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Harvard Posts $298 Million Surplus in 2019

University Hall houses several administrative offices.
University Hall houses several administrative offices. By Steve S. Li
By Luke W. Vrotsos and Cindy H. Zhang, Crimson Staff Writers

Harvard had a University-wide surplus of $298 million in fiscal year 2019, up from $196 million in 2018, according to Harvard’s annual financial report released Thursday.

University revenues rose to $5.5 billion, a 6 percent increase, according to the report. The largest source of University revenue was distributions from Harvard’s more than $40 billion endowment, which made up 35 percent of total revenue. Tuition, at 22 percent of revenue, and research grants, at 17 percent, were the next-largest revenue sources.

Increased demand for executive and continuing education programs bolstered general tuition revenues in 2019, according to the report. Executive and continuing education programs, representing 9 percent of the University’s revenues, have been consistently profitable and saw a 12 percent increase in net income this fiscal year. These programs are offered at nine of Harvard’s 12 schools, including Harvard Business School and Harvard Kennedy School.

Expenses also edged up in fiscal year 2019 to $5.2 billion, a 4 percent increase. By far the University’s largest expense was employee salaries, wages, and benefits at half the total value.

University President Lawrence S. Bacow wrote in the report that, while the University is in good financial condition, it faces challenges several challenges from Washington, D.C. — from the endowment tax to fluctuating research spending.

“Uncertainty in federal research funding and the damaging tax on college and university endowments in the Tax Cuts and Jobs Act also have the potential to hinder Harvard’s ability to grow investments in financial aid, teaching, and research across campus,” he wrote.

Though the endowment tax guidelines have not been finalized by the United States Treasury, the tax went into effect for the first time this fiscal year. University estimates put the additional burden of the endowment tax at $49.8 million for fiscal year 2019. The implications of this tax on operations, however, remain uncertain, according to the report.

“This new burden is approximately equal to 1% of revenues, or viewed in the context of maintaining affordability, less money is now available for University to maintain financial aid, which totaled $193 million for undergraduates this past year,” the report reads.

The report also focused heavily on Harvard’s advanced planning for a period of economic downturn. It highlights several measures that University leaders have asked each school to prepare, including five-year plans and creating a “Recession Playbook.”

Bacow wrote that an economic downturn could threaten the University’s financial health even with proper planning.

“The prospect of a long-running period of economic expansion coming to an end is very real,” he wrote, referring to the possibility of a recession.

Harvard’s schools that depend more heavily on the endowment face the most uncertainty in times of economic challenge. The report indicated that Harvard’s schools “vary widely” in their dependence on the endowment for funding. The Radcliffe Institute for Advanced Study and Harvard Divinity School draw the highest portions of their funding from the endowment, at 87 percent and 74 percent, respectively.

Donors supported 43 percent of University revenues in fiscal year 2019. Current use gifts increased slightly to $472 million from $467 million last fiscal year, which saw record numbers for current use giving in part because of a five-year capital campaign.

Harvard also relies heavily on research funding — both public and private. In fiscal year 2019, the University saw a 6 percent increase in non-federal sponsored research funding, part of a shift toward privately funded research in recent years.

“Nonfederal funding has been an area of growth in the past few years, as researchers look beyond the federal government for research funding support,” read the annual report.

Harvard Management Company CEO N.P. “Narv” Narvekar wrote for the second consecutive year that he was “not pleased” with this year’s endowment performance, which returned a lackluster 6.5 percent earlier this month, a decrease from the past two years.

Natural resources investments, which make up 4 percent of the endowment, posted a 12.4 percent loss in fiscal year 2019, making it the endowment’s worst-performing asset class for at least the second year in a row.

“We are obviously disappointed with persistent negative returns in this legacy part of our portfolio; however, we are pleased to have cut our exposure by more than half — from 9% to roughly 4% of the overall endowment — since my arrival,” Narvekar wrote.

Harvard’s natural resources investments have come under increased scrutiny from climate activists in recent years. In addition to calls for Harvard to divest its endowment from fossil fuels — which are not held in this asset class — activists have criticized Harvard’s land holdings in Brazil and California's Central Valley.

Correction: Oct. 25, 2019

A previous version of this article incorrectly stated that fossil fuels are part of Harvard's natural resources investments. In fact, they are not part of that asset class.

—Staff writer Cindy H. Zhang can be reached at​​​​

—Staff writer Luke W. Vrotsos can be reached at

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