Harvard’s War With Trump Forces Question of How Endowments Should Be Spent

Among Harvard University’s many distinctions remains the fact it is the oldest continuing corporation in the Western Hemisphere. The designation originates in a charter, authorizing a board of officers to oversee the college’s finances, property and receipt of gifts. Nearing his death in 1638, John Harvard, a Puritan minister, left half his estate to the institution that would soon bear his name. Five years later came a contribution of 100 pounds from Ann Radcliffe to underwrite Harvard’s first scholarships. The university’s funds, as the historian Bruce Kimball has noted, are the oldest perpetual investments in the United States.

At $53.2 billion, Harvard’s endowment is the largest in the world, with more than 70 percent of its portfolio given over to interests in hedge funds and private equity. The endowment does not include its real estate, which encompasses acres of land across the river in Boston, parcels of which the university purchased for $88 million over several years in the 1990s, anonymously to avoid the possibility of paying more. In 2023, the university’s chief investment officer, a title absent from any 17th-century charter, made $7.6 million. These figures can breed confusion, if not hostility, among the many people whose lives will never be touched by Massachusetts Hall.

The Trump administration’s war against higher education for what it insists is a dangerous culture of intellectual inflexibility has forced a debate about capital as central now as the vast underlying disagreements over values. The endowment of the University of Pennsylvania, to take one example, stands at three and a half times the municipal budget of Philadelphia. If universities can claim assets like this, it can be hard to understand what keeps them from releasing funds to cover the research dollars the government is taking away in the name of eradicating “wokeness.”

Unlike Columbia, which bowed to the White House, Harvard resisted. In retaliation, the government froze $2.2 billion in grant funding and threatened to revoke its tax-exempt status. Harvard has since sued the government, arguing that it cannot interfere with the university’s right to free speech, “to advance its own vision of ideological balance.”

Harvard might choose to go deeper into its reserves to compensate for losses. Or it might elect to take on more debt, or roll out a fund-raising campaign in the name of defending academic freedom — The Harvard Crimson reported that more than $1 million in online donations came in within 24 hours of the university’s announcing it would not concede. This month, both former President Barack Obama and Lawrence Summers, who had presided over Harvard and the U.S. Treasury, made the point that the endowments of rich universities were there to be activated in a crisis and did not exist, as Mr. Summers put it in a guest essay in The New York Times, “to simply be envied or admired.”

For the millions of Americans who do not pay attention to Ivy League investment strategy, that might not seem like an especially defiant proposition. But the idea abrades fiercely held tradition. It is a commandment of managing any trust, but especially university endowments, that the principal go untouched. If you suggest to academic bureaucrats that there must be a way for huge endowments to cover prospective cuts in government funding — and you are not Larry Summers — they will look at you as if you were a child wondering why it is unwise to leave raw eggs out in the sun.