So why can’t Harvard immerse himself in his famous steep endowment?
When the Trump administration announced a freezing of $ 2.2 billion in subsidies to the university this week after the school rejected its demands, some critics have asked why the Ivy League institution and other rich schools such as they cannot compensate for federal financing in that way.
Finance and Higher Education experts say that the endowments are not a simple replacement for government financing due to restrictions related to the marking of donors, legality and research priorities.
“If there is a great source of income that has disappeared, which is the threat of the administration, it is like any family with a shock for its income flow,” said Catharine Bond Hill, former president of Vassar College. “I would have to decide how I was going to assign its expenditure priorities.”
The Trump Administration said in a statement on Monday that it would reduce the $ 2.2 billion in subsidies of several years and $ 60 million “in a contract value of several years” to Harvard due to what it considers the “mental mentality of worrying right of the university.”
The freezing was announced hours after the school said it would not grant the demands of the administration, which include auditing points of student body and restricting the acceptance of international students who are “hostile to US values and institutions.
“The University will not deliver its independence or resign from its constitutional rights,” said the university’s account X in a statement on Monday. “Neither Harvard nor any other private university can afford to be taken by the federal government.”
Harvard has the greatest endowment among American universities, with $ 53.2 billion in 2024. That is higher than gross national products in almost 100 countries. Yale University has the second highest endowment, around $ 41.4 billion.
But those elite schools do not represent the norm. A study by the National Association of Business Officers of the College and University of 2024 of 658 American schools and universities found that the median endowment was $ 243 million. And 30% of the participating universities had endowments of $ 100 million or less.
While Harvard, without a doubt, has substantial funds, does not mean that he can trust his endowment to compensate for the loss, experts say. Hill, managing director of the Ithaka S+R Research and Consulting Organization, compared the provision of a pot of financial assets that are invested in a variety of things, from shares and bonds to real estate.
Much of that money boat, said Hill, comes from donors, including former students, foundations, members of the local community or any other person who seeks to support the expense of institutions. And should not be used immediately.
“They don’t give it as a pot of money to spend this year,” said Hill. “They give it as an endowment, so that profits can be used over time to support what the donor is interested in the university to perpetuity.”
There are also other restrictions. Liz Clark, policy vice president of the group of university business officers, said that essentially, the endowments can be seen as a “collection of contracts” with donors.
“Donors may have given to support scholarships, they may have given to support the faculty positions, they might donate to support a specific area of scientific research or medical research,” said Clark. “The university has the legal responsibility to maintain that contract and agreement.”
In Harvard, for example, donors’ terms direct 70% of the annual distribution of their endowment to specific programs or departments or other purposes. That leaves around 25%, said Hill, for discretionary expenses approved by the Board. It is still a lot; However, Hill said “you can burn that quite fast.” And the school may have to do financial businesses.
“That money designated by the Board may have been destined to support financial aid based on the need for university students,” said Hill. “If they spend it to cover this research deficit, they can certainly do it for a while, but when it is gone, it has gone. It can mean that they have to reduce spending in other areas where that money was being used.”
Federal financing has also historically played a fundamental role in the investigation, experts said. Cecilia Orphan, an associated professor of Higher Education at the University of Denver, said that financing often comes from the National Health Institutes, the National Endowment for Arts and other important agencies.
And those sources often come with national strategic priorities attended to them, said Orphan. The National Science Foundation, for example, has been making concerted efforts to increase the country’s competitiveness in Stem, he said.
When a university receives a subsidy, said Orphan, is usually divided into a variety of ways to support things as research materials, personnel costs or construction of physical spaces to conduct research.
“It is very difficult for a university like Harvard or Columbia to carry out this type of avant -garde research without that kind of infrastructure support that is separated from real research itself,” Orphan said.
Experts say it remains to be seen how universities will adapt to such federal financing freezing. But, said Orphan, the impact on the investigation could be devastating.
“The greatest involvement here is that a university like Harvard is to investigate that it has a global benefit in a variety of areas, including cancer research and the development of weapons and other strategic concerns that we could have as a country and the world,” said Orphan. “When it reduces research financing, that means that research will cease or decrease.”
