Harvard: King of Colleges


<p>I heard that Harvard receives something to the tune of 20 billion dollars in endowments...my question...WTF can it spend 20 billion dollars on??? i mean...its like a corporation...seriously...those trustees are rolling in dough...</p>

<p>yeah, it's mind-boggling. One of my profs assumed that Berkeley gets 3 billion while Harvard gets 7...I politely informed him that Berkeley gets 1 and Harvard gets around 19. It's a lot more than you think...</p>

<p>Harvard doesn't "receive" 20 billion in endowments. No one is giving Harvard $20 billion. Harvard OWNS $20 billion in endowments. The endowment is sort of money in the bank, money that is invested. It lives off the interest and earnings from its $20 billion investment. So it's not like someone is giving Harvard 20 billion dollars every year or something.</p>

<p>In any case, a $20 billion endowment still makes it the richest university in the US and probably in the world.</p>

<p>I agree with coureur. It's like Microsoft, which until just recently had $60 billion in cash and cash equivalents on its books, and zero debt (recently, Microsoft decided to pay out much of that cash in the form of the biggest one-time stock divided in modern history, but they will still have billions of dollars in their bank accounts). Harvard has actually over $23 billion of cash in its endowment, not because somebody just handed that cash to Harvard, but as a sum total of all of its financial reserves.</p>

<p>Harvard built up this reserve from numerous sources as well as by simple investing. First of all, you should realize that tuition is usually a small minority of the funding that most universities receive. By far the biggest portion of most private university's operating budget comes from alumni donations. Harvard alumni are consistently among the most generous alumni in the world. </p>

<p>Couple that with the fact that Harvard is the oldest college in the US and one of the oldest in the world, and so Harvard has simply had a tremendous amount of time to invest its money and enjoy the benefits of compound interest. I'll put it to you this way. 10-year Federal Treasury bonds, which are widely considered to be the safest investment in the world (so safe that they are considered the 'benchmark' of safety by financial institutions in the world), yield about 4% a year. So if Harvard took its entire $23 billion endowment and invested all of it in 10-year T-bonds, Harvard would earn more than $900 million every year just on interest alone, and would still be guaranteed to get its principal back unless the Federal government decides not to honor its debt (and if that happens, that means that the US government has collapsed financially, which means that the financial health of Harvard is probably the least of your worries). Furthermore, as a non-profit, Harvard pays minimal taxes on what it earns. So ignoring tax consequences, and assuming that Harvard doesn't spend any of its endowment and doesn't add to its endowment through more alumni donations, then the Harvard endowment would be increasing by $900 million each year, every year.</p>

<p>still...its like a corporation...some forward thinker should open up a chain of colleges and make money from that...its such a business...</p>

<p>What do you mean - like the University of Phoenix?</p>