Millennial Money

Harvard: Stop Being A Hedge Fund And Spend Endowment


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

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.

University's should spend the money in their endowments, especially when times are tough. How do they not get something this basic?

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