Comments on: Harvard’s Endowment Fund Hoard

By: Brent

Brent — Tue, 03 Apr 2012 15:53:21 +0000

Harvard should be embarassed to be short cutting it’s students while it has a an endowment that could easily weater the downturn in the economy without impacting it’s long term funding. It’s clear Harverd is no better then a greedy corporation at this point. Shame on them

By: Julie

Julie — Sun, 08 May 2011 05:41:27 +0000

wow – i’m impressed their not running on a budget deficit…

By: Jeff

Jeff — Mon, 24 Jan 2011 22:24:01 +0000

G.E. Miller,
I just wanted to open this discussion back open because Harvard released their FYE 2010 report. What surprised me was that harvard increased investments in emerging markets and real estate. These investments seem pretty risky after losing 30% in 2009.

By: R.Will

R.Will — Sun, 01 Nov 2009 16:34:35 +0000

Several points:

1) Endowments are LEGALLY entailed by donors…rarely are such funds discretionary. Translation: universities generally have ZERO discretion as to how to spend the funds. Ask Princeton about their $900MM predicament in the IR school;

2) Time value of money: as noted by endowment worker above, money spent today earns no future income. Universities try to grow the total pot on the theory that they have, as I agree they do, a duty to provide in perpetuity. Funds will compound over time such the total number of students eventually helped will vastly exceed those helped by quickly spending down the corpus.

3) As to publics, why rant on them? Rant about the private schools. In a time when state’s have no money to spend and the publics are getting absolutely decimated ($800MM cut coming for the Cal. system), why should the privates (with open ended ability to price) get ANY public money?

4) Capping is a silly idea for reasons too numerous to count, but here are a few: a) how would you manage the investment mandate and portfolio constraints; b) how would you convince donors to not walk away; c) how would you deal with spending entailments…

5) Even at over $1,000,000,000, the average public endowment is paltry at a per capita level: almost always under $5,000 per annum. With true cost running $50,000 per student per annum fully cost loaded, that is generally well South of 10%. The volatility in the past year, if it taught us anything, is that these funds are many orders of magnitude too small, not too large!

Using the exception that proves the rule, the richest institution, is incredibly simplistic and not dispositive of the overall conundrum: education funding is in deep trouble and a kneejerk response to endowment spending is not the answer

By: michael

michael — Tue, 13 Oct 2009 23:31:31 +0000

You also have to look at the spending they were doing. During the last decade, Harvard was getting ridculously high rates of return on its investment and went on a huge spending spree that assumed high rates of return would continue forever. New buildings, new staff, new professors higher pay etc. Now, with the endowment showing a loss they can’t pay for all this expansion out of their tuition and interest any more. All of the jobs they are cutting probably didn’t even exist 3 or 4 years ago. As for tuition increase, they’ve been doing ridiculous tuition increases for decades. This year isn’t any different.

By: Wise

Wise — Tue, 13 Oct 2009 19:48:39 +0000

Financial samurai 5% of 26 =1.3bn

By: Financial Samurai

Financial Samurai — Sun, 20 Sep 2009 07:33:32 +0000

A 5% risk free return on $26 billion is only $130 million in income. You can only pay 130 professors a million a year with that type of income

By: MLR

MLR — Fri, 18 Sep 2009 02:22:03 +0000

”Not applying to schools with high sticker prices that offer significant financial aid could actually lead families to pay more for their children’s education, not less. With Harvard’s new pricing structure, a family making $100,000 will pay about $10,000 for total charges (tuition, room and board, and fees). This compares to the average charges at public four-year colleges and universities in 2008-09 of $14,333…”

Seems like Harvard is doing a fine job to ensure that middle-class and under folks can afford going to their college!

By: Adam

Adam — Thu, 17 Sep 2009 05:59:52 +0000

Totally agreed. Well this is some big money you talkin about.

By: Deirdre

Deirdre — Thu, 17 Sep 2009 03:05:35 +0000

Much of that money is invested, which means they can’t actually use it. Plus @George, part of Harvard’s whole thing is that they ensure that every should be able to go there, regardless of how much money their family makes. So yes, maybe a little greedy. But hardly THAT greedy.