Management Company (MITIMCo). The Board of Directors of MITIMCo holds four regularly scheduled meetings during the fiscal year in which investment policy, performance, and asset allocation are reviewed.
MITs primary investment pool is known as Pool A.
Pooled investment income and a portion of gains are distributed for spending to support operations in a manner that preserves the long-term purchasing power of the endowment and other pooled investments. Funds invested in Pool A receive distributions based on relative ownership, which is valued monthly. MIT also has separate non-pooled investments from which investment income supports operations. In fiscal 2025, Pool A produced a return of 14.8 percent as measured using valuations received within one month of fiscal year-end.
Endowment (without pledges)
Endowment assets are the largest component of both total and pooled investments. The market value of investments in endowment funds, excluding pledges for endowed purposes, totaled $27,366.2 million as of fiscal year-end 2025, an increase of 11.4 percent compared to a total of $24,572.7 million last year. The increase was driven by a positive net return on pooled endowment investments and new donor-endowed gifts, partially offset by the distribution of pooled endowment gains and income to support current-year operations.
MIT REPORT OF THE TREASURER 2025 4
Land, Buildings, and Equipment Land, buildings, and equipment had a net book value of
$5,638.3 million as of fiscal year-end 2025, an increase of
$212.9 million, or 3.9 percent. In fiscal year 2025, the Institute advanced approximately 175 capital projects with a total fiscal-year spend of $370.8 million.
In June, the MIT community gathered to celebrate the naming of the L. Rafael Reif Innovation Corridor in honor of the Institutes 17th president. Formerly called the Outfinite, its location in the heart of the MIT campus honors President Reifs transformative impact on and service to our community.
February marked the public opening of the state-of-the-art Edward and Joyce Linde Music Building in MITs dynamic and evolving West Campus area. The new home of our thriving conservatory-level music program, the building features acoustically controlled rehearsal and performance spaces, a professional recording studio, and music technology laboratories.
The new Graduate Junction student residence, also on West Campus, opened in August 2024, adding 676 new graduate housing beds. Graduate Junction incorporates environmentally friendly features, including energy-efficient heating and cooling systems, green roofs and gardens, sustainable materials, and a solar array to power five-to-ten percent of the buildings electric needs.
This approach is representative of the work under way across campus to reduce our carbon footprint - making MITs buildings more energy efficient, transitioning our heating infrastructure to a more efficient hot water system, adding solar panels to our roofs, and honing strategies for major changes to our district energy system in the next decade. Beyond MITs campus, and as part of a critical effort to create a greener power grid and reach our 2026 net-zero carbon emissions goal, we led a consortium that spurred the development of new large-scale renewable energy facilities in Texas and North Dakota, which are part of two of the most carbon-intensive electrical grid regions in the United States. These projects reduce negative health impacts, generate local tax revenue, and create jobs.
MIT continues to prioritize addressing deferred maintenance as an integral part of the overall capital program. We track the condition of our facilities through a measure called the Facilities Condition Index (FCI) - the ratio of our deferred maintenance to replacement value for MIT buildings in Cambridge. Our FCI decreased from 0.22 in fiscal 2015 to 0.15 in fiscal 2023, and we have maintained an FCI of 0.15 through the end of fiscal 2025.
This is in line with MITs goals for keeping buildings in good condition while maintaining operational continuity to support the Institutes mission.
Postretirement Benefit Assets and Liabilities The defined benefit pension plan provides a basic retirement benefit to eligible MIT employees upon their retirement as monthly income for the rest of their lives. This plan had assets of $6,239.4 million as of fiscal year-end 2025, an increase of
$690.4 million from fiscal year-end 2024. The plans projected liabilities were $5,115.9 million as of fiscal year-end 2025, up $135.1 million from a year earlier. This resulted in a $555.3 million increase in net asset position, which totaled $1,123.4 million as of fiscal year-end 2025.
MIT also maintains a retiree welfare benefit plan that covers retiree expenses associated with medical and life insurance benefits. This plan had assets of $1,105.3 million as of fiscal year-end 2025, an increase of $119.8 million from fiscal year-end 2024. The plans projected liabilities were $603.2 million as of fiscal year-end 2025, down $84.9 million from a year earlier. This resulted in a $204.7 million increase in net asset position, which totaled $502.1 million as of fiscal year-end 2025.
The increases in asset values of both plans in 2025 were primarily a function of positive investment returns offset by payments made to beneficiaries. The increase in projected liabilities for the defined benefit pension plan was driven by ongoing benefit accruals partly offset by a 9-basis point increase in the discount rate. The decrease in projected liabilities for the retiree welfare plan was driven by higher projected prescription drug cost reimbursements from the federal government under the Employer Group Waiver Plan (EGWP) partly offset by a 3-basis point decrease in the discount rate. The discount rates for each plan were derived by identifying a theoretical settlement portfolio of high-quality corporate bonds sufficient to provide for the plans benefit obligations. The discount rates in both years reflected the prevailing interest rate environments at the dates of measurement (June 30, 2025, and June 30, 2024).
On a generally accepted accounting principles (GAAP) basis at fiscal year-end 2025, the defined benefit pension plan had a funding level of 122.0 percent, up from 111.4 percent one year earlier. The retiree welfare benefit plan had a funding level of 183.2 percent at fiscal year-end 2025, an increase from 143.2 percent one year earlier. There were no designated contributions to either plan during fiscal 2025.
MITIMCo manages the investment of assets in both plans.
MIT also offers a 401(k) plan to its employees, which is not reflected in the Consolidated Statements of Financial Position. Assets in this plan are invested at the direction of participants in an array of investment funds. The plans investment market value was $8,219.4 million as of fiscal year-end.
5
SUMMARY
Borrowings In fiscal 2025, borrowings increased $729.7 million, or 16.5 percent, to $5,160.1 million. The increase was primarily due to the issuance of the new taxable Series Q bonds of $750.0 million. The bond issuance will provide MIT flexibility to advance the Institutes mission in a wide range of conditions.
MITs financial strength is reviewed periodically by both Moodys Ratings and S&P Global Ratings. As of the close of fiscal 2025, the Institute maintained Aaa and AAA ratings, respectively.
Consolidated Statement of Activities Revenues and Expenses MIT ended fiscal 2025 with net results of $425.9 million.
This is $58.7 million, or 12.1 percent, less than fiscal 2024.
Operating revenues increased $302.0 million, or 6.0 percent, to $5,372.8 million, while operating expenses together with all other components of our net periodic retirement benefit costs increased $360.7 million, or 7.9 percent, to $4,946.9 million. Year-over-year comparisons of revenues and expenses are presented in the graph above.
Revenues
MIT REPORT OF THE TREASURER 2025 6
MITs operating revenues include tuition, sponsored support, contributions (expendable gifts and pledge payments), other revenue, support from investments, and auxiliary revenue.
Tuition revenue for graduate and undergraduate programs, net of financial aid, combined with tuition revenue for non-degree programs, increased $8.1 million, or 1.9 percent, to $436.1 million. Undergraduate net degree tuition increased $3.9 million, or 3.5 percent, and graduate net degree tuition increased $6.6 million, or 3.3 percent.
The combined increase in net degree tuition was driven by increases in published tuition rates, partially offset by corresponding increases in financial aid along with a change in aid policy to make an MIT education more affordable for undergraduate students with significant need. Non-degree program revenue decreased $2.5 million, or 2.1 percent, driven by decreased course offerings and enrollment.
Sponsored support increased $96.3 million, or 4.1 percent, to $2,421.2 million in fiscal 2025. Direct sponsored revenues increased $112.4 million, and indirect revenues decreased $16.1 million. Campus direct sponsored revenue increased $6.7 million, or 0.9 percent. Growth would have been higher were it not for one-time reimbursements for COVID-related expenses received in fiscal 2024 for costs incurred from fiscal 2020 through 2022. The increase was primarily driven by expenses incurred through subawards. Lincoln Laboratory direct sponsored revenue increased $102.7 million, or 7.9 percent, due to increases in compensation, expenses incurred through subawards, equipment, and other expenditures for supplies and services. Direct revenue associated with the Singapore-MIT Alliance for Research and Technology (SMART) increased $3.1 million, or 13.1 percent, due to increases in compensation, expenses incurred through subawards, and expenditures for supplies and services.
Indirect cost recovery decreased $16.1 million, or 5.6 percent, to $273.0 million primarily due to lower recoverable costs and recognition that MIT will not fully recover amounts underbilled to sponsors in prior years, both related to research performed off campus (primarily at Lincoln Laboratory).
Federal sponsored activity comprised 63.9 percent of total campus sponsored volume in fiscal 2025, while non-federal activity accounted for 36.1 percent.
Support from investments increased $84.2 million, or 5.7 percent, to $1,565.4 million due to an approved increase in distribution from pooled investments, offset by less income earned from non-pooled investments due to asset reallocations and lower interest rates earned on investments held in a highly liquid bond fund. The effective spending rate on pooled investment funds was 5.0 percent to start fiscal 2025, or 4.9 percent on a three-year-average basis.
Operating contributions, which include gifts and bequests for current use and expendable pledge payments, increased
$72.7 million, or 18.2 percent, to $473.0 million.
Expenses MITs operating expenses, combined with the non-service-cost components of net periodic benefit costs, increased
$360.7 million, or 7.9 percent. These expenses include salaries and wages; employee benefits; supplies and services; subrecipient agreements; utilities, rent, and repairs; depreciation; and interest.
Overall Institute salary and wage expenses increased $97.7 million, or 4.9 percent, to $2,090.9 million. Campus salary and wage expenses increased 4.3 percent as average annualized salaries and wages grew by 3.2 percent, and the number of full-time-equivalent employees increased 1.1 percent. Lincoln Laboratory salary and wage expenses increased 6.3 percent as average annualized salaries increased 3.0 percent, and the number of full-time-equivalent employees increased 3.4 percent. Employee benefit expenses, together with all components of net periodic benefit costs for retirement plans included in our net results calculation, increased $95.4 million, or 21.7 percent, to $535.7 million, driven by increases in total net periodic benefit costs of the defined benefit pension plan, net medical and dental costs, payroll taxes, and other benefit costs related to wages.
During fiscal 2025, expenses for supplies and services increased $68.8 million, or 5.3 percent, to $1,359.7 million, driven by graduate student fellowships stipend costs, sponsored tuition and undergraduate aid, minor equipment purchases, and dining operating costs. Subrecipient agreement costs increased $44.6 million, or 24.2 percent, to
$228.5 million, driven by an increase in expenses incurred through subawards at Lincoln Laboratory and in the School of Engineering.
7
SUMMARY
Utilities, rent, and repairs expenses increased $23.8 million, or 9.6 percent, to $272.1 million, largely due to an accounting change for an existing lease. Depreciation expenses increased $23.1 million, or 8.7 percent, to
$289.6 million, with the completion of several capital projects, such as the Graduate Junction residence. Interest expenses increased $7.4 million, or 4.5 percent, to $170.5 million, primarily due to new interest expense associated with the taxable Series Q bond issuance in fiscal 2025.
Other Revenues, Gains, and Losses Summary Other revenues, gains, and losses drove a $3,698.9 million increase in net assets in fiscal 2025. Other revenues, gains, and losses in fiscal 2025 included positive net returns on total investments, certain forms of contributions revenue, changes in retirement plan obligations, and other changes, offset by investment spending distribution to support operations. In fiscal 2025, net return on investments less spending distribution to support operations increased net assets by $2,733.5 million. Contributions revenue in other revenues, gains, and losses, which includes net current-year pledge revenue and endowed gifts and bequests, increased net assets by $204.9 million, while changes in the net asset positions of the retirement plans, outside of net periodic benefit income recognized in net results, increased net assets by $737.5 million.
Contributions Contributions to MIT provide support for scholarships, fellowships, professorships, research, educational programming, student life activities, the construction and renovation of buildings, and other expenses. Contributions (including both current use and endowed gifts and pledges) for fiscal 2025 totaled $677.9 million, an increase of $79.2 million, or 13.2 percent. Of new gifts and pledges in fiscal 2025, contributions from individuals represented 37.4 percent, contributions from foundations represented 46.0 percent, and contributions from corporations and other sources represented 16.6 percent. New gifts and pledges for research and education were the largest categories of contributions for fiscal 2025.
Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows divide cash inflows and outflows into three categories: operating, investing, and financing. Although this division is a requirement of GAAP, when reviewing the cash flow statement of a nonprofit organization such as MIT, it is important to also consider that investing activities as presented in the cash flows fund a large portion of operating activity through distributions from pooled investments. In fiscal 2025, support from investments comprised 39.7 percent of overall campus operating revenue.
Net operating activities - which result from a total increase in net assets adjusted for non-cash items in the Consolidated Statement of Activities (depreciation, net unrealized gain on investments, changes in the retirement plans net assets, etc.), changes in certain non-cash assets and liabilities, and other reclassifications - provided $28.0 million of cash and restricted cash in fiscal 2025. Net investing activities consumed $963.1 million in cash and were driven by purchases of investments and capital assets. Financing activities provided $973.0 million in cash, driven by the issuance of the Series Q bonds as well as contributions to the endowment.
MITs full consolidated financial statements and notes are on the pages that follow, including the Consolidated Statements of Financial Position, the Consolidated Statement of Activities, and the Consolidated Statements of Cash Flows.
Conclusion We can do world-changing work because of the extraordinary talent of the MIT community. I am grateful to faculty, students, and staff for their excellence and resilience, and to our alumni and friends for their unwavering dedication to supporting the Institutes mission of research, education, and service. I also want to thank former Provost Cynthia Barnhart, who stepped down from that role this summer, for her leadership and partnership. As Provost and previously as Chancellor, she has been instrumental to our efforts to expand the Institutes positive impact and create a campus with a heart as large as the power of the MIT mind and hand.
Respectfully submitted, Glen Shor Executive Vice President and Treasurer October 10, 2025
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PricewaterhouseCoopers LLP, 101 Seaport Boulevard, Boston, Massachusetts 02210 T: (617) 530 5000, www.pwc.com/us Report of Independent Auditors To the Members of the Corporation of the Massachusetts Institute of Technology Opinion We have audited the accompanying consolidated financial statements of the Massachusetts Institute of Technology and its subsidiaries (the "Institute"), which comprise the consolidated statements of financial position as of June 30, 2025 and 2024, and the related consolidated statements of activities for the year ended June 30, 2025, and of cash flows for the years ended 2025 and 2024, including the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Institute as of June 30, 2025 and 2024, and the changes in its net assets for the year ended June 30, 2025, and its cash flows for the years ended June 30, 2025 and 2024 in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Institute and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Other Matter We previously audited the consolidated statement of financial position as of June 30, 2024, and the related consolidated statements of activities and of cash flows for the year then ended (the statement of activities is not presented herein), and in our report dated October 11, 2024, we expressed an unmodified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying summarized financial information for the year ended June 30, 2024, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.
Responsibilities of Management for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Institute's ability to continue as a going concern for one year after the date the consolidated financial statements are issued.
9 REPORT OF INDEPENDENT AUDITORS
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with US GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Institute's internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Institute's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Other Information Management is responsible for the other information included in the annual report. The other information comprises the contents of the Report of the Treasurer but does not include the consolidated financial statements and our auditors' report thereon. Our opinion on the consolidated financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the consolidated financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Boston, Massachusetts October 10, 2025 MIT REPORT OF THE TREASURER 2025 10
11 CONSOLIDATED FINANCIAL STATEMENTS The accompanying notes are an integral part of the consolidated financial statements.
(in thousands of dollars) 2025 2024 Assets Cash 477,862 410,373 Accounts receivable, net 345,963 318,428 Pledges receivable, net, at fair value 631,729 626,904 Contracts in progress, principally US government 139,120 123,860 Deferred charges and other assets 276,938 261,534 Investments, at fair value 35,790,340 31,751,808 Operating leases - right-of-use assets 417,114 198,591 Net asset position - defined benefit pension plan 1,123,430 568,126 Net asset position - retiree welfare benefit plan 502,112 297,423 Land, buildings, and equipment (at cost of $8,484,714 for June 2025; $8,089,320 for June 2024), net of accumulated depreciation 5,638,334 5,425,451 Total assets 45,342,942 39,982,498 Liabilities and Net Assets Liabilities:
Accounts payable, accruals, and other liabilities 698,604 673,726 Deferred revenue and other credits 256,314 169,548 Advance payments 556,984 528,226 Operating lease liabilities 430,462 208,729 Liabilities associated with investments 564,787 420,996 Borrowings, net of unamortized issuance costs 5,160,054 4,430,396 Total liabilities 7,667,205 6,431,621 Net Assets:
Without donor restrictions 16,939,618 14,792,904 With donor restrictions 20,736,119 18,757,973 Total net assets 37,675,737 33,550,877 Total liabilities and net assets 45,342,942 39,982,498 MASSACHUSETTS INSTITUTE OF TECHNOLOGY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION as of June 30, 2025, and 2024
MIT REPORT OF THE TREASURER 2025 12 The accompanying notes are an integral part of the consolidated financial statements.
(in thousands of dollars)
Operating Revenues Tuition and similar revenues, exclusive of financial aid of $502,131 in 2025 and $488,551 in 2024 436,108 436,108 427,993 Sponsored support:
Campus direct 713,631 713,631 706,963 Lincoln direct 1,407,807 1,407,807 1,305,146 SMART direct 26,669 26,669 23,588 Indirect cost recovery 273,044 273,044 289,172 Total sponsored support 2,421,151 2,421,151 2,324,869 Contributions 468,853 4,165 473,018 400,299 Other revenue 296,067 296,067 274,978 Support from investments:
Endowment 1,230,255 1,230,255 1,166,597 Other investments 335,136 335,136 314,576 Total support from investments 1,565,391 1,565,391 1,481,173 Auxiliary enterprises 181,088 181,088 161,536 Total revenues 5,368,658 4,165 5,372,823 5,070,848 Operating Expenses Salaries and wages 2,090,862 2,090,862 1,993,165 Employee benefits 705,960 705,960 636,830 Supplies and services 1,359,662 1,359,662 1,290,865 Subrecipient agreements 228,510 228,510 183,957 Utilities, rent, and repairs 272,126 272,126 248,286 Total expenses before depreciation and interest 4,657,120 4,657,120 4,353,103 Results of operations before depreciation and interest 711,538 4,165 715,703 717,745 Depreciation 289,575 289,575 266,510 Interest 170,489 170,489 163,079 Results of operations 251,474 4,165 255,639 288,156 Net periodic benefit income other than service cost 170,276 170,276 196,503 Net results 421,750 4,165 425,915 484,659 Other Revenues, Gains, and Losses Contributions 204,922 204,922 198,441 Net return on investments 1,700,260 2,598,606 4,298,866 2,155,735 Distribution of investment income and gains (709,444)
(855,947)
(1,565,391)
(1,481,173)
Other changes 12,450 10,616 23,066 89,901 Postretirement benefit plan changes other than net periodic benefit cost 737,482 737,482 (79,657)
Net asset reclassifications and transfers (15,784) 15,784 Total other revenues, gains, and losses 1,724,964 1,973,981 3,698,945 883,247 Increase in net assets 2,146,714 1,978,146 4,124,860 1,367,906 Net assets at the beginning of the year 14,792,904 18,757,973 33,550,877 32,182,971 Net assets at the end of the year
$ 16,939,618
$ 20,736,119
$ 37,675,737
$ 33,550,877 2025 2024 Total 2025 Without Donor Restrictions With Donor Restrictions MASSACHUSETTS INSTITUTE OF TECHNOLOGY CONSOLIDATED STATEMENT OF ACTIVITIES For the year ended June 30, 2025 (with summarized financial information for the year ended June 30, 2024)
13 CONSOLIDATED FINANCIAL STATEMENTS The accompanying notes are an integral part of the consolidated financial statements.
(in thousands of dollars)
CASH FLOW FROM OPERATING ACTIVITIES:
Increase in net assets 4,124,860 1,367,906 Adjustments to reconcile change in net assets to net cash used in operating activities:
Net (gain) loss on investments (3,546,738)
(1,962,290)
Change in retirement plan assets, net of accrued benefit liability (759,993) 22,698 Change in allowances for uncollectible receivables (101,260) 860 Depreciation 289,575 266,510 Net (gain) loss on life income funds and donor advised funds (24,885)
(20,000)
Non-cash operating lease costs (218,523) 44,006 Amortization of bond premiums and discounts and other adjustments (8,353)
(3,711)
Change in operating assets and liabilities:
Pledges receivable 75,655 (6,692)
Accounts receivable (8,023) 4,255 Contracts in progress (15,260)
(19,138)
Deferred charges and other assets (15,911)
(23,730)
Accounts payable, accruals, and other liabilities, excluding building and equipment accruals 27,942 (32,634)
Liabilities associated with investments 170,396 34,757 Deferred revenue and other credits 52,101 (22,089)
Advance payments 28,758 12,023 Operating lease liability 221,733 (44,164)
Reclassification of donated securities (2,864)
(26,032)
Reclassification of investment income for restricted purposes (8,383)
(7,583)
Reclassification of contributions restricted for long-term investment (252,856)
(207,375)
Net cash and restricted cash provided by (used in) operating activities 27,971 (622,423)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of land, buildings, and equipment (468,331)
(596,154)
Purchases of investments (10,034,639)
(4,917,777)
Proceeds from sale of investments 9,538,601 5,805,616 Student notes issued (3,611)
(3,777)
Collections from student notes 4,879 5,678 Net cash and restricted cash (used in) provided by investing activities (963,101) 293,586 CASH FLOW FROM FINANCING ACTIVITIES:
Contributions restricted for long-term investment 252,856 207,375 Payments to beneficiaries of life income funds (26,605)
(25,191)
Proceeds from sale of donated securities restricted for endowment 2,864 26,032 Investment income for restricted purposes 8,383 7,583 Proceeds from borrowings 750,000 1,200 Repayment of borrowings (12,995)
(51,455)
Repayments of government advance for student loans (1,525)
(1,029)
Net cash and restricted cash provided by financing activities 972,978 164,515 Net increase (decrease) in cash and restricted cash 37,848 (164,322)
Cash and restricted cash at the beginning of the period 710,331 874,653 Cash and restricted cash at the end of the period 748,179 710,331 Supplemental Information on cash and restricted cash:
Cash on Statements of Financial Position 477,862 410,373 Cash and restricted cash included in Investments (see Note B) 270,021 299,155 Restricted cash included in Other Assets (see Note G) 295 803 Total cash and restricted cash on Cash Flow 748,179 710,331 2025 2024 MASSACHUSETTS INSTITUTE OF TECHNOLOGY CONSOLIDATED STATEMENTS OF CASH FLOWS for the years ended June 30, 2025, and 2024
MIT REPORT OF THE TREASURER 2025 14 Notes to Consolidated Financial Statements A. Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America. The consolidated financial statements (financial statements) include Massachusetts Institute of Technology (MIT or the Institute) and its wholly owned subsidiaries.
Net assets, revenues, expenses, and gains and losses are classified into two categories based on the existence or absence of donor-imposed restrictions: net assets with donor restrictions and net assets without donor restrictions.
Net assets with donor restrictions include gifts, pledges, trusts, and remainder interests, and income and gains that are either required by donors to be permanently retained or for which restrictions have not yet been met. Such restrictions include purpose restrictions (donors have specified the purpose for which the net assets are to be spent), time restrictions imposed by donors or implied by the nature of the gift (e.g., capital projects, pledges to be paid in the future, life income funds), or by interpretations of law (net gains on donor-endowed gifts, where the gains have not yet been appropriated for spending). Net assets without donor restrictions are all the remaining net assets of MIT.
Donor-restricted gifts and grants (including gifts of long-lived assets) and distributed restricted endowment income (for which the restrictions are met within the same year of gift, grant, or distribution) are reported as revenue without donor restrictions. Amounts for which the restrictions are not met within the same year of gift, grant, or distribution are reclassified to net assets with donor restrictions through the net asset reclassifications and transfers line in the Consolidated Statement of Activities. These amounts are released back to net assets without donor restrictions, through the net asset reclassifications and transfers line, during the years in which the restrictions are met. Gifts specified for the acquisition or construction of long-lived assets are reported as net assets with donor restrictions until the monies are expended and the long-lived assets (e.g., buildings) are put into use, at which point they are reclassified to net assets without donor restrictions, also through the net asset reclassifications and transfers line.
MIT administers its various funds, including endowments, funds functioning as endowments, school or departmental funds, and related accumulated gains, in accordance with the principles of fund accounting. Endowed gifts are recorded in fund accounts, and investment income is distributed to funds annually. Income distributed to funds may be a combination of capital appreciation and yield pursuant to MITs total return investment and spending policies. Each year, the Executive Committee of the Corporation approves the rates of distribution of investment return to funds from MITs investment pools. See Note J for further information on income distributed to funds.
MITs operating revenues include tuition, sponsored support, contributions (expendable gifts and pledge payments), other revenue, support from investments, and auxiliary revenue.
Net results, as presented in MITs Consolidated Statement of Activities, is the measure to which the Institute manages its annual budget and is used in financial reports presented to MITs leadership, including the Executive Committee and the Corporation. It is a comprehensive measure of MITs annual financial performance, including operating activity and the non-service-cost components of net periodic benefit costs or income that serve as a basis for cost recovery.
The Consolidated Statement of Activities also shows results of operations, a measure of ongoing activities, which excludes the impacts of the components of net periodic retirement benefit costs or income other than service costs, and results of operations before depreciation and interest, which is a valuable measure for the Institute as it highlights the impacts of financing and capital development costs that are included in net results.
15 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS A. Accounting Policies (continued)
Tax Status MIT is a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, originally recognized in October 1926, with the most recent affirmation letter dated May 2025.
U.S. GAAP requires MIT to evaluate tax positions taken by the Institute to recognize a tax liability (or asset) if the Institute has taken an uncertain tax position that, more likely than not, would not be sustained upon examination by the IRS. MIT has analyzed the tax positions taken and has concluded that as of June 30, 2025, and 2024, there are no significant uncertain positions taken or expected to be taken.
Cash Certain cash balances, totaling $113.7 million and $73.4 million as of June 30, 2025, and 2024, respectively, are restricted for use under certain sponsored research agreements and government regulations. These amounts are included within cash in the Consolidated Statements of Financial Position.
The Institute had approximately $433.5 million and
$367.9 million as of June 30, 2025, and 2024, respectively, of its cash accounts with a single institution.
The Institute has not experienced any losses associated with deposits at this institution.
Land, Buildings, and Equipment Land, buildings, and equipment are shown at cost when purchased, or at fair value as of the date of a gift when received as a gift, net of accumulated depreciation. When expended, costs associated with the construction of new facilities are shown as construction in progress until such projects are completed and put into use. Depreciation is computed on a straight-line basis over the estimated useful lives of 25 to 50 years for buildings, 3 to 25 years for equipment, and 6 years for software.
Fully depreciated assets were removed from the consolidated financial statements in the amount of $105.7 million and
$107.2 million during 2025 and 2024, respectively. Land, buildings, and equipment as of June 30, 2025, and 2024, are shown in Table 1 below.
Depreciation expense was $289.6 million in fiscal 2025 and
$266.5 million in fiscal 2024. Interest of $9.8 million and $12.9 million was capitalized during fiscal 2025 and fiscal 2024, respectively, in connection with MITs construction projects.
(in thousands of dollars) 2025 Land 119,063 $
119,063 Land improvements 115,389 115,637 Educational buildings 7,086,258 6,562,290 Equipment 628,122 583,741 Software 14,156 21,738 Total 7,962,988 7,402,469 Less: accumulated depreciation (2,846,380)
(2,663,869)
Construction in progress 503,987 679,604 Software projects in progress 17,739 7,247 Net land, buildings, and equipment 5,638,334 $
5,425,451 2024 TABLE 1. LAND, BUILDINGS, AND EQUIPMENT
MIT REPORT OF THE TREASURER 2025 16 A. Accounting Policies (continued)
Tuition and Student Support Tuition and similar revenues, shown in Table 2 below, include tuition and fees for degree programs as well as tuition and fees for executive and continuing education programs. Tuition revenue is recognized over the period during which the courses are taken.
Tuition support shown in Table 3 below is awarded to undergraduate students by MIT based on need. Graduate students are provided with tuition support in connection with research assistance, teaching assistance, and fellowship appointments.
(in thousands of dollars) 2025 2024 Undergraduate and graduate programs*
323,414 $
312,832 Executive and continuing education programs 112,694 115,161 Tuition and similar revenues 436,108 $
427,993
- Undergraduate and graduate programs at published rates totaled $825,545 and $801,383 in 2025 and 2024, respectively, and financial aid applied to undergraduate and graduate programs was $502,131 and $488,551 in 2025 and 2024, respectively.
2025 2024 (in thousands of dollars)
Undergraduate tuition support $
162,805 $
20,791 $
183,596 159,307 $
16,623 $
175,930 Graduate tuition support 339,326 59,395 398,721 329,244 57,212 386,456 Fellowship stipends 70,800 18,767 89,567 61,436 19,500 80,936 Student employment 65,321 91,997 157,318 68,481 92,600 161,081 Total 638,252 $
190,950 $
829,202 618,468 $
185,935 $
804,403 Total Student Support Institute Sources External Sponsors Total Student Support Institute Sources External Sponsors TABLE 2. TUITION AND SIMILAR REVENUES TABLE 3. STUDENT SUPPORT
17 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS A. Accounting Policies (continued)
Sponsored Support and Advance Payments Almost all of Lincoln Laboratory and Singapore-MIT Alliance for Research and Technology (SMART) sponsored revenue, as well as a portion of campus sponsored revenue, come from exchange contracts.
Sponsored revenue related to exchange contracts is recognized as MIT fulfills the terms of the agreements, which generally span fewer than five years. Almost all of campus sponsored revenue - and a portion of Lincoln Laboratory and SMART sponsored revenue - comes from non-exchange contracts. Sponsored revenue associated with non-exchange contracts is recognized as the qualified expenditures are incurred. Sponsored activities at Lincoln Laboratory (which are contractually authorized by the sponsor but for which costs have not yet been incurred) totaled $843.5 million and $974.8 million as of fiscal 2025 and fiscal 2024, respectively. Sponsored activities on campus (which are contractually authorized by the sponsor but for which costs have not yet been incurred) totaled
$1,015.5 million and $1,099.8 million as of fiscal 2025 and fiscal 2024, respectively.
Advance payments are amounts received by MIT from sponsors under the terms of agreements that generally require the exchange of assets, rights, or privileges between MIT and the sponsor. Advance payments are made for activity that will occur in the near future, generally within the next fiscal year.
Indirect sponsored revenue includes the portion of facilities and administrative expenses that is attributed to sponsored activities. MIT has recorded reimbursement of indirect costs relating to sponsored research activities at negotiated fixed billing rates. For non-research activities (such as instruction and other sponsored activity) MIT records reimbursement of indirect costs on federal awards using the de minimis rate allowed by Uniform Guidance, and for non-federal awards using rates that are agreed to with the sponsor.
The revenue generated by the negotiated indirect research rates is adjusted each fiscal year to reflect any variance between the negotiated fixed rates and rates based on actual costs; any adjustment in the rate is charged or credited to net assets without donor restrictions. The actual cost rate is audited by the Defense Contract Audit Agency (DCAA), and a final fixed-rate agreement is signed by the U.S. government and MIT. The variance between the negotiated fixed rate and the final audited rate results in a carryforward (over-or under-recovery). The carryforward is included in the calculation of negotiated fixed billing rates in future years.
Gifts and Pledges (Contributions)
Gifts and pledges (contributions) are recognized when MIT has an unconditional right to receive payment. Gifts of securities are recorded at their fair value at the date of contribution. Donated securities received totaled $83.0 million and $101.3 million in fiscal 2025 and fiscal 2024, respectively. Gifts of equipment received from manufacturers and other donors are put into use and recorded by MIT at fair value. Gifts of equipment totaled
$0.1 million in fiscal 2025 and $0.5 million in fiscal 2024.
Pledges consist of unconditional promises to contribute to MIT in the future. Pledges are reported at their estimated fair values. Pledges receivable are classified as Level 3 under the valuation hierarchy described in Note B.
Pledges, trusts, and remainder interests are reported at their estimated fair values. MIT does not recognize donated works of art, historical treasures, and similar assets in the financial statements if they are part of a collection. Items that are part of a collection are received for educational purposes, and most are displayed throughout MIT. In general, collections are not disposed of for financial gain or otherwise encumbered in any manner.
Other Revenue and Auxiliary Enterprises For the revenue streams included in other revenue and auxiliary enterprises, revenue is recognized at the point in time when goods or services are provided and are included in the without donor restrictions net asset category. Other revenue includes patent royalty revenue, membership agreement revenue, medical services revenue, and various other types. Auxiliary enterprises revenue includes room and board revenue, as well as revenue earned by MIT Press, Technology Review, and Endicott House.
MIT REPORT OF THE TREASURER 2025 18 A. Accounting Policies (continued)
Life Income Funds MITs life income fund agreements with donors consist primarily of irrevocable charitable gift annuities, pooled income funds, and charitable remainder trusts for which MIT serves as trustee. Assets are invested and payments are made to donors and other beneficiaries in accordance with the respective agreements. MIT records the assets that are associated with each life income fund at fair value and records as liabilities the present value of the estimated future payments at current interest rates to be made to the donors and beneficiaries under these agreements. Life income fund assets are included within investments and life income fund liabilities are included within liabilities associated with investments in the Consolidated Statements of Financial Position. A rollforward of liabilities due under life income fund agreements is presented in Table 4 below.
Recently Adopted Accounting Standards On July 1, 2023, the Institute adopted the FASB-issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the current GAAP incurred loss impairment methodology with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of this standard did not have a significant impact on the Institutes financial statements.
(in thousands of dollars)
Balance at the beginning of the year 279,503 265,640 Additions for new gifts 7,621 1,673 Termination and payments to beneficiaries (24,422)
(23,419)
Net investment and actuarial gain 40,793 35,609 Balance at the end of the year 303,495 279,503 2025 2024 TABLE 4. LIABILITIES DUE UNDER LIFE INCOME FUNDS
19 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS A. Accounting Policies (continued)
Non-Cash Items Non-cash transactions excluded from the Consolidated Statements of Cash Flows include $21.4 million and $24.5 million of accrued liabilities related to plant and equipment purchases as of June 30, 2025, and 2024, respectively.
Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Subsequent Events MIT has evaluated subsequent events through October 10, 2025, the date on which the financial statements were issued. On July 4, 2025, the One Big Beautiful Bill Act (the Act) was enacted. Under the Act, the Institutes tax rate on net investment income will increase from 1.4 percent to 8.0 percent, effective for the Institutes fiscal year 2027. The Institute is currently evaluating the potential impact of the Act on the financial statements.
Summarized Information The Consolidated Statement of Activities includes certain prior-year summarized comparative information in total, but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with GAAP in the United States of America. Accordingly, such information should be read in conjunction with MITs financial statements for the year ended June 30, 2024, from which the summarized information was derived.
Reclassifications Certain June 30, 2024, balances and amounts previously reported have been reclassified to conform to the June 30, 2025, presentation.
Related Parties There are three categories of related-party entities that are not fully consolidated in MITs consolidated financial statements and may have transactions with MIT. The first category is certain non-investment entities with education-or research-based missions. These entities are all U.S.
corporations. Income from shared research, royalties for intellectual property, and administration or other services provided to these entities is included as other revenue on the Consolidated Statement of Activities. Costs to pay for services from, provide services to, and support these organizations are included in operating expenses on the Consolidated Statement of Activities. Investments arising from investment participation agreements with these entities are included in investments and the related liability is included in liabilities associated with investments, both on the Consolidated Statements of Financial Position.
Second are trusts for the benefit of employees that are managed by or under the trusteeship of MIT management.
The assets of these U.S. trusts offset the benefit obligations of the defined benefit pension and retiree welfare benefit plans to arrive at the net funded status of each plan, both of which are shown on separate line items on the Consolidated Statements of Financial Position. Please refer to Note I for further details.
Third are certain investment entities for which MIT invests in their equity securities. These entities are limited partnership or equivalent entities located in both the U.S.
and internationally. The Institute recognizes these as investments, at fair value on the Consolidated Statements of Financial Position and in net return on investments in the Consolidated Statement of Activities. Please refer to Note B for further details.
MIT related parties also include Executive Committee members and senior management, their family members, and in some cases entities with which they are associated that may do business with MIT. Transactions between MIT and members of the Executive Committee, senior management, or members of their families can include philanthropic gifts to MIT or similar transactions reported in contributions and other changes on the Consolidated Statement of Activities.
MIT REPORT OF THE TREASURER 2025 20 B. Investments Investments are presented at fair value in accordance with GAAP.
Cash and short-term investments include cash, money market funds, repurchase agreements, and negotiable certificates of deposit, and are valued at cost, which approximates fair value. Instruments listed or traded on a securities exchange are valued at the last quoted price on the primary exchange where the securities are traded.
Over-the-counter positions, such as interest rate and total return swaps, credit default swaps, options, exchange agreements, and interest rate cap and floor agreements, are valued using broker quotes or models using market-observable inputs.
Investments in non-exchange-traded debt are primarily valued using independent pricing sources that use broker quotes or models using observable market inputs.
Investments managed by external managers include those in (i) absolute return; (ii) domestic, foreign, and private equity; (iii) real estate; and (iv) real asset commingled funds. The fair value of securities held in external investment funds that do not have readily determinable fair values are determined by the external managers based upon industry-standard valuation approaches that require varying degrees of judgment, taking into consideration, among other things: the cost of the securities, valuations, and transactions of comparable public companies; the securities estimated future cash flow streams; and the prices of recent significant placements of securities of the same issuer. Using these valuations, most of these external managers calculate MITs capital account or net asset value (NAV) in accordance with, or in a manner consistent with, GAAPs fair value principles.
As a practical expedient, MIT is permitted under GAAP to estimate the fair value of its investments with external managers using the external managers reported NAV without further adjustment, unless MIT expects to sell the investment at a value other than NAV or the NAV is not calculated in accordance with GAAP.
MIT has elected to measure certain equity securities (those without a readily determinable fair value that do not qualify to use NAV as a practical expedient) at cost or fair value on the date of investment less impairment, adjusted for changes in observable prices of the same issuer (the measurement alternative). The election to apply the measurement alternative is applied on a security-by-security basis. MIT reassesses whether these investments qualify for the measurement alternative and performs an impairment analysis on an annual basis.
As of June 30, 2025, and 2024, MIT held $319.7 million and
$261.3 million, respectively, of investments that are valued using the measurement alternative. These investments are included within Level 3 of the fair value hierarchy table.
There have been no impairment adjustments or observable price changes recognized.
Split-interest agreements are generally valued at the present value of the future distributions expected to be received over the term of the agreement.
MIT performs ongoing due diligence to determine that the fair value of investments is reasonable. In particular, to ensure that the valuation techniques for investments that are categorized within the fair value hierarchy are fair, consistent, and verifiable, MIT has established a Valuation Committee (the Committee) that oversees the valuation processes and procedures and ensures that the policies are fair and consistently applied. The Committee is responsible for conducting annual reviews of the valuation policies and evaluating the overall fairness and consistent application of the valuation policies. The Committee reviews external manager due diligence to substantiate the use of NAV as a practical expedient for estimates of fair value for externally managed funds. The Committee is comprised of senior personnel with members who are independent of investment functions. The Committee meets annually or more frequently, and members of the Committee report to MITs Risk and Audit Committee as needed.
The methods described in this note may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. While MIT believes its valuation methods are appropriate and consistent with those of other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
MIT leverages certain real estate investments to optimize the use of invested capital in support of the Institutes mission. The liabilities associated with these financings are presented, on a net basis, with the investment balances on the associated real estate asset found in Table 5. The liabilities associated with real estate investments were $1,320.0 million as of June 30, 2025, and $1,324.4 million as of June 30, 2024. MITs real estate subsidiaries are separate legal entities whose assets and credit are not available to satisfy the liabilities of MIT as a stand-alone entity. Also, the liabilities of MITs subsidiaries do not constitute obligations of MIT as a stand-alone entity.
21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS B. Investments (continued)
MIT may enter into short sales whereby it sells securities that may or may not be owned by MIT in anticipation of a decline in the price of such securities or in order to hedge portfolio positions. Cash collateral and certain securities owned by MIT may be held at counterparty brokers to collateralize these positions and are included in investments in the Consolidated Statements of Financial Position and in restricted cash included in investments on the Consolidated Statements of Cash Flows.
GAAP establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity.
Unobservable inputs reflect the entitys own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. MIT follows a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable.
The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by MIT for financial instruments measured at fair value on a recurring basis. The three levels of inputs are as follows:
Level 1 - Valuations based upon observable inputs that reflect quoted prices in active markets for identical assets and liabilities.
Level 2 - Valuations based upon: (i) quoted market prices for similar assets or liabilities in active markets; (ii) quoted prices for identical or similar assets or liabilities in markets that are not active; or (iii) other significant market-based inputs that are observable, either directly or indirectly.
Level 3 - Valuations based upon unobservable inputs that are significant to the overall fair value measurements. Level 3 investments are valued by MIT based upon valuation information received from the relevant entity, which may include last trade information, third-party appraisals of real estate, or valuations prepared in connection with the administration of an employee stock ownership plan. MIT may also utilize industry-standard valuation techniques, including discounted cash flow models. The significant unobservable inputs used in the fair value measurements of MITs direct investments may include their cost of capital, equity, and industry risk premiums.
Investments managed by external managers in fund structures are not readily marketable and are reported at fair value utilizing the most current information provided by the external manager, subject to assessments that the information is representative of fair value and in consideration of any factors deemed pertinent to the fair value measurement. These investments are shown in the NAV column of Table 5.
A financial instruments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to its fair value measurement. Market information is considered when determining the proper categorization of the investments fair value measurement within the fair valuation hierarchy.
MIT REPORT OF THE TREASURER 2025 22 B. Investments (continued)
Table 5 presents MITs investments at fair value as of June 30, 2025, and 2024, respectively, grouped by the valuation hierarchy described herein. All net realized and unrealized gains and losses related to financial instruments held by MIT included in Table 5 are reflected in the Consolidated Statement of Activities. Cumulative unrealized gains related to Level 3 investments totaled
$1,299.2 million and $1,694.3 million as of June 30, 2025, and 2024, respectively.
(in thousands of dollars)
Fiscal Year 2025 Cash and short-term investments 275,499 17,800 293,299 US Treasury 482,811 1,958,521 2,441,332 US government agency 237,305 237,305 Domestic bonds 6,377 1,350,967 172,318 1,529,662 Foreign bonds 348 181,631 181,979 Common equity:
Domestic 844,786 1
254,805 1,099,592 Foreign 1,504,203 180,224 20,024 1,704,451 Equity:**
Absolute return 5,681,712 5,681,712 Domestic 2,281,241 2,281,241 Foreign 2,903,852 2,903,852 Private 54,534 12,610,634 12,665,168 Real estate*
9,026 2,672,158 1,730,387 4,411,571 Real assets*
28,889 433 238,199 267,521 Split-interest agreements 93,799 93,799 Other 8,641 8,641 Derivatives, assets/(liabilities)
(10,785)
(10,785)
Total Investment assets 3,151,939 3,915,664 3,276,712 25,446,025 35,790,340 Fiscal Year 2024 Cash and short-term investments 201,967 67,682 269,649 US Treasury 1,403,002 1,403,002 US government agency 181,811 181,811 Domestic bonds 9,412 1,092,412 159,312 1,261,136 Foreign bonds 349 144,247 144,596 Common equity:
Domestic 506,130 1
246,840 752,971 Foreign 1,587,977 70,261 14,603 1,672,841 Equity:**
Absolute return 4,943,175 4,943,175 Domestic 2,540,222 2,540,222 Foreign 2,012,138 2,012,138 Private 11,284,910 11,284,910 Real estate*
1,192 3,306,974 1,580,242 4,888,408 Real assets*
16,620 368 277,784 294,772 Split-interest agreements 86,932 86,932 Other 14,779 14,779 Derivatives, assets/(liabilities) 3,561 (3,095) 466 Investments, at fair value 3,730,210 1,553,319 3,829,808 22,638,471 31,751,808
- Includes direct investments and investments held through commingled vehicles.
- Includes commingled vehicles that invest in these types of investments.
Level 1 Level 2 Level 3 Total Fair Value NAV TABLE 5. INVESTMENTS
23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS B. Investments (continued)
Table 6 below is a rollforward of the investments classified by MIT within Level 3 of the fair value hierarchy defined earlier in this note as of June 30, 2025, and 2024.
Table 7 below sets forth a summary of valuation techniques and quantitative information utilized in determining the fair value of MITs Level 3 investments as of June 30, 2025, and 2024.
(in thousands of dollars)
Fiscal Year 2025 Domestic bonds 159,312 56 (56) 24,695 (11,689) 172,318 Common equity:
Domestic 246,840 2,178 544 (2,178) 7,421 254,805 Foreign 14,603 9
5,433 (21) 20,024 Equity - Private 3,937 50,597 54,534 Real estate 3,306,974 83,168 (411,504) 273,739 (614,064) 33,845 2,672,158 Real assets 368 10 115 (60) 433 Split-interest agreements 86,932 987 4,662 4,363 (3,145) 93,799 Other 14,779 4
(66) 1,349 (4)
(7,421) 8,641 Investments, at fair value $
3,829,808 86,412 (396,935) 354,743 (631,161) 33,845 3,276,712 Fiscal Year 2024 Domestic bonds 146,166 57 (57) 21,232 (8,086) 159,312 Common equity:
Domestic 233,650 (2)
(1,267) 14,461 (2) 246,840 Foreign 23,965 (232) 12 (9,142) 14,603 Real estate 3,486,773 991 (573,182) 410,694 (2,806)
(15,496) 3,306,974 Real assets 346 22 368 Split-interest agreements 81,355 4,677 1,092 (192) 86,932 Other 12,245 2,534 14,779 Investments, at fair value $
3,984,500 1,046 (567,505) 447,491 (11,086)
(24,638) 3,829,808 Other Changes and Transfers Fair Value Ending Fair Value Beginning Realized Gains (Losses)
Unrealized Gains (Losses)
Purchases Sales (in thousands of dollars)
Valuation Technique Unobservable Input 2025 Rates 2025 Weighted Average 2024 Rates 2024 Weighted Average Real Estate 2,864,230 4,252,685 Income approach Discount Rate 5.00 - 10.00%
7.49%
5.25 - 9.00%
7.35%
Capitalization Rate 4.50 - 8.00%
6.30%
4.25 -7.25%
6.20%
Terminal Capitalization Rate 4.75 - 8.25%
6.65%
4.50 - 8.25%
6.47%
680,776 1,105 Market approach Comparable sale transactions $49-347/FAR
$274/FAR $99-299/FAR $217/FAR Equity and real asset securities 7,643 Discounted cash flow Discount Rate 25.00%
25.00%
Split-interest agreements 93,799 86,932 Net present value Discount Rate 5.25%
5.25%
5.85%
5.85%
Total assets*
3,638,805 4,348,365 approximates fair value or using unadjusted third party quotations and thus have been excluded from this table.
alternative and thus have been excluded from this table.
Fair Value as of June 30, 2025 Fair Value as of June 30, 2024
- Certain Level 3 investments and debt totaling ($681,823) and ($779,898) as of June 30, 2025 and June 30, 2024, respectively, have been valued at cost which
- Certain Level 3 investments totaling $319,730 and $261,344 as of June 30, 2025 and June 30, 2024, respectively, have been valued using the measurement
- FAR stands for Floor Area Ratio.
TABLE 6. ROLLFORWARD OF LEVEL 3 INVESTMENTS TABLE 7. LEVEL 3 VALUATION TECHNIQUES
MIT REPORT OF THE TREASURER 2025 24 B. Investments (continued)
MIT has made commitments to make periodic contributions in future periods to investments managed by external managers, and certain of these investments may be subject to restrictions that: (i) limit MITs ability to withdraw capital after such investment; and (ii) may limit the amount that may be withdrawn as of a given redemption date due to notice periods, lock-ups, and gates.
Most absolute return, domestic equity, and foreign equity commingled funds limit withdrawals to monthly, quarterly, or other periods, and may require notice periods. In addition, some of these funds are able to designate a portion of the investments as illiquid in side-pockets, and these funds may not be available for withdrawal until liquidated by the investing fund.
For the funds where MITs ability to withdraw capital is limited, primarily with private equity, real estate, and real asset funds, distributions are made when sales of assets within these funds are made, and the investment cycle for these funds can be as long as 15 to 20 years. These restrictions may limit MITs ability to respond quickly to changes in market conditions. However, MIT does have various sources of liquidity at its disposal. Refer to Note E for further details. Details on the remaining unfunded commitments and current redemption terms and restrictions by asset class and type of investment are provided below in Table 8 as of June 30, 2025, and 2024.
(in thousands of dollars)
Redemption Terms1 Days Notice Equity:
Absolute return2 102,421 5,681,712 91,761 4,943,175 Ranges from daily to 37 months4 0 to 365 days Domestic 1,721 2,281,241 29,546 2,540,222 Ranges from daily to 48 months4 30 to 120 days Foreign3 18,728 2,903,852 2,012,138 Ranges from daily to 37 months4 0 to 180 days Private 2,368,530 12,610,634 2,736,211 11,284,910 Close-ended funds not available for redemption Not redeemable Real estate 566,211 1,730,387 634,273 1,580,242 Close-ended funds not available for redemption Not redeemable Real assets 22,707 238,199 18,551 277,784 13 months4 90 days Total 3,080,318 25,446,025 3,510,342 22,638,471 2Absolute return funds include funds that have remaining lock-up provisions up to 34 months.
3Foreign funds include funds that have remaining lock-up provisions up to 60 months.
4Includes funds that are not available for redemption.
1The Redemption Terms column reflects the time required to redeem excluding any lockup restrictions. Footnotes 2 and 3 below disclose the longest remaining lockup period for each asset class as of June 30.
2025 Unfunded Commitments Fair Value Unfunded Commitments 2024 Fair Value TABLE 8. UNFUNDED COMMITMENTS AND REDEMPTION TERMS AND RESTRICTIONS
25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS C. Derivative Financial Instruments and Collateral For its investment management, MIT uses a variety of financial instruments with off-balance-sheet risk involving contractual or optional commitments for future settlement.
MIT uses these instruments primarily to manage or hedge its exposure to extreme market events and fluctuations in asset classes or currencies. Instruments utilized include fixed income, currency and equity futures, options, and swaps. The risks of these instruments, to varying degrees, include the possibility for imperfect correlation between the change in the market value of assets being hedged and the prices of the derivative or hedge instruments, and interest, credit market, liquidity, and counterparty risk.
To manage the counterparty risk, MIT requires collateral to the maximum extent possible under normal trading practices.
Collateral is moved on a daily basis as required by fluctuations in the market. The collateral is generally in the form of debt obligations issued by the U.S. Treasury or cash.
In the event of counterparty default, MIT has the right to use the collateral to offset the loss associated with the replacement of the agreements. Maximum risk of loss from counterparty credit risk on over-the-counter derivatives is generally the aggregate unrealized appreciation in excess of any collateral pledged by the counterparty. ISDA (International Swaps and Derivatives Association) Master Agreements under which many derivatives are traded allow MIT or the counterparties to an over-the-counter derivative to terminate the contract prior to maturity in the event either party fails to meet the terms in the ISDA Master Agreements.
This would cause an accelerated payment of net liability, if owed to the counterparty.
MIT enters into arrangements only with counterparties believed to be creditworthy. On June 30, 2025, and 2024, cash collateral and certain securities owned by MIT were held at counterparty brokers to collateralize these positions and are included in investments in the Consolidated Statements of Financial Position.
Derivatives held by limited partnerships and commingled investment vehicles pose no off-balance-sheet risk to MIT due to the limited liability structure of these investments.
The net fair value related to derivatives for the years ended June 30, 2025, and 2024, were short $10.8 million and $0.5 million, respectively. Net losses related to derivatives totaled
$203.8 million and $146.2 million for the years ended June 30, 2025, and 2024, respectively. The average net notional related to derivatives for the years ended June 30, 2025, and 2024, were short $2.5 billion and short $777.7 million, respectively.
Please refer to Note F for information regarding MITs Series J interest rate swap.
MIT REPORT OF THE TREASURER 2025 26 D. Pledges Receivable Table 9 below shows the time periods in which pledges receivable as of June 30, 2025, and 2024, are expected to be realized.
A review of pledges is conducted periodically regarding collectability. As a result, the allowance for unfulfilled pledges is adjusted, and some pledges have been cancelled and are no longer recorded in the financial statements.
Pledge discounts of $91.9 million and $145.1 million for the years ended June 30, 2025, and 2024, respectively, were calculated using rates ranging from 4.0 percent to 5.4 percent. MIT had gross conditional pledges, not recorded, for the promotion of education and research of
$65.9 million and $107.2 million in fiscal 2025 and 2024, respectively. Conditional pledges are classified into the following categories: foundation grants, fundraising challenges, other commitments, and building construction.
Table 10 below shows the breakout of conditional pledge amounts as of June 30, 2025, and 2024.
Table 11 below is a rollforward of pledges receivable as of June 30, 2025, and 2024.
(in thousands of dollars)
In one year or less 278,377 325,313 Between one year and five years More than five years 104,597 135,226 Less: allowance for unfulfilled pledges Pledges receivable, net 631,729 626,904 2024 2025 (69,841)
(150,320) 318,596 316,685 (in thousands of dollars) 2025 2024 Foundation Grants 29,339 28,914 Fundraising Challenge 22,121 22,471 Other 14,401 15,038 Building Construction 40,746 Total conditional pledges 65,861 107,169 (in thousands of dollars)
Balance at beginning of the year 626,904 611,187 New pledges 76,081 272,144 Pledge payments received (204,993)
(236,070)
Change in pledge discount 53,257 (29,382)
Change in allowance for unfulfilled pledges 80,480 9,025 Balance at the end of the year 631,729 626,904 2025 2024 TABLE 9. PLEDGES RECEIVABLE TABLE 11. ROLLFORWARD OF PLEDGES RECEIVABLE TABLE 10. CONDITIONAL PLEDGES
27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS E. Liquidity Table 12 below details the Institutes financial assets and resources available to meet cash needs for general expenditures within one year of the date of the Consolidated Statements of Financial Position.
As part of MITs liquidity management strategy, financial assets are structured to be available as its general expenditures, liabilities, and other obligations come due. MIT invests its working capital, which is comprised of cash and capital project funds in excess of daily requirements, in various investment vehicles. To help manage unanticipated liquidity needs, MIT expanded its line of credit from $500.0 million to $1.0 billion in June 2025, consisting of an extension of the existing $500.0 million facility to June 2028 and a new $500.0 million facility maturing in June 2026. The lines were undrawn as of June 30, 2025, and 2024.
(in thousands of dollars) 2024 Financial assets:
Cash and liquid operating investments 2,954,165 2,234,089 Accounts receivable 335,648 306,844 Pledges receivable 170,257 144,019 Investments appropriated for spending in the following year 1,444,368 1,379,171 Total financial assets available within one year 4,904,438 4,064,123 2025 TABLE 12. LIQUIDITY AND AVAILABILITY OF RESOURCES
MIT REPORT OF THE TREASURER 2025 28 F. Net Borrowings MITs outstanding borrowings as of June 30, 2025, and 2024, are shown in Table 13 below.
(in thousands of dollars / due dates are calendar based / par values as of 2025)
Educational plant Massachusetts Health and Educational Facilities Authority (MassDevelopment)
Series I, 5.20%, due 2028, par value $30,000 30,141 30,199 Series J-1, variable rate, due 2031, par value $125,000 125,000 125,000 Series J-2, variable rate, due 2031, par value $125,000 125,000 125,000 Series K, 5.5%, due 2032, par value $121,500 125,171 125,600 Series L, 5.25%, due 2033, par value $64,215 67,317 67,633 Series M, 5.25%, due 2024-2030, par value $68,760 57,821 70,654 Series P, 5.0%, due 2050, par value $136,055 197,558 200,017 Total MassDevelopment 728,008 744,103 Taxable Medium Term Notes Series A, 7.125%, due 2026, par value $17,415 17,410 17,406 Medium Term Notes Series A, 7.25%, due 2096, par value $45,604 45,494 45,489 Taxable Bonds, Series B, 5.60%, due 2111, par value $750,000 747,301 747,270 Taxable Bonds, Series C, 4.678%, due 2114, par value $550,000 550,000 550,000 Taxable Bonds, Series D, 3.308-3.959%, due 2026-2038, par value $456,000 456,000 456,000 Taxable Bonds, Series E, 3.885%, due 2116, par value $500,000 500,000 500,000 Taxable Bonds, Series F, 2.989%, due 2050, par value $525,000 545,736 546,566 Taxable Bonds, Series G, 2.294%, due 2051, par value $350,000 350,000 350,000 Taxable Bonds, Series H, 3.067%, due 2052, par value $500,000 500,000 500,000 Taxable Bonds, Series Q, 5.618%, due 2055, par value $750,000 750,000 Total taxable 4,461,941 3,712,731 Total educational plant*
5,189,949 4,456,834 Consolidated entity debt 590 1,200 Total borrowings 5,190,539 4,458,034 Unamortized bond issuance costs (30,485)
(27,638)
Total borrowings net of unamortized debt issuance costs 5,160,054 4,430,396
- Proceeds from recent issuances were in the process of being invested in physical assets in 2025 and 2024 with unused balances held in investments.
2025 2024 TABLE 13. NET BORROWINGS
29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F. Net Borrowings (continued)
The aggregate amounts of debt payments and sinking fund requirements for each of the next five fiscal years are shown in Table 14 below.
As of June 30, 2025, MIT had undrawn lines of credit with a major financial institution for an aggregate commitment of $1.0 billion. This includes a new $500.0 million line of credit secured in June 2025 (maturing in June 2026), and an existing $500.0 million line of credit, for which the maturity was extended to June 2028.
Cash paid for interest on long-term debt in fiscal 2025 and fiscal 2024 was $179.6 million and $182.4 million, respectively.
Variable interest rates as of June 30, 2025, are shown in Table 15 below.
In the event that MIT receives notice of any optional tender on its Series J-1 and Series J-2 variable-rate bonds, or if these bonds become subject to mandatory tender, the purchase price of the bonds will be paid from the remarketing of such bonds. However, if the remarketing proceeds are insufficient, MIT will be obligated to purchase the bonds tendered at 100.0 percent of par on the tender date.
In the event that MIT is obligated to purchase the bonds, cash on hand or liquidation of short-term investments from operating funds would be used as a source of funds.
MIT maintains an interest rate swap agreement to manage the interest cost and risk associated with a portion of the variable rate debt included in Table 15 above. Under the agreement, MIT pays a fixed rate of 4.91 percent and receives a payment indexed to the Securities Industry and Financial Market Association (SIFMA) index on a notional amount of $125.0 million. The notional amount of this derivative is not recorded on MITs Consolidated Statements of Financial Position. As of June 30, 2025, and 2024, the swap agreement had fair values of ($15.3) million and
($15.6) million, respectively, included in the accounts payable, accruals, and other liabilities line item on the Consolidated Statements of Financial Position. Fair value is measured using Level 2 inputs as defined in Note B. This swap had net gains of $0.3 million and $1.7 million in fiscal 2025 and 2024, respectively.
(in thousands of dollars) 2026 13,030 2027 103,415 2028 30,000 2029 13,715 2030 14,435 (in thousands of dollars)
Rate MassDevelopment Series J-1 125,000 2.80%
MassDevelopment Series J-2 125,000 2.11%
Amount TABLE 14. DEBT PRINCIPAL OBLIGATIONS TABLE 15. VARIABLE INTEREST RATES
MIT REPORT OF THE TREASURER 2025 30 G. Commitments and Contingencies Federal Government Funding MIT receives funding or reimbursement from federal agencies for sponsored programs under government grants and contracts. These grants and contracts provide for reimbursement of indirect costs. MITs indirect cost reimbursements for sponsored research activities are based on rates negotiated with the Office of Naval Research (ONR),
MITs cognizant federal agency. Indirect research rates are based on fixed rates with carryforward of under-or over-recoveries. MIT recorded a net under-recovery of $51.0 million and $94.0 million as of June 30, 2025, and 2024, respectively. The net under-recovery of $51.0 million as of June 30, 2025, includes an under-recovery related to on-campus research of $64.6 million offset by a net over-recovery of $13.6 million for off-campus research. The net under-recovery of $94.0 million as of June 30, 2024, includes an under-recovery related to on-campus research of $84.6 million and an under-recovery for off-campus research of
$9.4 million. The Institute had a reserve against on-campus under-recovery in the amount of $64.6 million and $84.6 million as of June 30, 2025, and 2024, respectively, to reflect that MIT may not, over time, fully recover the on-campus under-recovery.
The Defense Contract Audit Agency (DCAA) is responsible for auditing indirect charges to research grants and contracts in support of ONRs negotiating responsibility. The Institutes rates have been audited by DCAA through fiscal 2023, and the audit for fiscal 2024 is in progress. ONR has completed negotiations of final rates through fiscal 2023 and forward pricing rates through fiscal 2026.
Leases The Institute is the lessee of space under operating (rental) leases with contractual terms longer than 12 months. The Institute determines whether a contract is a lease at inception. Identified leases are subsequently measured, classified, and recognized at lease commencement. The Institutes leases generally have terms that range from 1 to 15 years for property, with certain leases inclusive of renewal options if they are considered to be reasonably assured at lease commencement. Right-of-use assets and lease liabilities for operating leases are included in the operating leases - right-of-use assets and operating lease liabilities line items, respectively, in the Consolidated Statements of Financial Position. Lease assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.
Operating lease right-of-use assets and associated lease liabilities are recognized based on the present value of future minimum lease payments to be made over the expected lease term, using the incremental borrowing rate at the commencement date in determining the present value of future payments. Rent expense related to operating leases, including short-term leases, was $69.3 million and $44.7 million in fiscal 2025 and fiscal 2024, respectively.
Future minimum lease payments with a reconciliation to the operating lease liabilities number in the Consolidated Statements of Financial Position as of June 30, 2025, are shown below.
The lease cost and other required information for the year ended June 30, 2025, and 2024, are shown below:
Assets Pledged as Collateral As of June 30, 2025, and 2024, $0.3 million and $0.8 million of assets, respectively, were pledged as collateral to various suppliers and government agencies. This is classified as restricted cash on the Consolidated Statements of Cash Flows.
(in thousands of dollars) 2026 69,470 2027 68,637 2028 65,783 2029 50,924 2030 46,610 Thereafter 219,603 Total minimum lease payments 521,027 Less: Amount representing interest (90,565)
Present value of net minimum lease payments 430,462 (in thousands of dollars)
Accretion of the lease liability
$ 139,054 47,397 Operating cash flows from operating leases*
66,531 $
43,872 Weighted-average remaining lease term in years 9.1 5.8 Weighted-average discount rate 3.5%
1.6%
- Lease costs are reported in utilities, rent, and repairs in the Consolidated Statement of Activities.
2024 2025 TABLE 16. ANNUAL MINIMUM LEASE TABLE 17. QUANTITATIVE DISCLOSURES
31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS G. Commitments and Contingencies (continued)
Future Construction As of June 30, 2025, MIT had contractual obligations of approximately $187.6 million in connection with educational plant construction projects. It is expected that the resources to satisfy these commitments will be provided from unexpended plant funds, anticipated gifts, bond proceeds, and funds without donor restrictions.
MIT has also made commitments related to the development of its commercial real estate holdings in Kendall Square and to the enhancement of its East Campus gateway. As of June 30, 2025, the outstanding commitments included approximately $56.3 million of contractual obligations related to the Kendall Square Initiative, $113.5 million related to Kendall Common, and
$4.8 million related to other commercial real estate projects.
In 2017, MIT and the federal government entered into an agreement whereby MIT agreed to construct a new transportation center on 4 of the 14 acres of federally owned land located at the John A. Volpe National Transportation Systems Center site in Kendall Square in exchange for the fee interest to and the right to redevelop the adjacent 10 acres of land. MIT has invested a total of $748.5 million in the project. Costs incurred for construction of the new facility and in completion of the final exchange, which are included in investments, were $270.6 million in fiscal 2024.
The exchange was completed in January of 2024 upon completion of the construction of the new facility by delivery of the building with a cost to MIT of $529.5 million and cash of $219.0 million. The Volpe property was then marked-to-market and is carried at fair value in investments as of June 30, 2025, and 2024.
General MIT has entered into agreements, including collaborations with third-party not-for-profit and for-profit entities, for education, research, and technology transfers. Some of these agreements involve funding from foreign governments. These agreements subject MIT to greater financial risk than do its normal operations. In the opinion of management, the likelihood of realization of increased financial risks by MIT under these agreements is remote.
MIT is subject to certain other legal proceedings and claims that arise in the normal course of operations. In the opinion of management, the ultimate outcome of these actions will not have a material effect on MITs financial position.
MIT REPORT OF THE TREASURER 2025 32 H. Functional Expense Classification MITs expenditures on a functional basis for the years ended June 30, 2025, and 2024, are shown in Table 18 below.
Expenses are presented by functional classification in alignment with the overall mission of the Institute. Each functional classification displays all expenses related to the underlying operation by natural classification. Natural expenses attributable to more than one functional expense category are allocated using reasonable cost allocation techniques. Depreciation and utilities, rent, and repair expenses are allocated directly and/or based on square footage. Interest expense on indebtedness is allocated to the functional categories that have benefited from the proceeds of the associated debt.
(in thousands of dollars)
General and administrative Instruction and unsponsored research Sponsored research Total Fiscal Year 2025 Compensation
$ 673,285
$ 775,150
$ 1,178,111
$ 2,626,546 Other operating 153,525 633,336 801,311 1,588,172 Space-related 246,080 259,697 226,413 732,190 2025 Total
$ 1,072,890
$ 1,668,183
$ 2,205,835
$ 4,946,908 Fiscal Year 2024 Compensation 559,934 736,573
$ 1,136,985
$ 2,433,492 Other operating 144,894 594,929 734,999 1,474,822 Space-related 211,387 235,623 230,865 677,875 2024 Total 916,215 1,567,125 2,102,849
$ 4,586,189 TABLE 18. EXPENDITURES BY FUNCTIONAL CLASSIFICATION
33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS I. Retirement Benefits MIT offers a defined benefit pension plan and a defined contribution plan to its employees. The plans cover substantially all MIT employees.
MIT also offers a retiree welfare benefit plan (certain healthcare and life insurance benefits) for retired employees. Substantially all MIT employees may become eligible for those benefits if they reach a qualifying retirement age while working for MIT. The healthcare component of the welfare plan is paid for in part by retirees, their covered dependents, and beneficiaries. Benefits are provided through various insurance companies whose charges are based either on the claims and administrative expenses paid during the year or annual insured premiums. The life insurance component of the welfare plan includes basic life insurance and supplemental life insurance. The basic life insurance plan is non-contributory and covers the retiree only. The supplemental life insurance plan is paid for by the retiree. MIT maintains a trust to pay for the retiree welfare benefit plan.
MIT contributes to the defined benefit pension plan amounts that are actuarially determined to provide the retirement plan with sufficient assets to meet future benefit requirements. There were no designated contributions to the defined benefit pension plan and the retiree welfare benefit plan for fiscal 2025 and fiscal 2024. For the defined contribution plan, the amounts contributed by MIT and expenses recognized during fiscal 2025 and fiscal 2024 were $89.5 million and $83.7 million, respectively.
For purposes of calculating net periodic benefit cost, plan amendments for the defined benefit pension plan are amortized on a straight-line basis over the average future service of active participants at the date of the amendment.
Plan amendments to the retiree welfare benefit plan are amortized on a straight-line basis over the average future service to full eligibility of active participants at the date of amendment.
Cumulative gains and losses (including changes in assumptions) more than 10.0 percent of the greater of the benefit obligation or the market-related value of assets for both the defined benefit pension plan and the retiree welfare benefit plan are amortized over the average future service of active participants. MIT accelerates recognition of cumulative gains or losses to the extent that the unrecognized balance partially or fully offsets the preliminary net periodic benefit cost or income calculated prior to this accelerated amount. In no event shall the annual amortization be less than the total amount of unrecognized gains and losses up to $1.0 million.
MIT REPORT OF THE TREASURER 2025 34 I. Retirement Benefits (continued)
Components of Net Periodic Benefit Cost Table 19 below summarizes the components of net periodic benefit cost recognized in net results and other amounts recognized in other revenues, gains, and losses without donor restrictions for the years ended June 30, 2025, and 2024.
Cumulative amounts recognized in net assets without donor restrictions are summarized in Table 20 below for the years ended June 30, 2025, and 2024.
(in thousands of dollars)
Components of net periodic benefit cost recognized in net results:
Service cost 119,503 110,231 28,262 29,313 Interest cost 283,236 254,078 40,888 38,643 Expected return on plan assets (411,426)
(391,526)
(68,032)
(64,763)
Amortization of net actuarial (gain)
(1,000)
(15,323)
(19,251)
(19,605)
Amortization of prior service cost 347 347 1,646 1,646 Special/contractual termination benefits 2,837 479 Net periodic benefit (income) recognized in net results (6,503)
(42,193)
(16,008)
(14,766)
Other amounts recognized in other revenues, gains and losses:
Current year actuarial (gain) loss (549,454) 93,816 (206,286)
(47,094)
Amortization of actuarial gain 1,000 15,323 19,251 19,605 Amortization of prior service (cost)
(347)
(347)
(1,646)
(1,646)
Total other amounts recognized in other revenues, gains and losses (548,801) 108,792 (188,681)
(29,135)
Total recognized (555,304) 66,599 (204,689)
(43,901) 2025 2024 2025 2024 Retiree Welfare Benefit Plan Defined Benefit Pension Plan (in thousands of dollars)
Amounts recognized in net assets without donor restrictions consist of:
Net actuarial (gain)
(856,696)
(308,242)
(444,278)
(257,243)
Prior service cost 1,554 1,901 9,372 11,018 Total cumulative amounts recognized in net assets without donor restrictions (855,142)
(306,341)
(434,906)
(246,225)
Retiree Welfare Benefit Plan 2025 2024 2025 2024 Defined Benefit Pension Plan TABLE 20. CUMULATIVE AMOUNTS RECOGNIZED IN NET ASSETS WITHOUT DONOR RESTRICTION TABLE 19. COMPONENTS OF NET PERIODIC BENEFIT COST AND OTHER AMOUNTS RECOGNIZED IN OTHER REVENUES, GAINS, AND LOSSES
35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS I. Retirement Benefits (continued)
Benefit Obligations and Fair Value of Assets Table 21 below summarizes the benefit obligations, plan assets, and amounts recognized in the Consolidated Statements of Financial Position for MITs retirement benefit plans. MIT uses a June 30 measurement date for its defined benefit pension plan and retiree welfare benefit plan.
The projected benefit obligation for the defined benefit pension plan, as shown in Table 21, was $5,115.9 million and $4,980.8 million as of June 30, 2025, and 2024, respectively. Another measure of the plans liabilities is the accumulated benefit obligation. While the projected benefit obligation factors in future salary increases, the accumulated benefit obligation does not.
The accumulated benefit obligation of MITs defined benefit pension plan was $4,985.3 million and $4,845.6 million as of June 30, 2025, and 2024, respectively.
The actuarial gains reflected in 2025 are due to a higher discount rate for the defined benefit pension plan and updated healthcare cost and reimbursement assumptions for the retiree welfare benefit plan.
MIT provides retiree drug coverage through an Employer Group Waiver Plan (EGWP). Under an EGWP, the cost of drug coverage is offset through direct federal subsidies, brand-name drug discounts, and reinsurance reimbursements.
(in thousands of dollars)
Change in benefit obligations*:
Benefit obligations* at beginning of year 4,980,844 4,570,000 688,056 661,227 Service cost 119,503 110,231 28,262 29,313 Interest cost 283,236 254,078 40,888 38,643 Retiree contributions 13,786 12,385 Net benefit payments, transfers, and other expenses (210,372)
(194,765)
(61,847)
(51,934)
Employer Group Waiver Plan (EGWP) reimbursement 16,145 12,973 Assumption changes and actuarial net (gain) loss (60,121) 241,300 (122,574)
(14,551)
Special/contractual termination benefits 2,837 479 Benefit obligations* at end of the year 5,115,927 4,980,844 603,195 688,056 Change in plan assets:
Fair value of plan assets at beginning of the year 5,548,970 5,204,725 985,479 914,749 Actual return on plan assets 900,759 539,010 151,744 97,306 Employer Group Waiver Plan (EGWP) reimbursement 16,145 12,973 Retiree contributions 13,786 12,385 Net benefit payments, transfers, and other expenses (210,372)
(194,765)
(61,847)
(51,934)
Fair value of plan assets at end of the year 6,239,357 5,548,970 1,105,307 985,479 Funded status at end of the year 1,123,430 568,126 502,112 297,423 Amounts recognized in the Consolidated Statements of Financial Position consist of:
Net asset position 1,123,430 568,126 502,112 297,423
- The benefit obligation for the defined benefit pension plan is the Projected Benefit Obligation (PBO); for the retiree welfare benefit plan it is the Accumulated Postretirement Benefit Obligation (APBO).
Retiree Welfare Benefit Plan 2025 2024 2025 2024 Defined Benefit Pension Plan TABLE 21. BENEFIT OBLIGATIONS* AND FAIR VALUE OF ASSETS
MIT REPORT OF THE TREASURER 2025 36 I. Retirement Benefits (continued)
Assumptions for Financial Parameters and Healthcare Trend Rates Table 22 below summarizes assumptions and healthcare trend rates. The expected long-term rate-of-return assumption represents the expected average rate of earnings on the funds invested, or to be invested, to provide for the benefits included in the benefit obligation. The long-term rate-of-return assumption is determined based on several factors, including historical market index returns, the anticipated long-term asset allocation of the plans, historical plan return data, plan expenses, and the potential to outperform market index returns.
Plan Investments The investment objectives for the assets of the plans are to minimize expected funding contributions and to meet or exceed the rates of return assumed for plan funding purposes over the long term. The nature and duration of benefit obligations, along with assumptions concerning asset class returns and return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives.
Investment policies and strategies governing the assets of the plans are designed to achieve investment objectives within prudent risk parameters. Risk management practices include the use of external investment managers, the maintenance of a portfolio diversified by asset class, investment approach, security holdings, and the maintenance of sufficient liquidity to meet benefit obligations as they come due.
(in thousands of dollars) 2025 2024 2025 2024 Assumptions used to determine benefit obligation as of June 30:
Discount rate 5.77%
5.68%
5.81%
5.84%
Rate of compensation increase*
5.50%
5.50%
Pension increases for in-payment benefits**
3.00%/1.88%
3.38%/1.88%
Cash balance interest crediting rate 6.00%
6.00%
Assumptions used to determine net periodic benefit cost for the year ended June 30:
Discount rate 5.68%
5.56%
5.84%
5.73%
Expected long-term return on plan assets 7.25%
7.25%
6.75%
6.75%
Rate of compensation increase 5.50%
7.00%/5.50%
Cash balance interest crediting rate 6.00%
6.00%
Assumed health care cost trend rates:
Healthcare cost trend rate assumed for next year (pre-65/post-65/EGWP)***
7.50%/7.00%/18.00%
7.75%/7.25%/-17.58%
Ultimate health care cost trend rate (pre-65/post-65/EGWP)****
5.00%/5.00%/5.00%
5.00%/5.00%/5.00%
Year the rate reaches the ultimate trend rate 2031/2031/2029 2031/2031/2033
- As of June 30, 2025, salary increases are assumed to be 5.50% for fiscal years ending 2026 and beyond, the same as June 30, 2024.
- As of June 30, 2025, the pension increase assumption for in-payment benefits is assumed to be 3.00% in 2025, grading down to 1.88% over 4 years, updated from June 30, 2024, assumption of 3.38% grading down to 1.88% over 5 years.
- As of June 30, 2025, the healthcare cost trend for next year is assumed to be 7.50% for pre-65 costs, 7.00% for post-65 costs, and 18.00% for EGWP reimbursement.
- As of June 30, 2025, the ultimate healthcare cost trend is assumed to be 5.00% for pre-and post-65 costs and for EGWP reimbursements.
Retiree Welfare Benefit Plan Defined Benefit Pension Plan TABLE 22. ASSUMPTIONS
37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS I. Retirement Benefits (continued)
Tables 23A and 23B present investments at fair value of MITs defined benefit pension plan and retiree welfare benefit plan, which are included in fair value of plan assets as of June 30, 2025, and 2024, grouped by the valuation hierarchy detailed in Note B. The investment values in these tables exclude certain items included in the assets and liabilities shown in Table 21.
(in thousands of dollars)
Fiscal Year 2025 Cash and short-term investments 278,950 1,300 280,250 US Treasury 299,962 119,386 419,348 US government agency 59,441 59,441 Domestic bonds 14 14 Common equity:
Domestic 401,706 1,577 403,283 Foreign 444,410 41,093 3,975 489,478 Equity:*
Absolute return 850,431 850,431 Domestic 534,283 534,283 Foreign 631,537 631,537 Private 12,143 2,267,823 2,279,966 Real estate*
1,804 386,262 388,066 Real assets*
73 56,524 56,597 Other 3,641 100 3,741 Derivatives 18,245 18,245 Total plan investment assets 1,430,473 239,479 17,868 4,726,860 6,414,680 Liabilities associated with investments Investments sold, but not yet purchased (161,479)
(161,479)
Other liabilities (4,430)
(6,960)
(11,390)
Total plan investment liabilities (165,909)
(6,960)
(172,869)
Total plan investments 1,264,564 232,519 17,868 4,726,860 6,241,811 Fiscal Year 2024 Cash and short-term investments 134,925 3,100 138,025 US Treasury 473,126 473,126 US government agency 67,778 67,778 Domestic bonds 13 13 Common equity:
Domestic 322,282 322,282 Foreign 400,472 16,732 2,867 420,071 Equity:*
Absolute return 759,274 759,274 Domestic 467,971 467,971 Foreign 527,793 527,793 Private 2,009,924 2,009,924 Real estate*
4 338,672 338,676 Real assets*
67,856 67,856 Other 3,001 1,577 4,578 Derivatives 8,636 8,636 Total plan investments assets 1,333,810 96,259 4,444 4,171,490 5,606,003 Liabilities associated with investments Investments sold, but not yet purchased (65,042)
(65,042)
Other liabilities (2,131)
(1,761)
(3,892)
Total plan investment liabilities (67,173)
(1,761)
(68,934)
Total plan investments 1,266,637 94,498 4,444 4,171,490 5,537,069
- Equity, real estate, and real assets categories include commingled vehicles that invest in these types of investments.
Total Fair Value Level 3 Level 2 Level 1 NAV TABLE 23A. DEFINED BENEFIT PENSION PLAN INVESTMENTS
MIT REPORT OF THE TREASURER 2025 38 I. Retirement Benefits (continued)
(in thousands of dollars)
Fiscal Year 2025 Cash and short-term investments 46,698 1,000 47,698 US Treasury 84,453 37,165 121,618 US government agency 14,683 14,683 Domestic bonds 3
3 Common equity:
Domestic 71,041 278 71,319 Foreign 78,312 7,252 702 86,266 Equity:*
Absolute return 146,055 146,055 Domestic 87,075 87,075 Foreign 116,948 116,948 Private 2,142 352,342 354,484 Real estate*
318 65,669 65,987 Real assets*
9,297 9,297 Other 650 18 668 Derivatives 3,212 3,212 Total plan investment assets 281,472 63,315 3,140 777,386 1,125,313 Liabilities associated with investments Investments sold, but not yet purchased (25,371)
(25,371)
Other liabilities (779)
(1,230)
(2,009)
Total plan investment liabilities (26,150)
(1,230)
(27,380)
Total plan investments 255,322 62,085 3,140 777,386 1,097,933 Fiscal Year 2024 Cash and short-term investments 30,569 30,569 US Treasury 123,894 123,894 US government agency 17,671 17,671 Domestic bonds 2
2 Common equity:
Domestic 57,126 57,126 Foreign 69,977 2,953 538 73,468 Equity:*
Absolute return 131,447 131,447 Domestic 74,227 74,227 Foreign 101,660 101,660 Private 311,668 311,668 Real estate*
1 55,924 55,925 Real assets*
10,983 10,983 Other 536 278 814 Derivatives 1,521 1,521 Total plan investment assets 282,103 22,147 816 685,909 990,975 Liabilities associated with investments Investments sold, but not yet purchased (11,442)
(11,442)
Other liabilities (376)
(310)
(686)
Total plan investment liabilities (11,818)
(310)
(12,128)
Total plan investments 270,285 21,837 816 685,909 978,847
- Equity, real estate, and real assets categories include commingled vehicles that invest in these types of investments.
Level 1 Level 2 Level 3 Total Fair Value NAV TABLE 23B. RETIREE WELFARE BENEFIT PLAN INVESTMENTS
39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS I. Retirement Benefits (continued)
The plans have made commitments to make periodic contributions in future periods to investments managed by external managers, and in other cases have entered into contractual arrangements that may limit their ability to initiate redemptions due to notice periods, lock-ups, and gates. Details on the remaining unfunded commitments and current redemption terms and restrictions by asset class and type of investment for both the defined benefit pension plan and retiree welfare benefit plan are provided in Table 24 below as of June 30, 2025, and 2024.
(in thousands of dollars)
Redemption Terms1 Days Notice Defined Benefit Pension Plan Equity:
Absolute return2 24,659 850,431 28,874 759,274 Ranges from daily to 37 months5 20 to 730 days Domestic3 387 534,283 387 467,971 Ranges from daily to 48 months5 30 to 120 days Foreign4 631,537 527,793 Ranges from daily to 18 months5 20 to 120 days Private 409,728 2,267,823 476,522 2,009,924 Close-ended funds not available for redemption Not redeemable Real estate 181,336 386,262 198,198 338,672 Close-ended funds not available for redemption Not redeemable Real assets 4,868 56,524 4,054 67,856 13 months5 90 days Total 620,978 4,726,860 708,035 4,171,490 Retiree Welfare Benefit Plan Equity:
Absolute return2 4,179 146,055 4,662 131,447 Ranges from daily to 37 months5 20 to 730 days Domestic3 43 87,075 43 74,227 Ranges from daily to 48 months5 30 to 120 days Foreign4 116,948 101,660 Ranges from daily to 18 months5 20 to 120 days Private 68,612 352,342 79,231 311,668 Close-ended funds not available for redemption Not redeemable Real estate 32,251 65,669 35,849 55,924 Close-ended funds not available for redemption Not redeemable Real assets 820 9,297 676 10,983 13 months5 90 days Total 105,905 777,386 120,461 685,909 2Absolute return funds include funds that have remaining lock-up provisions up to 12 months.
3Domestic funds include funds that have remaining lock-up provisions up to 10 months.
4Foreign funds include funds that have remaining lock-up provisions up to 1 month.
5Includes funds that are not available for redemption.
1The Redemption Terms column reflects the time required to redeem excluding any lock-up restrictions. Footnotes 2-4 below disclose the longest remaining lock-up period for each asset class as of June 30.
2025 2024 Unfunded Commitments Fair Value Unfunded Commitments Fair Value TABLE 24. UNFUNDED COMMITMENTS AND REDEMPTION TERMS AND RESTRICTIONS
MIT REPORT OF THE TREASURER 2025 40 I. Retirement Benefits (continued)
Target allocations and weighted-average asset allocations of the investment portfolios for MITs defined benefit pension plan and retiree welfare benefit plan as of June 30, 2025, and 2024, are shown in Table 25 below.
Expected Future Benefit Payments In fiscal 2026, MIT does not expect to contribute to its defined benefit pension plan or to the retiree welfare benefit plan as determined by their valuations. These valuations assume a 7.25 percent and 6.75 percent expected return on assets for the defined benefit pension plan and retiree welfare benefit plan, respectively. MIT elected to adopt Pri-2012 mortality tables for employees and retirees issued by the Society of Actuaries (SOA) with an experience adjustment multiplier of 0.8 to reflect MIT experience. Mortality rates are projected generationally from the base year of 2012 using Scale MP-2021.
Table 26 below reflects the total expected benefit payments for the defined benefit pension plan and retiree welfare benefit plan over the next ten years. These payments have been estimated based on the same assumptions used to measure MITs benefit obligations as of June 30, 2025.
2025 Target Allocation 2025 2024 2025 Target Allocation 2025 2024 Cash and short-term investments 0-10%
4%
2%
0-10%
4%
3%
Fixed income 3-13%
8%
10%
10-20%
13%
15%
Equities 41.5-88.5%
67%
67%
36.5-84%
63%
62%
Marketable alternatives 12-22%
14%
14%
12.5-22.5%
13%
13%
Real assets 0-6%
1%
1%
0-5.5%
1%
1%
Real estate 0.5-10.5%
6%
6%
0-8%
6%
6%
Total 100%
100%
100%
100%
Defined Benefit Pension Plan Retiree Welfare Benefit Plan (in thousands of dollars) 2026 231,359 31,681 2027 256,674 33,902 2028 271,016 36,051 2029 283,817 37,992 2030 296,008 39,633 2031 - 2035 1,646,783 225,972
- Retiree Welfare Benefits reflect the total net benefits expected to be paid from the plans (e.g., gross benefit reimbursement offset by retiree contributions).
Pension Benefits Retiree Welfare Benefits*
TABLE 25. PLAN INVESTMENT ALLOCATION TABLE 26. EXPECTED FUTURE BENEFIT PAYMENTS
41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS I. Retirement Benefits (continued)
Derivative Financial Instruments For investment management, the defined benefit pension and the retiree welfare benefit plans use a variety of financial instruments with off-balance-sheet risk involving contractual or optional commitments for future settlement.
They use these instruments primarily to manage or hedge exposure to extreme market events and fluctuations in asset classes or currencies. Instruments utilized include fixed income, currency and equity futures, options, and swaps.
The risks of these instruments, to varying degrees, include the possibility for imperfect correlation between the change in the market value of assets being hedged and the prices of the derivative or hedge instruments, as well as interest, credit market, liquidity, and counterparty risk.
Derivatives held by limited partnerships and commingled investment vehicles pose no off-balance-sheet risk to the plans due to the limited liability structure of these investments. The net fair value related to derivatives for the defined benefit pension plan for the years ended June 30, 2025, and 2024, were $11.3 million and $7.6 million, respectively. Net losses for the defined benefit pension plan related to derivatives totaled $9.8 million and
$5.1 million for the years ended June 30, 2025, and 2024, respectively. The average net notional values related to derivatives for the defined benefit pension plan for the years ended June 30, 2025, and 2024, were short $94.8 million and short $72.0 million, respectively.
The net fair value for the retiree welfare benefit plan related to derivatives for the years ended June 30, 2025, and 2024, were
$2.0 million and $1.3 million, respectively. Net losses for the retiree welfare benefit plan related to derivatives totaled $1.7 million and $0.9 million for the years ended June 30, 2025, and 2024, respectively. The average net notional for the retiree welfare benefit plan related to derivatives for the years ended June 30, 2025, and 2024, were short $16.8 million and short
$12.2 million, respectively.
MIT REPORT OF THE TREASURER 2025 42 J. Components of Net Assets and Endowment Tables 27A and 27B present the composition of net assets as of June 30, 2025, and June 30, 2024, respectively. The amounts listed in the without donor restrictions category under the endowment funds sections are those gifts and other funds received over the years that MIT designated as funds functioning as endowments and invested with the endowment funds. A large component of net assets with donor restrictions in other funds is pledges, the majority of which will be reclassified to net assets without donor restrictions when cash is received.
(in thousands of dollars)
Endowment funds General purpose 2,312,086 2,754,572 5,066,658 Departments and research 1,332,225 4,031,423 5,363,648 Library 21,505 95,623 117,128 Salaries and wages 1,081,995 6,403,379 7,485,374 Graduate general 159,345 493,499 652,844 Graduate departments 489,461 1,623,009 2,112,470 Undergraduate 499,478 2,902,566 3,402,044 Prizes 16,797 103,429 120,226 Miscellaneous 2,163,349 882,498 3,045,847 Endowment funds before pledges 8,076,241 19,289,998 27,366,239 Pledges 161,929 161,929 Total endowment funds 8,076,241 19,451,927 27,528,168 Other Funds Student-related loan funds 16,425 23,716 40,141 Building funds 57,945 17,281 75,226 Designated purposes:
Departments and research 604,192 604,192 Other purposes 430,686 23,218 453,904 Life income funds and donor-advised funds 154,216 296,139 450,355 Pledges 469,799 469,799 Other funds available for current expenses 4,832,513 454,039 5,286,552 Retirement benefits overfunded 1,625,542 1,625,542 Funds for educational plant 1,141,858 1,141,858 Total other funds 8,863,377 1,284,192 10,147,569 Total net assets 16,939,618 20,736,119 37,675,737 Without Donor Restrictions With Donor Restrictions Total TABLE 27A. 2025 TOTAL NET ASSET COMPOSITION
43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS J. Components of Net Assets and Endowment (continued)
MITs endowment consists of approximately 4,800 individual funds established for a variety of purposes and includes both donor-restricted endowment funds and funds that function as endowments. As required by GAAP, net assets associated with endowment funds, including funds designated to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions.
The Executive Committee has interpreted the Massachusetts-enacted version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA) as allowing MIT to appropriate for expenditure or accumulate so much of an endowment fund as MIT determines is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established, subject to the intent of the donor as expressed in the gift instrument. Unless stated otherwise in the gift instrument, the assets in an endowment fund shall be donor-restricted assets until appropriated for expenditure by the Executive Committee. In accordance with UPMIFA, the Executive Committee considers the following factors in deciding to appropriate or accumulate endowment funds:
- i. the duration and preservation of the fund; ii. the purposes of MIT and the endowment fund; iii. general economic conditions; iv. the possible effects of inflation and deflation;
- v. the expected total return from income and the appreciation of investments; vi. other resources of MIT; and vii. the investment policies of MIT.
(in thousands of dollars)
Endowment Funds General purpose 2,108,647 2,531,129 4,639,776 Departments and research 1,189,900 3,626,231 4,816,131 Library 19,664 87,396 107,060 Salaries and wages 954,739 5,859,984 6,814,723 Graduate general 145,704 405,825 551,529 Graduate departments 429,446 1,455,528 1,884,974 Undergraduate 444,685 2,633,845 3,078,530 Prizes 15,358 91,467 106,825 Miscellaneous 1,899,274 673,894 2,573,168 Endowment funds before pledges 7,207,417 17,365,299 24,572,716 Pledges 142,314 142,314 Total endowment funds 7,207,417 17,507,613 24,715,030 Other Funds Student-related loan funds 16,744 23,718 40,462 Building funds 42,241 67,308 109,549 Designated purposes:
Departments and research 578,762 578,762 Other purposes 374,501 17,665 392,166 Life income funds and donor-advised funds 130,273 259,518 389,791 Pledges 484,590 484,590 Other funds available for current expenses 4,467,622 397,561 4,865,183 Retirement benefits overfunded 865,549 865,549 Funds for educational plant 1,109,795 1,109,795 Total other funds 7,585,487 1,250,360 8,835,847 Total net assets 14,792,904 18,757,973 33,550,877 Without Donor Restrictions With Donor Restrictions Total TABLE 27B. 2024 TOTAL NET ASSET COMPOSITION
MIT REPORT OF THE TREASURER 2025 44 J. Components of Net Assets and Endowment (continued)
Table 28 below reflects changes in endowment net assets without and with donor restrictions for fiscal 2025 and fiscal 2024, respectively.
(in thousands of dollars)
Fiscal Year 2025 Endowment net assets, July 1, 2024 7,207,417 17,507,613 24,715,030 Investment return:
Net Investment income 173,762 412,130 585,892 Realized and unrealized gains/(losses) 970,803 2,163,846 3,134,649 Total investment return 1,144,565 2,575,976 3,720,541 Contributions 200,126 200,126 Appropriation of endowment assets for expenditure (369,958)
(860,297)
(1,230,255)
Net asset reclassifications and transfers 94,217 28,509 122,726 Endowment net assets, June 30, 2025 8,076,241 19,451,927 27,528,168 Fiscal Year 2024 Endowment net assets, July 1, 2023 6,812,562 16,802,844 23,615,406 Investment return:
Net Investment income 16,366 45,569 61,935 Realized and unrealized gains/(losses) 606,405 1,348,702 1,955,107 Total investment return 622,771 1,394,271 2,017,042 Contributions 182,723 182,723 Appropriation of endowment assets for expenditure (349,302)
(817,295)
(1,166,597)
Net asset reclassifications and transfers 121,386 (54,930) 66,456 Endowment net assets, June 30, 2024 7,207,417 17,507,613 24,715,030 Without Donor Restriction With Donor Restriction Total TABLE 28. CHANGES IN ENDOWMENT NET ASSETS
45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS J. Components of Net Assets and Endowment (continued)
Endowment Investment and Spending Policies MITs investment policy is based on the primary goal of maximizing return relative to appropriate risk such that performance exceeds appropriate benchmark returns at the total pool, asset class, and individual manager levels. To achieve its long-term rate-of-return objectives, MIT relies on a total return strategy in which investment returns are realized through both capital appreciation (realized and unrealized gains) and current yield (interest and dividends).
MIT targets a diversified asset allocation that places greater emphasis on equity-based investments to achieve its long-term objectives within prudent risk constraints.
The Institutes primary investment pool, Pool A, is principally for endowment and funds functioning as endowment. The effective spending rates on pooled investment funds were 5.0 percent, or 4.9 percent on a three-year-average basis, and 5.0 percent, or 4.8 percent on a three-year-average basis, for fiscal 2025 and fiscal 2024, respectively.
Pool A operates as a mutual fund with units purchased and redeemed based on the previous months unit market value.
Certain endowed assets are also maintained in separately invested funds.
MIT has adopted spending policies designed to provide a predictable stream of funding to programs supported by its investments while maintaining the purchasing power of assets. For pooled investments, the Executive Committee of the Corporation votes to distribute funds for operational support from general investments. In accordance with MITs spending policy, these distributions are funded from both investment income and market appreciation. The distribution rates were $129.81 and $124.63 per Pool A unit as of fiscal 2025 and fiscal 2024, respectively. For separately invested endowment funds, only the annual investment income generated is distributed for spending. For any underwater endowment funds, the distribution of funds for operational support is at the discretion of the Executive Committee.
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47 FIVE-YEAR TREND ANALYSIS Massachusetts Institute of Technology Five-Year Trend Analysis (Unaudited) -
Financial Highlights (in thousands of dollars)
Financial Position Investments, at fair value 35,790,340 31,751,808 30,692,919 32,548,631 34,793,438 Land, buildings, and equipment, at cost less accumulated depreciation 5,638,334 5,425,451 5,016,660 4,686,460 4,475,962 Borrowings, net of unamortized issuance costs 5,160,054 4,430,396 4,484,462 4,657,050 3,929,034 Total assets 45,342,942 39,982,498 38,637,992 39,883,400 42,526,492 Total liabilities 7,667,205 6,431,621 6,455,021 6,652,869 6,080,123 Net assets without donor restriction 16,939,618 14,792,904 13,999,705 14,295,593 15,725,732 Net assets with donor restrictions 20,736,119 18,757,973 18,183,266 18,934,938 20,720,637 Total net assets 37,675,737 33,550,877 32,182,971 33,230,531 36,446,369 Total endowment funds before pledges 27,366,239 24,572,716 23,453,446 24,600,809 27,394,039 Principal Sources of Revenues Tuition and similar revenues, exclusive of financial aid 436,108 427,993 409,031 415,252 344,303 Sponsored support:
Campus direct 713,631 706,963 657,193 608,753 578,900 Lincoln direct 1,407,807 1,305,146 1,166,956 1,072,814 1,073,876 SMART direct 26,669 23,588 23,857 21,639 28,246 Indirect cost recovery 273,044 289,172 215,004 284,643 276,103 Total sponsored support 2,421,151 2,324,869 2,063,010 1,987,849 1,957,125 Contributions 677,940 598,740 553,280 686,680 505,184 Net return on investments 4,298,866 2,155,735 (282,724)
(2,056,207) 10,889,913 Distribution of investment returns 1,565,391 1,481,173 1,360,833 1,022,202 912,642 Principal Purposes of Expenditures Expenses 4,946,908 4,586,189 4,338,274 3,993,328 3,728,725 Compensation*
2,626,546 2,433,492 2,274,055 2,111,924 2,059,954 Other operating 1,588,172 1,474,822 1,390,513 1,286,588 1,106,791 Space-related 732,190 677,875 673,706 594,816 561,980
- Compensation includes the non-service-cost components of net periodic benefit costs.
2021 2022 2023 2024 2025
MIT REPORT OF THE TREASURER 2025 48 Massachusetts Institute of Technology Five-Year Trend Analysis (Unaudited) -
Financial Highlights (continued)
(in thousands of dollars)
Sponsored Support Campus Federal government sponsored:
Health and Human Services 198,396 185,205 163,298 148,837 138,873 Department of Defense 143,828 137,975 134,214 140,341 131,960 Department of Energy 95,876 93,453 89,876 82,583 71,983 National Science Foundation 118,794 119,902 118,456 107,600 95,052 National Aeronautics and Space Administration 40,829 38,714 38,062 40,331 36,199 Other Federal 37,198 72,301 36,838 35,107 24,481 Total Federal 634,921 647,550 580,744 554,799 498,548 Non-Federally sponsored:
State/local/foreign governments 32,967 27,554 26,729 29,341 28,469 Foundations 91,792 84,125 87,040 85,743 76,109 Other nonprofits 48,970 57,724 49,246 37,907 36,568 Industry 184,699 192,705 189,477 176,585 191,367 Total Non-Federal 358,428 362,108 352,492 329,576 332,513 Total Federal and non-Federal 993,349 1,009,658 933,236 884,375 831,061 F&A and other adjustments (75,496)
(76,179)
(115,275)
(38,415)
(20,628)
Total Campus 917,853 933,479 817,961 845,960 810,433 Lincoln Laboratory Federal government sponsored 1,472,534 1,322,231 1,192,218 1,111,075 1,085,592 Non-Federally sponsored 23,562 28,571 28,753 24,258 23,638 F&A and other adjustments (20,004) 16,426 (346)
(15,513) 8,772 Total Lincoln Laboratory 1,476,092 1,367,228 1,220,625 1,119,820 1,118,002 SMART
- Non-Federally sponsored 27,206 24,162 24,424 22,069 28,690 Total SMART 27,206 24,162 24,424 22,069 28,690 Total Sponsored Support 2,421,151 2,324,869 2,063,010 1,987,849 1,957,125
- The amounts represent research that has predominantly taken place in Singapore.
2021 2022 2023 2024 2025
49 FIVE-YEAR TREND ANALYSIS Massachusetts Institute of Technology Five-Year Trend Analysis (Unaudited) -
Financial Highlights (continued)
Students Undergraduate:
Full-time 4,489 4,543 4,601 4,588 4,234 Part-time 46 33 56 50 127 Undergraduate applications:
Applicants 28,232 26,914 33,767 33,240 20,075 Accepted 1,284 1,291 1,337 1,365 1,457 Acceptance rate 5%
5%
4%
4%
7%
Enrolled 1,098 1,091 1,136 1,177 1,070 Yield 86%
85%
85%
86%
73%
Freshmen ranking in the top 10% of their class 96%
97%
97%
99%
100%
Average SAT scores (math and verbal) 1,544 1,539 1,543 1,538 1,539 Graduate:
Full-time 7,194 7,163 7,024 7,199 6,766 Part-time 157 181 177 97 127 Graduate applications:
Applicants 37,409 34,655 33,991 37,798 30,699 Accepted 3,894 3,935 3,906 3,834 4,448 Acceptance rate 10%
11%
11%
10%
14%
Enrolled 2,439 2,305 2,380 2,339 2,284 Yield 63%
59%
61%
61%
51%
Tuition (in dollars)
Tuition and fees 62,396 60,156 57,986 55,878 53,450 Average room and board 20,280 19,390 18,790 18,100 16,000 Student Support (in thousands of dollars)
Undergraduate tuition support 183,596 175,930 173,868 163,555 159,206 Graduate tuition support 398,721 386,456 355,961 337,507 324,181 Fellowship stipends 89,567 80,936 68,840 55,243 51,793 Student employment 157,318 161,081 151,579 149,517 140,441 Total student support 829,202 804,403 750,248 705,822 675,621 Faculty and Staff*
Faculty 1,090 1,089 1,080 1,069 1,064 Staff and fellows 16,400 16,091 15,247 14,653 15,121
- Headcount figures represent main campus-and Lincoln Laboratory-based personnel affiliated with MIT as of October 31. These include personnel, as well as individuals with unpaid appointments.
2021 2022 2023 2024 2025
Report of the Treasurer For the year ended June 30, 2025 Photo: Bob OConnor