Study: Harvard Benefits Local Economy

Harvard has contributed nearly $4.8 billion in economic activity to the greater Boston region in the 2008 fiscal year, according to a study released by the University last week.

The study emphasizes Harvard’s role as a benefactor to its local community in times of financial crisis. The University commissioned the 18-page report as an update to a similar 2004 study, said the report’s author Hugh O’Neill, founder and president of Appleseed, a New York consulting firm.

The study outlines the primary ways in which the institution contributes to the regional area and state: employment, local spending, research, and community outreach. The report is aimed at shining a light on how Harvard benefits the community beyond the perennially- controversial Payment in Lieu of Taxes (PILOT), which is about $5.6 million to Cambridge, Boston, and Watertown.

Today, Boston is forecasting a shortfall of $140 million, Mayor Thomas M. Menino said last week. The government is eyeing tax-exempt non-profits like educational institutions and hospitals to make up a portion of the difference.

City officials estimate that they could collect more money than is provided by the PILOTs if non-profits paid taxes.

In the months since the close of the past fiscal year, Harvard’s endowment has dropped from $37 billion to $29 billion. But according to the report itself, universities like Harvard may be less affected by the current recession.

For example, from 2000 to 2003, while the computer services sector shed 27 percent of its jobs in the Bay State, Massachusetts’ colleges and universities increased employment by 5.7 percent.

“There is a significant web of connections between the University and its host communities,” said Mary Power, Harvard’s chief of community relations. “Many [relationships] can be characterized in terms of dollars, but others reach into a quality of life and service impact—contributions of equal importance.”

Among the report’s other findings include:

—Ninety percent of the University’s $3.5 billion in annual revenue came from outside the Boston area, but more than 70 percent of its $2.6 billion in spending went into the local five-county region.

—The University employed 18,750 full- and part-time employees, and it directly or indirectly supported 51,570 jobs in the region.

—Harvard spent $850 million in goods and services and $580 million in construction or renovation projects with Boston companies. This economic activity contributed more than $225 million in revenues for the state and local governments.

—Harvard spent $660 million on externally-funded research. Compared to other institutions that his firm has analyzed, O’Neill said, “The clarity and sharpness of Harvard’s focus on areas of research critical for the future is unusual.”

—Harvard’s 20,000 undergraduate and graduate students created $349 million in revenue for the Boston area with off-campus spending in areas like food, transportation, and housing.

—More than 40,000 alumni, or 17.5 percent of those who live in the United States, resided in a 75-mile radius around Boston.

—Staff writer Victor W. Yang can be reached at vyang@fas.harvard.edu.