Harvard Ended Fiscal Year 2021 With A Surplus Of $ 283 Million, Despite Losing $ 124 Million In Revenue | New
Harvard ended the fiscal year ending June 2021 with a budget surplus of $ 283 million, despite a $ 124 million drop in revenue, according to the university’s annual financial report released Thursday. This figure marks a significant reversal from the University’s $ 10 million deficit at the end of fiscal 2020.
Officials had estimated in June 2020 that Harvard would face a shortfall of $ 750 million for fiscal 2021.
The University reduced its operating expenses by 8% in fiscal 2021, primarily due to a decrease in significant one-time costs incurred during the onset of the coronavirus pandemic in fiscal 2020. Harvard Saved on expenses through reduced on-campus student attendance, as well as savings in travel costs and other campus-related expenses.
Despite these savings, the reduction in the number of students living on campus caused room and board revenues to drop 58% and total student net income by 17%, to $ 888 million.
In the two-year period from fiscal 2019 to fiscal 2021, both revenue and expenses decreased by 5%, according to the report. It was the first time Harvard has experienced two consecutive years of declining revenues since the Great Depression of the 1930s.
University President Lawrence S. Bacow wrote in the report that Harvard had invested more than $ 143 million in pandemic-related expenses, including Covid-19 testing, contact tracing, and inactive employee compensation .
“In the face of declining revenues over the past year, we have taken steps to control spending while developing and enacting new policies, providing frequent testing and robust contact tracing, and reimagining our shared practices. and our physical spaces to protect our students, faculty and staff, an investment totaling over $ 83 million, ”Bacow wrote. “We also continued to pay our inactive employees and contractors at a cost of nearly $ 60 million.”
These investments helped the University avoid widespread layoffs, according to Bacow, who wrote that “nearly all” of those employees had returned to work.
Bacow wrote that the University received an influx of common-use donations from donors over the past fiscal year, a marked improvement from the 13% drop in pledges in fiscal 2020.
“An increase in donations for current use has given us the ability to direct funding to areas that need it most, and in a way that has had a real impact as we work to combat and reduce the pandemic, ”Bacow wrote.
Harvard Management Company CEO NP “Narv” Narvekar said in a note to the financial report on Thursday that the endowment had a 33.6% return on its investments in 2021. The fund now totals $ 53.2 billion , the highest sum in its history.
The distribution of the Harvard endowment increased by 2 percent in light of these immediate use donations to total 5.2 percent of its market value. The endowment typically pays out around 5% of its value each year.
Despite the success of the endowment, University Treasurer Paul J. Finnegan ’75 and CFO Thomas J. Hollister wrote in the report that the University is constrained by structured giving and market uncertainty over the endowment. amount she spends from the endowment.
“The endowment is sometimes misunderstood as a checkbook for free expenses, but that is not how it works, nor how it was intended by the donors whose donations created the endowment,” wrote Finnegan and Hollister. “We are delighted that this year’s results provide a boost to operations over the next several years, but we remain mindful that history teaches capital markets give and recover. “
– Editor Virginia L. Ma can be reached at [email protected]