The Endowment

30 Jun 2026

The pile. On 30 June 2026 Harvard’s endowment stood at $68.0 billion, by its own investment company’s report; Yale reported $54.5 billion. A survey of 657 colleges, universities and school foundations, by the business officers’ group NACUBO and Commonfund, counted $944.3 billion across all of them a year earlier. Their median endowment was $253.6 million, so the biggest funds are far from typical.

30 Jun 2026

Thousands of gifts. An endowment is not one account. Yale says about 75 percent of its endowment funds are restricted to a specific purpose, such as scholarships or research. Harvard Magazine reported that Harvard’s is roughly 15,000 funds, 80 percent restricted and under 5 percent fully unrestricted. MIT says state law makes it keep each gift as a permanent fund.

30 Jun 2025

Who it pays. Across 657 surveyed schools the largest share of endowment spending in fiscal 2025, 47.4 percent, went to student financial aid, and the average school spent 4.9 percent of its fund. The biggest funds differ: Harvard told Congress in 2016 that about a quarter of its annual payout went to tuition aid, and that among its restricted funds professorships and faculty pay led (32 percent) ahead of aid (21 percent). For fiscal 2026 Harvard says its endowment paid $2.6 billion, nearly 40 percent of its operating revenue, and that it gave students more than $775 million in aid; Yale says its endowment supplies 62 percent of Yale College’s budget.

2026

What the law says. A school is tax-exempt under section 501(c)(3) only if no part of its net earnings may “inure to the benefit of any private shareholder or individual.” The IRS adds that an “excess benefit transaction” with someone of substantial influence can bring an excise tax on that person and on the managers who agreed to it. Harvard’s 2016 reply to Congress says it is exempt under that section. The next scenes set the record against this rule.

2025

What a donor gets. The IRS says a donor who gives property to a qualified organization can generally deduct its fair market value, but if the donor receives a benefit, only the amount above the benefit is deductible. A gift made in exchange for the right to buy college athletic tickets gets no deduction. Harvard adds that a gift of appreciated assets can save capital gains tax. The senators who questioned colleges in 2008 put the double exemption this way: “Donations to universities are tax-exempt, and endowment funds are tax-exempt.” Whether an admissions boost counts as a benefit is a question no source here answers.

31 Mar 2016

Income for life. Some gifts do pay the donor, by contract. Harvard offers charitable gift annuities, from $25,000, and trusts that pay the donor or another person income for life or a set term; at the end, the remaining principal goes to Harvard. Harvard says the donor gets an immediate income tax deduction and capital gains savings on appreciated assets. Its 2016 reply to Congress says Harvard Management Company also manages “split interest” trusts outside the endowment; the memo gives one total, $7.8 billion, for these together with working capital and pensions.

24 Jan 2008

136 letters. On 24 January 2008 Senators Max Baucus and Chuck Grassley wrote to every college with an endowment of $500 million or more. They asked how much was permanently restricted by donors, what the endowment cost to manage, how investment advisers were paid, and why any payout under 5 percent met students’ needs. Harvard, Yale and Dartmouth had already announced more student aid. A 5 percent payout rule, like the one for private foundations, was floated but never passed; Harvard Magazine noted that the other ideas in the air, an IRS spending test and state or federal taxes on endowments, did not “appear likely to advance soon.”

11 Mar 2008

Bound by contract. Stanford’s president, John Hennessy, told the Stanford Daily in 2008 that Congress should not tell colleges how to spend their gifts. Senator Grassley answered that “endowments have a lot of flexibility, even though there is a lot of designated giving”; Stanford’s finance chief agreed the school kept some flexibility with the roughly 30 percent not restricted. Harvard told Congress in 2016 that 84 percent of its $37.6 billion was restricted by the terms of the original gifts, and that endowment funds are generally not transferable between schools.

22 Dec 2017

A tax. The Tax Cuts and Jobs Act became law on 22 December 2017. Its section 13701 put a flat 1.4 percent tax on the net investment income of private colleges with at least 500 students, more than half of them in the U.S., and assets of at least $500,000 per student, not counting those used directly for its educational purpose. State colleges and universities were left out.

30 Jun 2026

Where the money sits. By Harvard’s own report, on 30 June 2026 its endowment was 46 percent private equity, 29 percent hedge funds and 14 percent public stocks; a year earlier private equity was 41 percent, and Harvard Management Company says it “deliberately grew private equity.” Yale says its chief investment officer David Swensen, from 1985, moved its fund from the usual 60 percent stocks and 40 percent bonds toward hedge funds, real estate, timber and private equity, and that over his 36 years it beat the average endowment by 3.4 points a year. Yale credits that return with raising its endowment spending from $45 million, about a tenth of its budget, to $1.6 billion, about a third.

27 Apr 2016

Who manages it. In 2016 Congress asked what each outside manager was paid, and to whom. Harvard answered with its structure and averages, not names or sums: outside managers get a management fee and a performance fee, outside funds generally cost 1 to 2 percent of assets, and its in-house funds below 0.75 percent. At least 30 universities, all eight Ivy League schools among them, did not disclose their performance fees, citing confidentiality agreements, the difficulty of the sums, and competition; Yale’s report said its managers earn “large performance-based fees,” and that “the important metric is net returns, not gross fees.” What is public is top in-house pay, such as $6,065,114 for Harvard Management Company’s chief executive in calendar 2023; who the outside managers are, and what each is paid, mostly is not.

29 May 2012

The letter. In 2012 an anonymous group calling itself “The Friends of Eleazar Wheelock” wrote that Dartmouth trustees who run investment firms were paid “sky-high fees” and “recycled some portion of the fees” to the college as donations, and that one trustee’s firm managed over $130 million of the endowment and had been paid an estimated $24 million. These are allegations from anonymous writers, and the fee figure is their estimate. Dartmouth called the letter inaccurate and said it began investing with those firms before the people joined the board, that such deals need a two-thirds vote without the trustee involved, with notice to the attorney general and in a newspaper, that the fees are “typical,” and that its returns were top-quartile.

12 Oct 2012

The attorney general. On 12 October 2012 the director of the state’s Charitable Trusts Unit wrote that, given “the unsupported nature of the allegations,” the college’s replies and its latest financial statement, the office found “no basis to conclude” the trustees had violated state law, and it went no further; the text is as Dartmouth reports it. In January 2013 the Chronicle of Philanthropy reported that about 13.5 percent of the $3.5 billion endowment was in six funds tied to current or recent trustees, some of whom had made major gifts, a practice “not unusual at major colleges.” A Commonfund Institute official said it was “probably better” for universities to avoid such deals, to avoid “the perception of conflict of interest and self dealing.” A 2010 Chronicle of Higher Education study found financial ties to trustee-affiliated firms at 25 percent of 618 private colleges.

30 Sep 2019

The tip. In the 2019 trial of Students for Fair Admissions against Harvard, the court found that legacies were admitted at 35.2 percent and applicants on the dean’s or director’s interest lists at 43 to 48 percent, against 5.5 percent for applicants outside the four tipped groups; recruited athletes, one of the four, were admitted at about 88 percent. The opinion never uses the word “donor,” but the Crimson reported trial evidence that did: emails showing the Dean’s Interest List tied to top donors, the dean answering “It could be” when asked if it includes donors’ children, and defending such treatment as “important for the long-term strength of the institution.” Harvard said listed applicants go through the same process as everyone else. The district court ruled for Harvard on race in 2019; the Supreme Court reversed that judgment in 2023, in a ruling on the use of race.

Aug 2025

The study. Raj Chetty and two co-authors linked admissions data from several Ivy-Plus colleges to tax records. Children from the top 1 percent were more than twice as likely to attend as middle-class children with the same test scores, and the authors say three factors drive the advantage: preferences for alumni children, weight on non-academic credentials, and athletic recruiting. The same paper finds that attending an Ivy-Plus college instead of the average flagship public college raises a student’s chance of reaching the top 1 percent of earners by 50 percent. The paper does not mention donors.

12 Mar 2019

The crime. No source here ties this case to an endowment. It is a federal case unsealed on 12 March 2019 over cheating on entrance exams and passing students off as athletic recruits, and the U.S. Attorney’s office for the District of Massachusetts says coaches from Yale, Stanford, USC, Wake Forest and Georgetown, among others, were implicated, along with parents and exam administrators. William Rick Singer pleaded guilty that day and was sentenced on 4 January 2023 to 42 months in prison. The page lists restitution of $10,668,841 to the IRS but does not say for what, and its list of defendants is of people, not schools.

31 Aug 2005

The Google shares. When Larry Page brought a new search method to Stanford’s licensing office, the university licensed it and received equity in Google. Its 2004–05 report gives $336 million both for the sale of that equity and as the year’s total from seven companies, and calls it “by far the most lucrative invention” it has licensed. For conflict-of-interest and insider-trading reasons, it says, the Stanford Management Company, the school’s internal investment management company, sells such shares as soon as it is allowed instead of holding them for gains. The report accounts for only $111,000 of the $336 million, to a graduate fellowship fund; it does not say where the rest went.

27 Oct 2020

The Engine. This scene is here because it is the nearest documented case of a university investing in companies that grow out of its own labs. In 2016 MIT founded a venture firm, The Engine, to back “tough tech” start-ups, with $25 million, which MIT’s treasurer said would come directly from the school and not from its endowment; the source of the $35 million it put into the second fund in 2020 is not stated. One company The Engine backs, Quaise, was “born from research at the MIT Plasma Science and Fusion Center.” MIT calls these investments part of a portfolio meant to return money to its operating budget, and Harvard joined as a limited partner in the second fund.

27 Oct 2026

The 2025 law. The 2017 tax reached only private colleges above a size line; before it, in the senators’ 2008 words, “endowment funds are tax-exempt.” The law signed on 4 July 2025 replaced the flat 1.4 percent with 1.4, 4 and 8 percent rates by endowment per student, for tax years beginning after 31 December 2025, and raised the size floor from 500 to 3,000 tuition-paying students. These are the schools’ own figures and they count different things. Yale says it is now subject to the 8 percent tax and that the liability on this year’s $11.3 billion gain is roughly $900 million; Harvard says the higher tax will cost approximately $300 million a year, with a $1.9 billion liability, mostly deferred, already on its balance sheet. Yale’s release gives no yearly figure.

Nov 2026

What the record shows. Yes, some gifts pay donors, by contract: Harvard offers annuities and trusts that pay a donor income for life, with a deduction and capital gains savings, and they sit outside the endowment. Beyond that the sources show deductible gifts, court and press evidence that applicants tied to donors are admitted at higher rates, and one college where trustee-linked funds held 13.5 percent of the endowment, an anonymous letter alleged fees came back as gifts, the college denied it and the state declined to pursue it. What no source here shows is an endowment paying a donor in return for a gift, outside such contracts. Who manages the money, and for what pay, is mostly not public, and that is part of the record.