In my opinion, by the time you are paying money managers far, far in excess of what any academic could ever hope to earn, you have crossed that line. Yeah, the

In my opinion, by the time you are paying money managers far, far in excess of what any academic could ever hope to earn, you have crossed that line. Yeah, there is certainly a legitimate question about whether the high rates of compensation across the entire finance industry are justified, and correlated with improved job performance. What do they say to someone who reached deep and gave a hundred K or so to express their thanks and hope to guarantee the university's future academic service? Well, they did earn an annual ~15% return for the past 15 years, which is a pretty stellar record; the recent financial turmoil was hard for anyone to predict. But sure, you've definitely got a point: the Harvard money managers screwed up bigtime, and took on far too much risk. My point is that I have no problem with the Harvard endowment being run as a private hedge fund in pursuit of good returns at an acceptable level of risk, and being compensated at about the same level they'd get in the private sector. The problem is they just ran the fund incompetently.