When the Endowment Sinks, Here’s What Harvard Should Keep Afloat

For the past five years, the Harvard Management Company under the leadership of N.P. “Narv” Narveker has continually reported positive returns on Harvard’s endowment. This year, however, things may not be as smooth: Amid inflation and rising interest rates, financial experts predict that the median university will experience negative returns on its endowment. Despite a lack of consensus on how the make-up of Harvard’s endowment, with its idiosyncratic reliance on alternative investments, will influence the exact outcome, it appears fairly likely that broader market conditions will lead to negative or at least declining returns for the University.

This situation isn’t new — and neither is the administration’s predictable response. Following the 2008 recession, which hit the endowment particularly hard, Harvard cut the Faculty of Arts and Sciences’ budget by $77 million dollars, delayed construction of the Allston campus, froze faculty hiring, laid-off hundreds of workers, and cut back on hot breakfast. In fear of a potential recession during the Covid-19 pandemic, Harvard announced that it would end compensation for contracted workers idled by the pandemic, reduce pay for faculty, and freeze hiring and salaries. It seems likely that, should the anticipated negative returns on the endowment materialize, the administration will once again trim the University’s operating budget, given that 39 percent of it is funded by the endowment.

We appreciate that Harvard, out of fiscal responsibility, may be forced to slash our budgets. It’s not our place to advise the University on how to best manage its finances; Harvard retains plenty of experienced financial officers and world-class economists that are far better equipped to do so. However, as students, we can advise the University on what we know best — the parts of life at Harvard that deliver the oft-touted transformational student experience, and those which we consider to be indispensable, even in the face of looming budget cuts.

As we have previously opined, financial aid is a crucial part of Harvard’s institutional commitment to socioeconomic justice and diversity — one that cannot, under any circumstances, be sacrificed. When poor market conditions cause even an institutional behemoth like Harvard to struggle, economically disadvantaged students also suffer — but instead of worrying over a decrease in expected returns, students may be uncertain of their ability to afford and enroll in college altogether. When the endowment sinks, Harvard must continue its generous financial aid policy so that all are able to navigate the oft-treacherous waters of graduating with little to no student debt. Additionally, provisions such as BoardPlus that are covered within attendance costs — and which can often play an important role in providing financial flexibility to students — should remain unaffected by budget cuts.

This emphasis on financial accessibility, in our view, is a crucial element of maintaining a standard of academic excellence at Harvard; after all, what is the value of a school without its students? To this point, however, we must also acknowledge the tremendous amount of labor required to maintain the educational apparatus and physical spaces that students utilize on a daily basis, which form an equally central part of Harvard’s academic mission. The University’s graduate student workers, non-tenured faculty, and non-teaching staff work tirelessly to sustain everything, from captivating courses to dining hall delights, that we as undergraduates hold dearest — efforts that have historically been devalued as soon as financial trouble hits. This time around, however, if budget cuts are in order, the University should avoid making payroll cuts and layoffs for those who rely almost entirely on Harvard for their wages, and ensure that all compensation levels unquestionably provide enough to be considered liveable wages.

If negative endowment returns mean that the University ultimately must sacrifice certain essential features of campus life, it should not capitalize on lapses in institutional memory to do away with them indefinitely. We’re thinking, as most students do when they find themselves hungry and far from Quincy in the morning, of hot breakfast — what was originally a necessary measure during the 2008 financial crisis has now become a seemingly permanent loss, cemented by a diminishing community memory of what it was like when we didn’t have to trek along the River for eggs and bacon. This example may seem trite, but the broader sentiment holds true: When making cuts, Harvard should avoid circumstantial decisions that may prove to be shortsighted and unnecessarily harsh when the storm eventually withers off.

Most importantly, in our view, Harvard should prioritize current jobs and programs that people depend on for their livelihoods as opposed to capital investment in assets that will remain idle for a long time. We also worry about the University’s future — but we know that Harvard must survive the present as well.

This staff editorial solely represents the majority view of The Crimson Editorial Board. It is the product of discussions at regular Editorial Board meetings. In order to ensure the impartiality of our journalism, Crimson editors who choose to opine and vote at these meetings are not involved in the reporting of articles on similar topics.

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