Harvard University announced that the value of its endowment has risen to $53.2 billion, marking a significant recovery following a 9.6 percent return on investments for the fiscal year 2024. This increase is notable as it is the first growth seen since 2021. The Harvard Management Company (HMC) reported that this year’s investment return is substantially higher than last year’s 2.9 percent, contributing to a $2.5 billion increase in the endowment’s value compared to fiscal year 2023.
Despite experiencing a decline in endowment gifts, largely attributed to criticism over its handling of campus antisemitism, Harvard has reversed two consecutive years of downward trends in endowment value. The value fell to $50.9 billion in FY 2022 and further to $50.7 billion in FY 2023. HMC CEO N.P. “Narv” Narvekar indicated that the endowed funds have a target return of 8 percent, and the annualized return over the past seven years, at 9.3 percent, has exceeded this target.
While some have criticized the endowment for underperformance in recent years, Harvard’s 9.6 percent return this year ranks it third among Ivy League+ institutions, surpassing only Brown and Columbia, which reported returns of 11.3 percent and 11.5 percent, respectively.
For fiscal year 2024, endowment distributions amounted to $2.4 billion, representing 37 percent of the University’s total revenue. These funds support critical areas such as financial aid, faculty salaries, and research initiatives, allowing Harvard to allocate $749 million in financial aid, including $250 million for undergraduates.
The endowment’s allocations are primarily directed towards private equity and hedge funds, which account for 39 percent and 32 percent respectively. Only 14 percent of the endowment is invested in public equities due to a conservative risk approach. Despite a strong performance in public equities, the HMC reported impressive returns with lower public equity exposure.
In his report, Narvekar highlighted the performance of the public equity and hedge fund portfolios, noting that strong performance in these areas is encouraging, particularly given that HMC’s hedge fund portfolio has less equity exposure than many hedge fund benchmarks.
Additionally, Harvard has reduced its endowment’s exposure to real estate and natural resources from 25 percent in 2018 to just 6 percent in FY 2024, contributing positively to the endowment’s performance.
Harvard’s budget for 2024 revealed a surplus of $45 million, which is a decline from the significant surplus of $186 million reported in FY 2023. Revenue growth was noted at 6 percent, while expenses grew by 9 percent, a change Vice President and CFO Ritu Kalra attributed to investments in attracting and retaining talent.
In a message in the annual report, Harvard President Alan M. Garber acknowledged ongoing challenges but expressed optimism about the University’s resilience. He noted that the institution is bolstered by substantial resources and a commitment to utilizing them effectively.
Significantly, endowment gifts to Harvard have decreased from $561 million in FY 2023 to $368 million this year. Narvekar pointed out the University’s growing reliance on endowment distributions for its operational budget, which have increased from accounting for 21 percent of the budget twenty years ago to nearly 40 percent today, emphasizing the importance of this resource for Harvard’s future.