Harvard University raised a record $1.2 billion in annual donations yet warned it faces a tight budget because of its underperforming endowment, which has faced internal criticism over its management.
The fundraising total, the second-largest ever in higher education and the biggest for Harvard, demonstrates the concentration of wealth at American colleges. Harvard’s donations amounts to more than the value of investments of many big schools including the University of Kentucky and the University of Tennessee.
Harvard’s fundraising total, disclosed Tuesday for the year ended June 30, also shows how the richest colleges can offset losses and weak endowment returns by appealing to wealthy alumni. In the same year, Harvard’s $35.7 billion endowment posted a 2 percent loss for fiscal 2016, among the worst of its peers.
Still, Harvard, which ended the year with a $77 million surplus, warned money is getting tight. While the fundraising campaign is strong, the overall outlook “suggests more restraint on spending will be called for than in the last few years,” Thomas Hollister, Harvard’s chief financial officer, told the Harvard Gazette, a school publication, as it released its financials in an annual report.
Hollister didn’t say where spending may slow and the university declined further comment. Harvard reached a tentative deal with dining hall workers last week to end a strike over salaries and health care costs. The school is in the middle of a massive expansion of its Cambridge, Massachusetts campus across the Charles River that was delayed and scaled back after steep endowment losses following the 2008 global financial crisis.
Harvard said it’s dependent on the endowment to subsidize its budget so it must slow spending when investment returns trail as they have in recent years. The university said it transferred $1.7 billion out of the fund to support financial aid, research and other academics, accounting for 36 percent of total revenue for fiscal 2016.