Harvard, With a $40 Billion Endowment, Will Receive $8.7 Million in Federal Aid for Coronavirus Relief

Harvard University in Boston will receive $8,655,748 in federal aid for coronavirus relief despite having a $40 billion endowment.

The Harvard Crimson, the student newspaper, posted news of the federal aid on its Twitter account: "Harvard University will receive nearly $9 million in aid from the federal government through the Coronavirus Aid, Relief, and Economic Security Act, the Department of Education announced last week."

Harvard University will receive nearly $9 million in aid from the federal government through the Coronavirus Aid, Relief, and Economic Security Act, the Department of Education announced last week. https://t.co/CuTqv5SUzA

— The Harvard Crimson (@thecrimson) April 15, 2020

The money is part of the $14 billion allocated to colleges and universities in the CARES Act, the $2 trillion stimulus bill passed by Congress to help struggling Americans across the nation impacted by the new coronavirus pandemic. The aid set to be given to Harvard hinges on half of the money being held in reserve "for emergency financial aid grants to students," according to the Harvard Crimson article.

The Harvard Management Company, which manages the university's endowment and related financial assets, according to its website, released a financial report for the fiscal year 2019 that stated Harvard's endowment value was at $40.9 billion, an increase from the $39.2 billion endowment value for the university's 2018 fiscal year.

"For the most recent fiscal year ended June 30, 2019, the return on the Harvard endowment was 6.5 percent and the value stood at $40.9 billion," N.P. Narvekar, the chief executive officer for the Harvard Management Company, stated in a letter included in the 2019 report. "The endowment also distributed $1.9 billion toward the University's operating budget, in support of financial aid, research funds, faculty support, and more."

The report also states that Harvard University ended the 2019 fiscal year with an operating surplus of $298 million, a year in which the "net undergraduate and graduate tuition income increased 4 percent."

The Harvard webpage that explains how its endowment is managed states that the funds are meant to "foster leading financial aid programs, scientific research discoveries, and hundreds of professorships."

"However, there is a common misconception that endowments, including Harvard's, can be accessed like bank accounts, used for anything at any time as long as funds are available. In reality, Harvard's flexibility in spending from the endowment is limited by the fact that it must be maintained in perpetuity and that it is largely restricted," the webpage states.

"Harvard is obligated to preserve the purchasing power of these gifts by spending only a small fraction of their value each year. Spending significantly more than that over time, for whatever reason, would privilege the present over the future in a manner inconsistent with an endowment's fundamental purpose of maintaining intergenerational equity," the webpage states. Restrictions for spending are in place for approximately 80 percent the endowment fund as donors may request that their money be set aside for a specific purpose.

A U.S. Department of Education spokesperson told Newsweek in an email that the formula to decide how much money is allocated to American colleges and universities was set by Congress.

"Secretary Betsy DeVos shares the concern that sending millions to schools with significant endowments is a poor use of taxpayer money. In her letter to college and university presidents, Secretary DeVos asked them to determine if their institutions actually need the money and, if not, to send unneeded CARES Act funds to schools in need in their state or region. We hope that the presidents of these schools will take the Secretary's advice and direct CARES Act funds to students in need, no matter where those students are enrolled," the spokesperson said.

A Harvard spokesperson told Newsweek in an email that the CARES Act is meant to address the "substantial costs" to colleges and universities during the pandemic.

"Like nearly all sectors of the economy, higher education has experienced significant disruption due to the coronavirus pandemic; most immediately with our efforts to reduce the population on our campuses, move classes online, and shutter most research labs, while at the same time, working to support staff and our local communities, as well as rapidly escalate our research around treatments, diagnostics and vaccines for COVID-19," the Harvard spokesperson said.

They did not signal as to whether or not the school would be accepting the funds.

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The Harvard University campus in Cambridge, Massachusetts is shown on March 23. Harvard ended the 2019 fiscal year with an operating surplus of $298 million. Maddie Meyer/Getty

Update 4/16/20, 5:42 p.m.: The article has been updated to include a statement from a Department of Education spokesperson and a Harvard spokesperson.