The world’s wealthiest university is under attack by one of world’s richest, most powerful men. The reasons have to do with disagreements about antisemitism, racial politics and raw power.
But the fight, which the government accelerated with a mistimed letter, is also about taking Harvard and its billions down several notches.
The Trump administration has frozen more than $2.2 billion in grants and contracts that were intended for Harvard, which is also America’s oldest institution of higher education. As Harvard and President Trump face off over the government’s intrusive demands, the university’s riches have emerged as a flashpoint.
Mr. Trump has made it clear that he may want to take every last penny the government sends to the institution — and, if the Internal Revenue Service strips Harvard of its tax-exempt status, maybe collect more from the university, too.
On Monday, the university sued the administration, arguing the government had overstepped. The question is whether Harvard can handle the blow if its legal effort is unsuccessful.
A Balance Sheet of Billions
Harvard was sitting on $64 billion at the end of its most recent fiscal year, after factoring in its various debts. By comparison, this year’s Massachusetts state budget is worth about $58 billion.
Money flows into the university each year from a variety of sources, including research grants, donations and, of course, tuition. (The sticker price is soon to be $59,320; room and board and other fees tack on nearly $30,000 more.) But most of Harvard’s wealth — more than $53 billion — is kept in its endowment, which resembles an enormous retirement account that is built to last.
It might seem simple for Harvard to dip into those funds in an emergency like the one it is facing now. Many people, including former President Barack Obama and Harvard’s own former president, Lawrence H. Summers, have urged it to do just that — and it can, to some extent.
But tapping an endowment is hardly automatic. At Harvard, the endowment is not just a single account from which the university can make withdrawals. Rather, it is broken up into more than 14,000 funds, many of them connected to donations from individuals or family foundations.
Endowments, it is fair to say, can be more about egos than emergencies. Many donors, whether they are giving to a university or a house of worship or an aquarium, attach specific rules to their contributions.
At Harvard, roughly 80 percent of the endowment is restricted, a higher share than at some other top institutions, including Yale and Princeton. Universities often have limited leeway to change these terms on their own.
Harvard leaders, like their counterparts across the country, also carefully guard the endowment as a marker of prestige. But more fundamentally, endowments are designed to provide a permanent flow of money, so removing enormous sums could threaten the university’s long-term viability.
Instead, Harvard is among the institutions that make regular, modest withdrawals. Those withdrawals help the university to pay its bills, which run to more than $6 billion a year. In recent years, Harvard has pulled out somewhere between 4.2 percent and 6.1 percent of its endowment’s market value. For 2024, that added up to $2.4 billion.
The university has other resources, too. Its general operating account, for example, has billions in unrestricted investments that the university could deploy at will. It also has vast real estate holdings. By Harvard’s estimate, its land alone is worth more than $1 billion. And more than 20 percent of revenue comes from tuition, room, board and the like.
But an essential category accounts for about 11 percent of Harvard’s revenue: federally sponsored research. In its most recent fiscal year, Harvard received about $687 million in research funding from Washington.
What Trump’s Cuts Could Unleash
Harvard, like many other research universities around the country, has become dependent on the federal government to underwrite some of the most important work its doctors, engineers and scientists do.
Most federal research money that flows to Harvard comes from the Department of Health and Human Services. In 2023, almost $150 million a year came from other federal agencies, including the intelligence community, NASA and the Department of Housing and Urban Development.
The full scale of the government’s newly announced cuts to Harvard are still coming into view, in part because the university is learning details as researchers receive so-called stop-work orders from the government.
Among the projects targeted so far: work on a diagnostic tool for Lou Gehrig’s disease, or A.L.S.; research on space travel and radiation sickness; and a $60 million effort to combat tuberculosis.
Harvard, which says it funded $489 million in research itself in 2023, has warned that many projects “will come to a halt midstream” if federal funding evaporates. The university imposed a hiring freeze last month and could ultimately turn to layoffs, lab closures and other steps.
The Trump administration has also taken aim at other sources of funding.
If the federal government revoked Harvard’s tax-exempt status — a move experts say would be legally dubious — Harvard would find itself in uncharted territory. Harvard has never operated as a for-profit entity.
While tuition would be taxed as revenue, the university could deduct expenses like faculty and staff salaries and other operating costs. But one big hit could come in the form of donations to the university, which would become taxable.
Harvard’s loss of tax-exempt status “would reduce the number of donors, the amount that donors gave, or both,” Samuel D. Brunson, a law professor at Loyola University Chicago who studies nonprofit organizations, said in an email.
There are other financial headwinds the Trump administration could unleash.
Among them: Republican leaders, including Vice President JD Vance, who received generous university funding to attend Yale Law School, have pushed to increase excise taxes on endowments, from a current tax of 1.4 percent to as much as 35 percent of annual net investment income. And Mr. Trump’s tariff policies could increase prices, the university noted.
A decline in international students or even a total elimination of them could be another significant hit.
What Harvard Could Be Reduced To
Harvard has not announced all of its contingency plans. Raiding its endowment piggy bank would have consequences for years to come — an outcome that the institution’s critics might welcome — but even some in Harvard’s orbit are arguing that the university is facing just the sort of crisis that might require it.
Drew Gilpin Faust, Harvard’s president through the Great Recession, warned that the Trump administration’s funding cuts could have unpredictable and far-reaching consequences for the university.
Schools that are heavily dependent on the endowment, like the Harvard Divinity School, could face major cuts if administrators seek to redirect funds to other parts of the university that rely almost entirely on federal grants, such as the T.H. Chan School of Public Health.
Nearly half of that school’s annual revenue is drawn from federal funds.
In meetings, the Chan School’s administrators have listed steps they are taking to reign in spending to weather the Trump assault. They are, for example, eliminating desktop phones, limiting catering, reducing security and cutting back on new computers, according to presentation slides obtained by The New York Times.
The school has also cut doctoral students, building space, a plan to hire a new dean of research, and a shuttle that ferries employees between offices.
In a message to members of the university community on Monday evening announcing the lawsuit against the federal government, Dr. Garber suggested that shrinking Harvard would not just do damage to their “beloved university.”
“The victims will be future patients and their loved ones who will suffer the heartbreak of illnesses that might have been prevented or treated more effectively,” he wrote. “Indiscriminately slashing medical, scientific, and technological research undermines the nation’s ability to save American lives, foster American success, and maintain America’s position as a global leader in innovation.”
Andrea Fuller, Miles J. Herszenhorn and Vimal Patel contributed reporting.
Alan Blinder is a national correspondent for The Times, covering education.
Stephanie Saul reports on colleges and universities, with a recent focus on the dramatic changes in college admissions and the debate around diversity, equity and inclusion in higher education.
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