ADVERTISEMENT

Harvard Forecasts Decline in Revenue, Slowdown in Donations

The school, with an endowment of $40.9 billion, has already begun reducing all discretionary, non-essential spending

Harvard Forecasts Decline in Revenue, Slowdown in Donations
Harvard University stands in Cambridge, Massachusetts, U.S. (Photographer: Scott Eisen/Bloomberg)

(Bloomberg) -- Harvard University forecast a decline in revenue and a slowdown in philanthropy due to the economic impact of the coronavirus outbreak.

The school, with an endowment of $40.9 billion, has already begun reducing all discretionary, non-essential spending and may need to consider slowing the pace of capital projects in the future, Thomas Hollister, Harvard’s chief financial officer and vice president of finance, said Monday.

Even so, Hollister said the school is well positioned to withstand a recession and the interruption of its operations, largely due to forward planning by endowment chief N.P. “Narv” Narvekar. The endowment lost 27% of its value in the last downturn.

“The university is in a much better position than we were following the 2008 financial crisis with respect to liquidity and the capacity to withstand stress,” Hollister said in a posting on the university’s website. “The endowment is comparatively liquid, does not have any substantial derivative exposures, and is not broadly leveraged.”

In the second half of 2019, the school repositioned its non-endowment investments to have “less exposure to the markets and to carry more liquid fixed-income securities” than in recent years, he said.

The school is also on the lookout for opportunities and select investments that would position it to come out stronger after an economic downturn, Hollister said.

In a separate statement, the university said it’s giving some janitors and dining hall staffers at least 30 days of paid leave now that the school has ordered most of its students to return home.

The initial decision involves employees whose work has been eliminated or reduced, Harvard said. They will also get full benefits. A university spokesman was unable to provide the number of staff affected. Harvard said it will continue to review and assess its policies related to compensation of these workers.

©2020 Bloomberg L.P.