Harvard: Stop Being A Hedge Fund And Spend Endowment - Millennial Money with Cliff Mason

BIO

Cliff Mason is the author of Millennial Money. He is the Senior Writer of CNBC's Mad Money with Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Rich and Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like. Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.

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Dec.05

3:41 PM ET

Friday, 5 Dec 2008

Harvard: Stop Being A Hedge Fund And Spend Endowment

Posted By:Cliff Mason

Topics:Education | Stock Market

You've probably read about the huge hits taken by university endowments recently, after years of outperformance. Harvard's endowment has fallen 22% since June 30th, when it was worth $36.9 billion, and is probably in for even more losses according to The Crimson.

Because of these losses, the Faculty of Arts and Sciences, which includes Harvard College (the undergraduate section of Harvard U.), initiated a hiring freeze last week. Maybe I'm sensitive because this is my alma mater, but what's going on? Even after a 22% decline, the endowment still has more than $28 billion left in it, more than any other university. I'm pretty sure it's still larger than it was when I was an incoming Freshman in 2003.

So here's my question, why is Harvard University being run like a hedge fund? It's not, it's a school. Instead of cutting back on hiring and other aspects of the school's operating budget, the University should be relying even more heavily on the money in its endowment to get through the recession. Who cares if that means the endowment takes more losses? The Harvard endowment, and this goes for every other private university, exists to help fund the school. It's not just a giant hedge fund that exists only to make more and more money.

I'm sure Harvard would be fine even if the endowment fell to $20 billion or, God forbid, $10 billion. While I don't remember much about my time in college, I'm pretty certain that capital appreciation was NOT one of the University's stated goals.

Harvard plans $600 million bond issue: report

In time the economy will recover and the endowment will grow again. But right now students need more help covering tuition and the University needs help to cover operating costs. Harvard's got tens of billions of dollars. It's not like they're strapped for cash, they've just decided to devote that money to investing instead of running a school. I understand that they don't want to kill the goose that laid the golden egg by taking out too much money, but since they never take out much, or at least what I consider much, from the endowment regularly, it's not like Harvard's seen a lot of golden eggs lately anyway.