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BTW Scholarships etc. are not necessarily fungible; like, if it's restricted to botany PhDs only or whatever. If you look in that report, you'll see "education

BTW Scholarships etc. are not necessarily fungible; like, if it's restricted to botany PhDs only or whatever. If you look in that report, you'll see "education revenue" - i.e. people paying to attend in the form of tuition, boarding etc - was 22% of revenues (about $1.3bn) in fiscal 2023. The endowment distributed $2.2bn (about 37% of revenues), based on a ~5% target payout rate. You can't look at that and say "that $2.2bn per year could easily pay for the $1.3bn in tuition etc" because they're already separate items on the revenue side of the book. If you reduced tuition revenue to $0, i.e. made attendance completely free, you'd have to find an additional $1.3bn a year to fund operations - that's a gigantic hole.

burkaman 3y ago
I know how to fill that hole - increase the ~5% target payout rate to ~8%. Also, I'm not really suggesting they use any of their existing endowment to cover tuition. Just put a lot of it in the bank and interest alone fills the "hole".
- NovemberWhiskey 3y ago
  >I know how to fill that hole - increase the ~5% target payout rate to ~8% That's a fantastically glib answer; do you have any reason to believe that's a sustainable rate? The endowment is supposed to last forever, remember. The usual citation for a safe withdrawal rate in retirement is 4%, for example. >Just put a lot of it in the bank and interest alone fills the "hole". The Harvard endowment is actively invested and generally substantially outperforms the interest that you'd get "in the bank" - that's the only reason that withdrawal rate of 5% is feasible.