<p>On another thread there was a discussion as to whether Harvard (or any school) could afford to be truly need-blind in admissions. If a large majority of admits required financial aid, could it spell financial ruin? </p>
<p>After doing a little research, it seems Harvard's endowment has recovered quite nicely over the past few years - it's presently 32 billion dollars. Each year Harvard enrolls approximately 1650 incoming freshman and the total room, board, tuition is around 50K each. So if every incoming freshman required full fare financial aid, it would cost about 82 million dollars.</p>
<p>Just to put these numbers in perspective, think of it in terms of taking 10 kids to a movie. Tickets are ten bucks each and you told the kids that they have to pay if they can afford it, but you'll cover the ticket cost if they can't. You get up to the ticket window and it turns out most of the kids are broke...you're getting a little nervous because you could potentially have to cough up 100 bucks here. Your wife has all the money (the endowment) in her purse so you check it out, just to make sure you can swing this generous offer. If you're Harvard, your wife has 40,000 dollars in her purse.</p>
<p>Haha that’s an awesome analogy</p>
<p>Yes, but you got to realize that that’s not $32 billion that Harvard can just spend. Most of it is used for investments to insure Harvard’s financial stability.</p>
<p>^ True. That’s why we’re not buying them any popcorn.</p>
<p>also, there are four college years, so if you provide finaid to all 1650 students, then the overall cost is not 82 but 328 million$.
As mathstar pointed out, harvard cannot spend its endowment, but the return from this endowment, which, in the current economy, could be very low.</p>
<p>As with other universities, Harvards finances are complex. The endowment is actually broken into multiple pools. Each separate faculty at Harvard (arts & sciences, law, business, medicine, etc.) has its own chunk of the endowment, and the endowment is further sub-divided into specific funds, many of which are restricted by donor intent to specified purposes (for example, scholarships for people who grew up in a particular town in Massachusetts, or an endowed professorship in economics). Harvards board (The President and Fellows of Harvard College) determines the spending rule for the endowment, trying to balance short-term spending needs against the long-term health of the endowment.<br>
All in all, Harvards financial position is the envy of just about every other college in the world. The endowment returns represent close to 40% of revenue at Harvard, providing a very important financial cushion. Compare that to, say, Boston University, which had a good year in 2010 with revenues of $1.6 billion, but only about 2% came from endowment.<br>
Harvard had a terrible year in 2009, when the endowment declined by $11 billion and they took another $3 billion in short-term investment losses ([Harvard</a> annual financial report released | Harvard Magazine](<a href=“http://harvardmagazine.com/2010/10/harvard-annual-financial-report-released]Harvard”>http://harvardmagazine.com/2010/10/harvard-annual-financial-report-released)). But things stabilized in 2010, with revenues of $3.72 billion and expenses of $3.73 billion the deficit of about $5 million was something Harvard could easily manage.</p>
<p>I am curious: if only 40% of the revenue comes from the endowment, then what sources provide the remaining $2 billion? certainly not the tuition</p>
<p>Opensecret will probably have a more complete answer, but off the top of my head I’m thinking grants and contracts for research, publishing, grad school tuition, possibly real estate leases…</p>
<p>Harvard’s financial statements are on-line. '09-'10 is at [Financial</a> Administration - Annual Financial Report of Harvard University](<a href=“http://vpf-web.harvard.edu/annualfinancial/]Financial”>http://vpf-web.harvard.edu/annualfinancial/). </p>
<p>Main revenue sources: ~$250 million in current use gifts (for example, from Harvard alumni annual giving), ~$500 million in ‘other income’ (royalties, publications, services, etc.), $711 million from students (including graduate students and Harvard’s many executive programs), $777 million from grants (“sponsored programs”), and about $1.5 billion in investment income, of which about 1.3 billion came from the endowment.</p>