​Too Well-Endowed for Its Own Good

UPDATED: Sept. 27, 2016 at 10:50 a.m.

For a school so infatuated with finance, Harvard sorely lacks a grasp of how it actually works. Once again, students are holding its uber-big endowment against it, and once again they are missing the mark. In the midst of a looming University Dining Services strike, which has now ballooned into a proxy war for broader social issues, a myth as old as Harvard itself has resurfaced: that the university has carte-blanche access to its whopping endowment, as if the fund were a bloated piggy bank and Harvard a miserly Scrooge.

The university’s eye-popping seven-billion-dollar fundraising haul has student activists incensed about recent cuts to HUDS workers’ compensation. Students have circulated copious petitions, flyers, and other communiques that give the university a thorough tongue-lashing for its lavish fundraising and concurrent employee neglect. But students have made a connection where there is none by linking the university’s fundraising spree to its employees’ compensation.

Alumni who give money to the University tend to be choosy about where they want their gifts to go. They often give to the financial aid fund, as opposed to the house renewal fund, for example, because they are able to connect their contribution with individual students and have a personal link to their gift. So when they give money to Harvard, and to its colossal endowment, it is usually set aside for a certain purpose—it is not dumped into a general-purpose free-for-all checking account.

The goals listed by the multibillion dollar Harvard Capital Campaign are farcically vague, but even still, they have nothing to do with funding employee health benefits. Donors give money to support “advancing the power of integrated knowledge,” “advancing innovation and hands-on discovery,” and “advancing meaning, values, and creativity” (whatever that means).

Harvard’s gargantuan endowment has become a liability for the university and a straw man for groups seeking to challenge the administration. Divest Harvard has very publicly lambasted the Harvard Management Corporation for investing in fossil fuels. The university has been equated with hoarders for sitting on its endowment. And John Paulson’s gratuitous four-hundred-million-dollar gift to Harvard was as humiliating for the university as it was impressive. Is Harvard’s endowment too big for its own good?

Even accomplished alumni conflate Harvard’s wealth with its available funds. An “outsider slate” of Candidates for the Harvard Board of Overseers—led by Ron K. Unz, a banker—campaigned on eliminating Harvard tuition on the strength of its hefty endowment.

Perhaps it is time for the university—or even better, one of the countless, interchangeable financial analyst clubs on campus—to give students and alumni a primer on how the endowment actually works.

While it is entirely plausible that HUDS employees are in the right to demand better compensation, they are not helped by students who conjure spurious relationships between the school’s endowment and its employees’ benefits. It is a shame that students’ support of HUDS is marred by this misconception, but it is especially embarrassing that they are retreading a misconception about the university that has been debunked every time it reappears. Their cavalier exploitation of such an easily refuted claim casts doubt on their whole platform.

This will not be the last time Harvard’s fortune is used against it. The endowment haunts the university as much as it sustains it. Now that it has been propelled to center stage in the HUDS showdown—which has been hijacked by students from peripheral schools promoting peripheral issues—the endowment is all but guaranteed to be a bone of contention for many student-led conflicts to come. Even if HUDS employees come to a neat agreement with the university, the battle between students, workers and the university has opened a Pandora’s box of endowment-related angst.

Like those arguing on behalf of HUDS, future student activists will likely be tempted to use the endowment as a rhetorical tool to argue for otherwise credible points. Hopefully they can learn from their predecessors’ errors and not poison their message with a misinformed notion of how Harvard’s wealth works.

Cristian D. Pleters, a Crimson Editorial writer, lives in Lowell House.

CORRECTION: Sept. 27, 2016:

A previous version of this article stated that John Paulson's gift to Harvard was four hundred billion dollars. In fact, it was four hundred million dollars.