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Harvard endowment grows to $53.2 billion, helping offset COVID-related revenue dip

University reports $283 million surplus after ending previous year at a $10 million deficit

The stock market’s strong performance over the past year gave Harvard a lift.Craig F. Walker/Globe Staff

Despite ongoing fallout from the COVID-19 pandemic, Harvard University ended its last school year with a $283 million surplus, a dramatic improvement over the $10 million deficit it saw the previous year.

In its financial report, released Thursday, for the fiscal year that ended June 30, Harvard also reported that its endowment, already the largest college fund in the world, had a 33.6 percent return on its investments and now sits at $53.2 billion.

The news comes amid similarly sunny endowment returns from other wealthy institutions across the country.

Bowdoin College reported a 57.4 percent return, Brown University more than 50 percent, and the University of Minnesota, 49.2 percent, according to Inside Higher Education.


The stock market’s strong performance over the past year has been a boon to most endowments, although institutions such as Harvard can access private equity and venture capital investments, which also have performed extremely well.

The report underscores how different echelons of schools have been variously affected by the pandemic. Wealthy institutions like Harvard have the luxury of falling back on their endowments for stability even if other revenue streams, such as tuition, are unstable. Colleges with small endowments that depend on tuition for almost all their revenue and receive much less philanthropic support have had a much more difficult time, and have had to make deeper cuts.

Despite the surplus, overall revenue was down 2 percent at Harvard, the first time since the Great Depression that it has fallen two consecutive years, the university said. The university shut its campus during the earlier phase of the pandemic, which meant less income from undergraduate tuition, executive education, board and lodging, parking, and other services.

Tuition revenue specifically, including room and board, dropped 17 percent from last year. Because fewer students enrolled in the last school year — many deferred — the university allocated more financial aid per student, according to the report.


The university always relies on its endowment to fund a large portion of its operating costs, and in a lean year, that cushion was even more important. The university used $2 billion from its endowment returns last year to fund operations, a 2 percent increase over the previous year.

Harvard also benefited from an increase in philanthropic gifts that could be used immediately. Traditionally, gifts become part of the endowment and carry restrictions on when and how they can be used. Those so-called current use gifts represented about 10 percent of operating revenue for the 2021 fiscal year, the university reported, a slight increase over the previous year.

All told, philanthropy and transfers from the endowment made up almost half the university’s revenue last year, a 3 percentage point increase over the previous year, according to the report.

“As we continue to adjust to an unpredictable situation, strong financial stewardship has positioned Harvard and our entire community to accelerate progress,” Harvard University president Lawrence Bacow wrote in a letter accompanying the report.

Like most schools, Harvard was not immune from cuts and other unexpected costs, although it also saved money on travel and campus-related operations during a period of remote work and school.

So while Harvard idled some 2,800 workers during the pandemic, it also continued to provide some $60 million in pay and benefits to them, a move that averted the widespread layoffs that took place at many institutions.


It also spent $83 million last year on pandemic-related safety measures, including COVID-19 testing.

“The Harvard community rallied in a shared and purposeful effort to reduce expenses commensurate with losses in revenue,” wrote Thomas Hollister, vice president for finance, and Paul Finnegan, treasurer, in a letter accompanying the report.

The endowment’s performance was driven by strong returns in private equity, according to a letter included in the report from N.P. “Narv” Narvekar, the chief executive officer of the Harvard Management Company, which oversees the endowment.

The endowment fund has reduced its exposure to natural resources, real estate, and public equity while increasing its investment in private equity and hedge funds, Narvekar wrote in the letter, which also mentioned the endowment’s goals of having net zero greenhouse gas emissions by 2050.

Calling 2021 “an extraordinary year,” Narvekar also sounded a word of caution.

“As experienced investors understand, Harvard’s endowment will not produce 33.6 percent returns each year,” he wrote, saying periods of negative returns are inevitable.

Ken Redd, the senior director for research and policy analysis at the National Association of College and University Business Officers, said all endowments benefited from strong markets over the past year, but that won’t last forever.

Institutions face several forces that will continue to make their financial picture difficult. First, the US college-age population is set to start dropping in the next few years as the country’s birth rate has slowed. Second, families are less able, and less willing, to pay vast sums for tuition, or take out loans, a reality only exacerbated by the pandemic.


As the two trends collide, schools will be competing for a shrinking pool of students while under pressure to give each student more aid, creating what will, in essence, be a buyer’s market.

“Despite one year of very good returns, there are still a lot of challenges that every institution, including Harvard, will have to face,” Redd said.

He added that because only wealthier endowments can invest in venture capital and private equity, the gap between very rich schools and those of more modest means is widening. But he also noted those types of investments are also more volatile.

“When the financial markets do turn, as they always do, those investments do worse,” he said.