The Need for Unrestricted Funds

By now, the impact of the financial crisis on Harvard is old news.

With drastic budget cuts across its many schools and an endowment that dropped roughly 30 percent in the last fiscal year alone, the university, in tightening its belt, has also given careful consideration to the ways in which it can continue providing its essential programs and services in such a bleak economic environment. And one of Harvard’s better ideas in protecting both its financial health and efficiency has been to emphasize flexible funding and unrestricted donations in the development office.

In the wake of the news about the magnitude of the endowment’s decrease, university officials have been promoting an increase in flexible funds raised in order to ensure that major priorities like financial aid can still be met. In other words, rather than encouraging donors to give earmarked gifts for specific purposes, the university has wisely been trying to convince its benefactors to not restrict their donations and to allow their resources to be allocated for whatever purpose deemed most in need of funding.

As far as we can tell, those efforts seem to be working well: Although Harvard’s fundraising in general fell by eight percent in the last fiscal year, unrestricted gifts rose by 38 percent.

We are grateful that university fundraisers have made the decision to concentrate on soliciting unrestricted funds, as the financial comfort of the very recent past is unlikely to return anytime soon. Of course, earmarked gifts for specific programs or organizations with which donors were personally involved during their Harvard careers allow them the chance to “give back” to those institutions that afforded them a great experience—we do not dispute that claim.

But alumni and other philanthropists should understand that, in times like these, Harvard has a very real need for resources to fund what in better days might have seemed like basic components of the collegiate experience. As unglamorous or as impersonal as giving unrestricted funds may seem, we hope the Harvard donor network understands the gravity of the university’s current situation.

That said, we understand the hesitations that donors may have in giving money to Harvard for no clearly specified reason. Regardless of one’s opinion of the Harvard Management Corporation, the university no longer has a golden reputation when it comes to managing money effectively. The university should therefore strive for transparency with regard to both its budget and in how it will allocate these unrestricted funds—if not to reveal the details of how they will be spent, then at least to ensure donors that they will be spent wisely.