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Harvard, With a $40 Billion Endowment, Will Receive $8.7 Million in Aid

Newsweek logo Newsweek 4/17/2020 Eddy Rodriguez
a large white building: CAMBRIDGE, MASSACHUSETTS - MARCH 23: The Harvard University campus is shown on March 23, 2020 in Cambridge, Massachusetts. Students were required to be out of their dorms no later than March 15 and finish the rest of the semester online due to the ongoing COVID-19 pandemic. (Photo by Maddie Meyer/Getty Images) © Maddie Meyer/Getty CAMBRIDGE, MASSACHUSETTS - MARCH 23: The Harvard University campus is shown on March 23, 2020 in Cambridge, Massachusetts. Students were required to be out of their dorms no later than March 15 and finish the rest of the semester online due to the ongoing COVID-19 pandemic. (Photo by Maddie Meyer/Getty Images)

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."

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."

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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.

Newsweek reached out to Harvard to inquire as to whether the school would accept the coronavirus relief aid or ask its donors to release the restrictions on endowment money equal to the relief aid amount, but the university they didn't respond to those questions in time for publication.

Newsweek also reached out to the United States Department of Education inquiring as to why Harvard is receiving any aid when it has $40.9 billion in endowment money, but it did not respond in time for publication.

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