Harvard endowment losses fueled financial crisis -- report
When Harvard University’s endowment plummeted by billons of dollars during the country’s financial crisis, it wasn’t only Harvard that was hurt.
According to a new report, the bad financial decisions Harvard and five other New England institutions of higher education made during that period helped make the crisis worse in the region. As a result, it says, the endowment model of investment is “broken.”
Bloomberg is reporting that the study says
Harvard, Dartmouth College, Massachusetts Institute of Technology, Boston College, Boston University and Brandeis University collectively suffered investment losses that led to delays and cutbacks in construction projects that will drain at least $1.35 billion from local economies over the next three years.
Harvard, the wealthiest university in the United States, saw its endowment drop 30 percent--to $26 billion--from June 2008 to June 2009.
“The endowment model of investing is broken,” the report said. “Whatever long-term gains it may have produced for colleges and universities in the past must now be weighed more fully against its costs -- to campuses, to communities and to the wider financial system that has come under such severe stress.”
Bloomberg reported that Harvard spokesman John Longbrake would not comment but referred to comments in a September 2009 letter from Jane Mendillo, CEO of Harvard Management, which oversees the endowment.
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| May 20, 2010; 4:38 PM ET
Categories: Higher Education | Tags: endowments and financial crisis, harvard endowment, report on endowments
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