How Harvard University's Funding Works

Yahoo

15-04-2025

A view of Harvard Yard on the campus of Harvard University on July 8, 2020 in Cambridge, Massachusetts. Credit - Maddie Meyer—Getty Images
Harvard University announced on Monday that it will not be yielding to the Trump Administration's demands to alter its hiring and general oversight practices, putting $2.2 billion in multi-year federal grants for the institution at risk.
The funding cut is a substantial slice of the university's budget. By comparison, the amount distributed by Harvard's endowment for the fiscal year ending in June 2024 was $2.4 billion, which encompassed nearly 40% of the university's total operating revenue that year.
The university's defiance makes it the first educational institution to push back against the Trump Administration, which has been cracking down on schools via Executive Order and the Department of Education.
In a letter directed to Harvard University President Alan Garber, officials asked the university to cater to a number of provisions, including shutting down all diversity, equity, and inclusion programs and offices; 'reducing the power held by students and untenured faculty;' and adopting merit-based hiring processes without taking into account race, religion, sex, or other identification factors. They also directed Harvard to commit to tackling antisemitism on college campuses, following a year of turbulent student encampments asking universities to divest from Israel. More than 50,000 Palestinians have died due to the Israel-Hamas War, according to the Gaza Ministry of Health.
'The university will not surrender its independence or relinquish its constitutional rights. Neither Harvard nor any other private university can allow itself to be taken over by the federal government,' attorneys representing the university wrote in a letter.
Universities, along with hospitals and nonprofit organizations, rely on endowments—permanent investment funds that generate returns to help fund these entities. Endowments are established when donors provide a gift that they want to be maintained for a specific, long-term purpose. The financial donation is then invested and each organization has its own guidelines on how to manage their endowment to optimize current and future spending needs by dictating what percentage of their investment income can be used per year. Harvard's endowment is made up of more than 14,000 funds.
In addition to its endowment, Harvard supplements its funding through tuition, which costs $86,926 for undergraduate students during academic year 2025-2026. Education revenue made up 21% of the total revenue for the university, though many students are exempt from such contributions. Around 55% of undergraduates receive need-based scholarships. And for this academic year, the university announced that families that make under $100,000 would not have to financially contribute towards their education.
Other alumni donations also help generate revenue for the university to operate. Philanthropy represented 45% of the university's revenue for fiscal year 2024, which includes the net endowment distribution and other gifts.
Federal sponsored research for that year made up 11% of the university's revenue, compared to the 5% the institution receives from non-federal organizations. Government grants, however, are often multi-year streams of funding—pulling this funding could put some long-term research efforts at risk.
The endowment remains Harvard's largest source of revenue. Some schools within the university are more reliant on such funds. For instance, 85% of the funding for the Radcliffe Institute for Advanced Study comes from the endowment, whereas just 20% of the funding for Harvard Business School relies on it.
Harvard's actions stand out against the response by fellow Ivy League Columbia University, which announced it would be complying with the demands of the Trump Administration as more than $400 million in federal funds to the university remain at risk. The University of Pennsylvania also had some $175 million in federal research funds suspended because of the participation of a transgender athlete on a women's swimming team in 2022. This February, President Trump issued an Executive Order barring transgender athletes from participating in women's sports.
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