Harvard University, the country’s oldest continually operating college — indeed, an institution older than the United States itself — has long enjoyed a tax-exempt status with the federal government.
A 501(c)(3) designation from the Internal Revenue Service allows Harvard, like many colleges and universities, hospitals, and religious organizations, to not pay taxes on most of its substantial property holdings and for Harvard donors to treat their contributions as tax-deductible.
In his rapidly-escalating dispute with Harvard over its admissions, hiring and student discipline policies, President Trump this week suggested the IRS revoke Harvard’s tax-exempt status — a nearly-unprecedented move that, if enacted, would put at risk Harvard’s charitable donations and its $52 billion endowment. But perhaps the single biggest impact a change in Harvard’s tax-exempt status could have would be on the university’s vast real estate holdings in Boston and Cambridge.
While Harvard does pay some local real estate taxes on primarily commercial property, such as storefronts it owns in Harvard Square and the under-construction Enterprise Research Campus in north Allston, the vast majority of its property — dorms, classroom and administration buildings, its athletic complex — is tax-exempt.
So how much property does Harvard control?
On either side of the Charles River, Harvard owns or leases close to 873 acres of land, nearly all of it exempt from local property taxes. Among its Cambridge, north Allston, and Longwood Medical Area campuses, the university controls about 500 buildings. Those include its undergraduate campus in Cambridge’s Harvard Square, business school campus in Boston’s Allston neighborhood, and medical and dental school campuses in Longwood. Outside of the medical and dental campuses, Harvard’s holdings in Allston and Cambridge span more than 21 million square feet.
What about the Arboretum?
Then there’s the Arnold Arboretum, a 281-acre nature preserve and living museum in Jamaica Plain. Harvard originally owned the property when it was established in 1872, then Charles Sprague Sargent, a botanist and the Arboretum’s first director, and landscape architect Frederick Law Olmsted in 1882 gave the Arboretum property to the city of Boston in exchange for a 1,000-year lease at a rate of $1 per year. The property’s combined assessed value is just under $116 million, according to a Globe analysis of assessment records, though it’s currently exempt from Boston property taxes. If the Arboretum property were taxed at the current commercial tax rate, the bill would be more than $3 million.
And there’s a lot of new development in Allston too, right?
Harvard’s long-planned Enterprise Research Campus, alongside Harvard Business School in north Allston, is the institution’s first large-scale commercial project, a sort of answer to MIT’s huge commercial presence in Kendall Square. The first phase of construction is still underway, but some of the campus has already been added to Boston’s tax rolls, and when fully built out it will eventually be a big property-tax payer in Boston. The 14-acre first phase includes 510,000 square feet of lab space developed by Breakthrough Properties, the biotech arm of real estate giant Tishman Speyer, along with 343 apartments and a conference center named for private equity billionaire and philanthropist David Rubenstein. Construction on the 900,000-square-foot first phase started in November 2023 and is slated to wrap up next year.
What about the PILOTs?
Local governments in Cambridge and Boston task nonprofit universities, hospitals, and museums with providing voluntary “payment in lieu of taxes” payments, otherwise known as PILOTs, to account in part for the city services they consume. In 2023, the most recent year the city of Boston has publicly reported on its PILOT program, Boston said Harvard’s holdings on its side of the Charles River — including the John A. Paulson School of Engineering and Applied Sciences complex in Allston and the Harvard T.H. Chan School of Public Health in the Longwood Medical Area — were worth a combined $1.5 billion, and sought about $14 million in PILOT payments. Harvard contributed more than $11 million in fiscal 2023 — $4 million in cash and the other $7 million in credits for various community benefits — in Boston and $4.7 million in Cambridge.
What happens if Harvard loses tax-exempt status?
As of now, there’s no clear answer — but it’s something every major research institution in the United States is closely watching.
“This whole idea that the IRS could suspend Harvard’s nonprofit status is laughable on the face of it,” said George W. “Mac” McCarthy, president and CEO of the Lincoln Institute of Land Policy in Cambridge. “There a lot of stumbling blocks that somebody could put into their way. The people who manage Harvard’s endowment, and manage that university, are very sophisticated, and they know how to navigate IRS rules, and do whatever they can to maintain a pristine 501(c)(3) status.”
And unlike federal income tax deductions, property taxes are administered by local governments, under state law. It’s not yet clear if or how a federal ruling might impact what goes on in Massachusetts, or how Boston and Cambridge might choose to tax Harvard should the opportunity arise.
But long before any of that hits, McCarthy said, any threat to Harvard’s nonprofit status would likely prompt fierce legal action.
“There’s way too much at stake there to let it go,” he said.
Catherine Carlock can be reached at catherine.carlock@globe.com. Follow her @bycathcarlock.