Harvard’s billions – Fundraising machine

The endowment at Harvard University is huge, aggressively managed and conservatively distributed, The New York Times reported June 25 in its Sunday magazine.

Harvard has amassed $19 billion in endowment spread over 9,600 funds that belong to whichever of Harvard’s 10 schools they were donated, the Times said.

That’s by far the biggest in the U.S. With $10 billion, Yale ranks second.

In the mid-1970s, the Harvard Management Company, a university-owned nonprofit that oversees investment of the endowment, launched an aggressive but diverse strategy, and now has invested in 69 private equity and venture-capital firms, and seeded new investment funds.

The payoff has been big for Harvard, which earned $4.3 billion last year alone, and for its top five performing portfolio managers, who last year earned more than $50 million in bonuses.

Yet while endowment returns have beat internal goals of 6 percent to 6.5 percent above inflation for the last nine years, Harvard has paid out only 4.2 percent of its endowment on average to its deans for spending, compared to a goal of 4.5 percent to 5 percent for a typical university, the Times said.

That has netted billions for the university, which recently raised $2.6 billion in a six-year capital campaign, exceeding its goal by $500 million.

The campaign landed 498 gifts of $1 million or more, 90 of $5 million or more and two of $50 million or more.

Harvard also restricts 87 percent of its endowment either to a particular school or for a particular purpose at that school. And up to $920 million in the university’s $3 billion general operating account has been unrestricted.

With Lawrence Summers, former U.S. treasury secretary, taking over as president July 1, Harvard faces big questions about how to spend its endowment, the Times said.

For full story, go to The New York Times.

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