Harvard University

Harvard University’s whopping $34 billion endowment is declining in the current economic crisis, and the hits could keep coming, wrote university president, Drew Gilpin Faust, in a recent e-mail sent to students and employees (“A Sober Message From Harvard’s President,” The Chronicle of Higher Education, Nov. 10, 2008).

While it is not known just how deep Harvard’s endowment losses go, Moody’s Investors Service projects that the value of college and university endowments, in general, have decreased by 30 percent this fiscal year. For Harvard, the nation’s wealthiest university, that would mean an $11 billion drop.

The declines mean that Harvard will have to make tough choices in the months ahead, Faust wrote, in anticipation of continued losses to an endowment that pays for more than one-third of the university’s operating budget.

“We must recognize that Harvard is not invulnerable to the seismic financial shocks on the larger world,” Faust wrote. “Our own economic landscape has been significantly altered.”

Although markets could improve, she added, “We need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.”


Harvard Exploring Cost-Cutting Measures

To cut costs, Harvard is in the process of reviewing its compensation expenses, which account for nearly half of the school’s budget, as well as reassessing its ambitious expansion program, which includes plans to build campus additions across the Charles River.

Like fellow Ivy League schools Brown University and Cornell University, which are delaying planned projects and implementing hiring freezes due to the effects of the economy, Harvard is also considering a budget freeze on all programs and a wage freeze for administrators and faculty. The Faculty of Arts and Sciences alone — Harvard’s largest body of instructors — has lost roughly $4.5 billion of its own endowment, or $225 million in net budget losses, a Harvard official familiar with the school’s financial picture told The Boston Globe (“Harvard Looks to Tighten Its Belt,” Nov. 11, 2008).

Despite Harvard’s belt-tightening measures, the school says it still intends to implement new initiatives that expand financial aid offerings for low- and middle-income families.