Finances and Funding

On the surface, it might seem that Harvard, with a $32.7 billion endowment, should never have to worry about financial constraints. However, the actual situation is more nuanced.  Significant fluctuations can occur in financial performance—including an $8 billion loss in 2009—that make the endowment more volatile and less freely dispensable than its listed amount might indicate. And as this year’s financial report showed, operating expenses are a sizeable $4.2 billion, with Harvard running a $34 million operating deficit and $5.7 billion in total debt. Harvard, like most other universities, is clearly still recovering from the recent financial crisis.

As such, Harvard may need to make more budget cuts in the future; the University has already been forced to make painful layoffs and enact less difficult but still tangible reductions such as ending hot breakfast in the Houses. But given the uncertainties of University finances, it is even more starkly clear that dependable federal funding of basic research—and the valuable contributions that come with it—is necessary and critically important.

After all, in a time of economic downturn, universities will find it much more difficult to provide sufficient money for research.  As such, academics must then rely more on the public sector to maintain a stable stream of funding.  Unfortunately, at the same time that higher education is struggling financially, the federal government has enacted a set of extensive budget cuts, known as the sequester, that took effect in March. This includes major cuts to federal funding of basic research that Harvard researchers depend upon heavily to finance their work.

Certainly, Harvard, as a leading academic institution, should prioritize protection of basic research. However, currently Harvard may not have the financial ability to sustain the same levels of funding as before or match the amount of former government grants. As such, researchers will be unable to fund as many projects and hire as much staff; in particular, young, promising academics are shut out. Consequently, without other external parties willing to provide money, basic research will suffer over time. As University President Drew G. Faust said, this is “a self-inflicted wound on [the U.S.’s] intellectual and human capital.”

This issue goes far beyond Harvard—in fact, Harvard is one of the most fortunate universities in this crunch since it has a large amount of resources and clout with which to support its research interests. Other institutions may not be so lucky. Without consistent and meaningful federal funding, American university research will be left in limbo, vulnerable to the instability of financial currents. But the future of U.S. academic research—the future of American intellectual contributions to the world—is too important to risk.