Harvard University announced that its endowment gained 15.4 percent from its investments in the past year. At the end of the school’s fiscal year on June 30, the endowment was worth $36.4 billion, which exceeds the gross domestic products (GDPs) of more than half the world’s nations. Yes, the Harvard endowment has more money in its coffers than most countries generate in all their economic activity.
It may seem like apples and oranges to compare the investment holdings of a university with the money countries generate. However, given how expensive an education at Harvard and most other private colleges is, it seems outrageous that they are so well endowed.
Boston.com compared Harvard’s endowment with data from the International Monetary Fund. The $36.4 billion balance, if compared with what countries generate in their GDP, places Harvard in the middle of all the world’s economies, below the developed nations, but ahead of half. In fact, there are 93 countries whose economies generate less economic activity than the pot of money Harvard is sitting on.
A GDP is the economic value of the finished goods and services that produced in that country during a given period, usually annually. This total includes consumer spending, government spending, capital spending from businesses in the country, as well as exports minus imports. GDP is a gauge of the economic health and standard of living in a country. So, it is no surprise that the world’s poorest countries fall far below Harvard’s total; the surprise is that they fall right in the middle of the pack.
Harvard is the wealthiest university in the world. To be fair, not all the endowment money is actually available to Harvard. According to The Boston Globe, only $11.6 billion, or about one-third of the university’s operation budget, has been available from the endowment to the school over the past five years.
Harvard’s impressive investment balances did benefit from the overall stock market run-up during the past fiscal year. In recent years, Harvard has actually lagged behind some of its peers since the 2008 financial crisis. The university endowment funds are still trying to recover from the crisis and have not returned to the pre-crisis high of $36.9 billion that June.
Harvard’s sizeable endowment is not an anomaly. In fact, the school may have more funds on hand than other Ivy League universities, but its investment results are not. Other Ivy League schools posted better overall results in 2014 than those universities that have reported their fiscal year-end results. Dartmouth College reported that its endowment gained 19.2 percent during the period. University of Pennsylvania’s endowment funds were up 17.5 percent. Harvard’s neighbor, the Massachusetts Institute of Technology (MIT) generated a 19.2 percent gain for its endowment. (Brown University, Cornell University, Princeton University, Columbia University and Yale University have not reported their results for the last fiscal year.)
In defense of the Ivy League endowments, the average student loan debt of their graduates is lower than most other private schools. This indicates people either pay in full or the schools do offer more financial aid.
The $36.4 billion Harvard has does make the university richer in many ways that most countries. While not an equal comparison (apples to oranges!), it is an interesting indication that a lot of the private universities that keep raising tuition do not need the money. It also cannot help but raise the question of how much good it could do employed elsewhere.
By Dyanne Weiss