As of May 15, the Trump administration has frozen about $2.7 billion in federal grants from Harvard University. While the University’s robust endowment should help cushion further cuts, the challenges of digging into such funds leave the institution on unstable fiscal footing.
At $53.2 billion, Harvard has the largest endowment across global higher education institutions. Stewardship from the Harvard Management Company, 388 years of University support, and 14,600 individual funds have guided the trust in serving as the backbone of the institution’s academic and philanthropic goals.
Fiscal year 2024 brought significant growth. Return on the endowment was 9.6%, increasing the fund’s value by $2.5 billion from FY 2023. In addition to this income generation, FY 2024 also brought $368 million in gifts. Over the past decade, cumulative donations have ranged from $338 million to $646 million. The FY 2024 market value of the Faculty of Arts and Sciences specifically is approximately $21.5 billion.
Such expansive finances fuel annual University responsibilities. $2.4 billion, or over a third of Harvard’s total operating revenue, was distributed from the endowment as of FY 2024. In the same fiscal year, the endowment granted $749 million in financial aid in scholarships, including $250 million for undergraduates—a 6% increase compared to FY 2023.
“Harvard’s financial capital acts as both a catalyst to accelerate learning and discovery today, and as a stabilizing force to ensure that future generations of scholars have the same opportunities,” wrote Vice President for Finance Ritu Kalra and University Treasurer Timothy Barakett ’87 in Harvard’s 2024 financial report. “In such a rapidly evolving landscape, safeguarding the University’s financial resilience is vital.”
However, this fund is not unlimited. Endowment spending is fickle, determined by the need to fund the institution’s overhead costs and the obligation to longitudinally preserve the fund’s value. Tilting the scales too far in the operating budget’s favor imperils the worth of yearly charitable donations and the larger fund. Yet leaving too much for later use is likewise not pragmatic. Each year, the University thus must strike a delicate balance between endowment spending and sustaining to uphold their mission of intergenerational equity.
“It’s not a checking or a savings account—it’s a long term investment for the future,” a joint Instagram post by Harvard affiliates, Princeton, and the University of Pennsylvania read on the purpose of such higher education funds.
“Endowments do not sit idle. Each year, only a portion of an endowment is paid to fund the university’s work, supporting annual operating expenses like research and financial aid,” the carousel continued.
The University, therefore, relies on other sources to fund around two-thirds of its operating expenses, among which federal grants remain a critical subsidiary. Yet since arriving in office, Trump has placed American higher education institutions on notice over alleged on-campus antisemitism, illegal diversity practices, or noncompliance with federal mandates. Harvard in particular has been a target of these executive actions—the presidential administration first jeopardized the institution’s federal funding on March 31 and most recently has terminated approximately $89 million in grant money from the U.S. Department of Energy Office of Science and Advanced Research Projects Agency. On May 2, Trump posted on Truth Social that he is planning on revoking Harvard’s tax-exempt status, exacerbating an already unstable financial situation.
U.S. Secretary of Education Linda McMahon compounded this series of resource cuts on May 5 in a letter to Harvard President Alan M. Garber ’76. “Harvard University has made a mockery of this country’s higher education system,” she wrote. According to McMahon, the University has consistently violated its legal obligations. “Harvard should no longer seek GRANTS from the federal government, since none will be provided,” she added.
Garber responded to McMahon on May 15. “We share common ground on a number of critical issues,” he wrote. Garber proceeded to outline the government’s claims made about campus antisemitism, the presence of illegal international students, and unconstitutional hiring practices. “Our agenda touches on all aspects of university life with a view to making Harvard a better place for our entire community,” he wrote.
His conclusion suggested the potential overturn of the grant freeze and a desire to amend the currently fragmented relationship between Harvard and the Trump administration. “We hope that the partnership between higher education and the federal government will be vibrant and successful for generations to come.”
Though the University saw a surge in donations surrounding the administration’s April funding freeze—nearly $1.14 million was collected between April 14-16—much larger funding cuts mean such contributions do not offset total losses. However, greater dips in the endowment to counter federal pressures may not be possible.
Endowment spending has remained fairly consistent over the past few years. FY 2023 saw less spending than FY 2024, but accounted for a similar 37% of total operating revenue. FY 2022 reported $2.1 billion in endowment distributions or 36% of total operating revenue. In FY 2021, the University observed a similar $2.0 billion distribution or around 38% of the total operating revenue. For Harvard to offset the past few months of executive funding withdrawals with endowment money, they would have to almost double what they have taken in the past from the trust.
However, little of Harvard’s endowment is available for unrestricted use. According to the University’s FY 2024 Financial Report, 80% of the trust is restricted to specific Schools, programs, or activities. Hedge funds, private equity, and real estate leave other portions of the money illiquid.
Moreover, if these restrictions can be circumvented, the Harvard Corporation still must agree to increase the annual payout rate of Harvard’s endowment from what has been held at around 5-5.5% of its market value. The Corporation has authorized deeper dives into the endowment’s corpus before—in 2020, they approved an increase of 2.5% to the distribution rate. Drastic changes have not been made since 2020, though, and a recent announcement from University leadership confirms that they will not yet accommodate another steep shift. “We cannot absorb the entire cost of the suspended or canceled federal funds,” Garber and Provost John F. Manning ’82 wrote in a statement to Harvard affiliates on May 14.
But steps have been taken to tighten University financing in the wake of presidential pressure.
On March 10, Harvard announced a temporary hiring freeze to preserve financial flexibility that will extend through the summer. Late April brought a University decision to pause all merit-based faculty pay raises. Garber declared he will be taking a voluntary 25% pay cut on May 14, which will take effect on July 1. Past Harvard presidents have made upwards of $1 million annually, meaning such a reduction could result in a six-figure salary decline. More than 80% of University faculty members have also agreed to dedicate 10% of their pay to supporting the University’s legal resistance to the Trump administration.
In their recent message, Garber and Manning disclosed that the University will dedicate a preliminary $250 million to bolster research affected by the Trump administration’s funding withdrawals.
The University’s lawsuit against departments of the federal government regarding funding freezes will be heard in the Massachusetts federal court system on July 21—an expedited date that Harvard administration hopes will mitigate the more permanent impacts of resource cuts.
“While there will undoubtedly be difficult decisions and sacrifices ahead, we know that, together, we will chart a path forward to sustain and advance Harvard’s vital research mission,” Garber and Manning concluded.
Sara Kumar ’27 (sjkumar@college.harvard.edu) is the News Editor of the Harvard Independent.