Rising Costs And Falling Funding

The administrations of both Harvard and the United States are holding important meetings this weekend, and their discussions will undoubtedly center around one thing: inflation.

Down yonder in Washington, President Ford has assembled over 700 of the nation's top economists to argue with presidential advisers over the best way to tame run-a-way inflation and bring the economy back into whack. And here in Cambridge, President Bok and the alumni fund-raisers for the Harvard College Fund will spend much of their 13th annual assembly brooding over what they will do in the coming year if Ford's crew continues to fail.

Spiralling costs, plummeting stocks, and the other bad animals that any Ec 10 student knows shouldn't exist, in theory, are affecting the entire nation -- rich and poor; charitable institutions and profit-maximizing corporations.

But like anything else, it's the small guy who gets hit the hardest and the big guy who suffers temporary loss whose complaints are heard the loudest.

The Ford Foundation -- the nation's largest charitable organization -- saw its assets depleted from $3 billion to $2 billion in a year's time, and its board of directors made a big to-do before deciding to consider cut-backs in projects they fund.

Harvard, too, is experiencing its temporary financial setbacks. Its portfolio has dropped in value from about $1.35 billion to about $1.1 billion in a year. Private donations may fall off drastically this year if the market doesn't pick up and if tax legislation cuts out deductions on charitable giving.

One estimate being floated around by administrators and members of the Governing Boards is that if the cards fall the wrong way, Harvard could lose as much as $30 million of its $60 million in annual private gifts.

Even if the loss in private donations is only half that size, Harvard could face a significant drop in its $220 million annual income for 1974-75. The Faculty of Arts and Sciences and several others have already predicted deficits for the coming year. Although the 1973-74 figures are not yet out, the $2.1 million surplus of a year ago will definitely fade into a deficit.

The deficit for 1973-74 is not serious or unexpected -- Corporation sources place it at slightly under $1 million, about the increased cost of energy Harvard was forced to pay last winter. It's the drop in income and the continued rise in expenses forecast for this year that could cause serious problems for the University.