Harvard publishes an annual balance sheet [1] and its a good read to get a sense of elite tier university revenue and cost structures. Its net worth is $42B in

Harvard publishes an annual balance sheet [1] and its a good read to get a sense of elite tier university revenue and cost structures. Its net worth is $42B in 2016, down from $44B last year due to very poor returns in the public equity and natural resources portion of its endowment investment portfolio, run by Harvard Management Company. --- Total operating revenues in 2016 were $4.8B (up 6%): - $1.7B endowment disbursement (36% of revenues, up 7%) - $1.0B tuition/room/board revenue (21% of revenues, up 7%) - $0.6B federal funding (11% of revenues, up 3%) - $0.3B non-federal funding (5% of revenues, up 9%) - $0.4B donations for 2016 use (9% of revenues) - $0.8B other revenue (17% of revenues) --- Total operating costs in 2016 were $4.7B (up 5%): - $2.3B in salaries and wages (50% of costs, up 6%) - $2.0B in services, space & occupancy, depreciation, equipment (42% of costs) - $0.2B in interest payments (5% of costs) - $0.1B in scholarships (3 % of costs) Harvard used 4% of its endowment to fund operations, up 7% from 2015. In normal years, the endowment fund would see returns that would cover the 4% withdrawal, but in 2016 the fund lost $626m for a -2.0% investment return (3% below benchmark of +1.0%). Real estate returned +13.8%, but public equity returned -10.2% (4.1% below benchmark) and natural resources returned -10.2% (11.6% below benchmark). Over 50% of the real estate investment portfolio is "direct investment" - the actual purchase and management of property, as opposed to indirect investment in real estate funds. This direct investment returned 20.2% in 2016, probably one of the most lucrative asset classes for HMC. You can be sure that the university will be making a lot more land purchases in the Cambridge area in the near future... --- This is all to say that purchasing real estate is a huge source of returns for colleges like Harvard, and that building facilities and updating old ones will continue as colleges look to increase the value of their purchased land. Salaries and wages at 50% of cost seem slightly high for a largely human asset-based company (compare with 48% for Facebook, 46% for HCA Holdings the largest hospital conglomerate) and will probably continue to be trimmed if returns on the rest of the endowment portfolio don't increase. [1] http://finance.harvard.edu/files/fad/files/harvard_ar_11_12016_final.pdf http://finance.harvard.edu/files/fad/files/harvard_ar_11_120...