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Institutional Investor: Harvard Is Paying Out More of Its Endowment Next Year

After recording strong annual returns, Harvard’s endowment plans to distribute more money in 2022, increasing its spending to 2.5 percent. However, other universities are unlikely to be doing the same. According to SEI’s most recent Nonprofit Investment Survey results, many schools indicated that the pandemic had no effect on their spending and that their revenues were only down slightly.

“69 percent of 102 surveyed reported that the pandemic had no effect on their spending rates”

Reflecting on the survey results, MJ Bobyock, Director of Nonprofit Advice, said that the number of those effected was smaller than we anticipated. She noted that federal aid programs like the Paycheck Protection Program provided a stopgap for money lost on students staying off-campus and other lost revenue sources. Some universities tapped other sources of liquidity like existing lines of credit or loans to cover short-term costs.

“Endowments are meant to last in perpetuity, not meant to be liquidity Band-Aids,” Bobyock said. “There are other avenues that universities have to access liquidity.”

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Information provided by SEI Investments Management Corporation, a registered investment adviser and wholly owned subsidiary of SEI Investments Company (SEI). Neither SEI nor its subsidiaries is affiliated with any firms mentioned herein.

Investing involves risk including possible loss of principal. Diversification may not protect against market risk. There is no assurance that an investment strategy or risk management will be successful. Alternative investments are subject to a complete loss of capital and are only appropriate for parties who can bear that risk and the illiquid nature of such investments.

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