1. Harvard University: Facts and Figures
Research and Teaching
Finances
12 primary academic units
Approximately 21,000 degree candidates
Approximately 2,400 instructional faculty
More than 70 libraries and ~19 million volumes
FY16 Operating revenue: $4.8 billion
FY16 Operating expenses: $4.7 billion
FY16 Endowment market value: $35.7 billion
FY16 Capital expenditures: $567 million
Employment
Physical Plant
One of the top five largest employers in Massachusetts with approximately 17,700 employees
Current replacement value: ~$13 billion
More than 650 buildings
Approximately 25 million gross square feet
Over 5,000 acres
Capital expenditures includes capital projects and acquisitions, a 19% increase from 2012, driven by progress on HUAM, HBS’s Tata Hall, House Renewal (Stone Hall, Leverett-McKinlock), and the Science Center Plaza.
Harvard in Context
Not-for-profit
Decentralized organizational structure
Intense public and community scrutiny
Long-term time horizon
Increasingly global
AAA/Aaa credit ratings

2. Harvard is in a strong financial position but is not immune to financial pressures
Strengths
Challenges
Distinctive faculty, students, alumni (enabler of brand strength)
Harvard Campaign
Integrated, transparent financial management
Strong balance sheet, anchored by the endowment, which provides a substantial cushion for the university
Capital market and federal government dependencies during a time of increased uncertainty / volatility
Large-scale capital expenditures
Fixed cost structure

3. Harvard University is a large enterprise with diversified revenue sources
FY16 Revenue: $4.8B
Other
17%
Distribution
36%
Current Use
Gifts 9%
Other Income includes publications, rental and parking fees, royalties, sales and services income.
21%
Income
12% 5%
Revenue
Revenue

4. Endowment distributions may be pressured if economists are correct about future market returns
We are living in a low-return world, with future market returns likely to be lower than in recent history.
Blackrock Investment Institute, 2016
The outlook for global stocks and bonds remains the most guarded since 2006.
Vanguard, December 2015
…longer-term economic growth is looking very disappointing….the growth rate of potential G.D.P. … has declined from around 3.5 percent per year in the late 1990s to around 1.5 percent now.
Paul Krugman, The New York Times, August 2016
…this is a long-term problem…. The bad news is that, precisely because this is a long-term problem, investors … will be tempted to leave it to their successors. That will only make the eventual funding crisis even bigger.
The Economist, November 2015
The growth of future endowment distributions will be adversely affected by slower growth of endowment returns

5. If we see an economic downturn, almost all revenue sources would be further adversely affected
Constrained endowment results
Weak Economy
Fewer current use gifts
Lower levels of sponsored funding
Pressure to keep gross tuition low and potential loss of continuing & executive education revenue
More financial aid necessary
Less retirements and attrition