Key Takeaways
- • Harvard's endowment reached $40.9 billion in fiscal 2019, a $1.7 billion increase from the prior year, according to Harvard Magazine and The Harvard Crimson as cited by CNBC.
- • Harvard distributed $1.9 billion from the endowment in 2019, covering about 35% of the school's annual operating budget.
- • Endowment spending is 30% flexible and 70% allocated, with 24% going to professorships, 19% to scholarships and student support, and 7% to research.
- • Harvard's endowment returned 10% in 2018 but only 6.5% in 2019, per the figures CNBC confirmed with the Harvard Management Company.
- • Harvard's 2018-2019 financial report stresses the endowment is designed to last forever and cannot be used like a bank account, limiting spending flexibility.
Summary
Harvard's endowment totaled $40.9 billion for fiscal 2019, up $1.7 billion from the previous year, according to Harvard Magazine and The Harvard Crimson as reported by CNBC. The fund consists of more than 13,000 individual funds invested as a single entity and is overseen by the Harvard Management Company. Representatives for the Harvard Management Company confirmed these figures to CNBC Make It but declined to comment further.
The university drew $1.9 billion from the endowment in the past year through its endowment distribution, which covers about 35% of the school's annual operating budget. The remaining costs are met by student tuition and donations made directly to the school rather than to the endowment. In its 2018-2019 financial report, Harvard stressed that the endowment does not provide full financial freedom, stating that its spending flexibility is limited because the fund is designed to last forever.
According to the school's latest report, 30% of endowment spending is flexible and 70% is allocated to specific uses. Professorships receive 24%, scholarships and student support 19%, research costs 7%, libraries and museums 4%, faculty and teaching 2%, construction 1%, and other costs 9%. Harvard said the two largest categories support faculty and students. In 2016-2017, the university committed $414 million to financial aid, including roughly $175 million in need-based undergraduate aid. About 70% of students receive some form of financial aid, and 55% receive need-based scholarship aid with average grants near $53,000.
The endowment's performance has softened. It returned 10% in 2018 and 6.5% in 2019. In 2018, the endowment was worth $39.2 billion and the school drew $1.8 billion. Citing The Washington Post, CNBC noted that at that spending rate and 2% inflation, the endowment would need a 7% annual return just to maintain its value in today's dollars, roughly 2.5 percentage points more than it generated over the last decade.
The school enrolls 6,699 undergraduates and about 13,120 graduate and professional students, a population that accounts for part of the endowment's spending on fellowships and student support. Debate continues over whether the endowment should be used to eliminate tuition or to recruit more low-income students.
The university drew $1.9 billion from the endowment in the past year through its endowment distribution, which covers about 35% of the school's annual operating budget. The remaining costs are met by student tuition and donations made directly to the school rather than to the endowment. In its 2018-2019 financial report, Harvard stressed that the endowment does not provide full financial freedom, stating that its spending flexibility is limited because the fund is designed to last forever.
According to the school's latest report, 30% of endowment spending is flexible and 70% is allocated to specific uses. Professorships receive 24%, scholarships and student support 19%, research costs 7%, libraries and museums 4%, faculty and teaching 2%, construction 1%, and other costs 9%. Harvard said the two largest categories support faculty and students. In 2016-2017, the university committed $414 million to financial aid, including roughly $175 million in need-based undergraduate aid. About 70% of students receive some form of financial aid, and 55% receive need-based scholarship aid with average grants near $53,000.
The endowment's performance has softened. It returned 10% in 2018 and 6.5% in 2019. In 2018, the endowment was worth $39.2 billion and the school drew $1.8 billion. Citing The Washington Post, CNBC noted that at that spending rate and 2% inflation, the endowment would need a 7% annual return just to maintain its value in today's dollars, roughly 2.5 percentage points more than it generated over the last decade.
The school enrolls 6,699 undergraduates and about 13,120 graduate and professional students, a population that accounts for part of the endowment's spending on fellowships and student support. Debate continues over whether the endowment should be used to eliminate tuition or to recruit more low-income students.
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