Endowment Performance and Financial Results
Harvard University’s financial endowment reportedly grew by 11.9% to reach $56.9 billion in fiscal year 2025, according to the university’s recently released financial report. The endowment gained $3.7 billion during the fiscal year ending June 30, 2025, surpassing last year’s 9.6% return and exceeding the institution’s long-term goal of 8%. Analysts suggest the portfolio has averaged an annualized return of 9.6% over the past eight years.
Despite this endowment growth, sources indicate Harvard posted an operating deficit of $113 million, representing a 1.7% shortfall against $6.7 billion in overall revenue. This marks the university’s first operating deficit since 2020, with unrestricted funds accounting for a $212 million deficit while donor-restricted funds showed a $99 million surplus.
Federal Funding Disruption Impact
The report states that the deficit primarily resulted from disruptions in federal research funding following clashes with the Trump administration. Although a federal judge ruled the funding freeze unconstitutional in September, restoring grants for fiscal year 2026, the suspension caused federally sponsored revenue to decline by 8% in FY2025. Harvard had been on track for a 9% increase in federal research dollars before the freeze.
University officials reportedly described the financial environment as “precarious,” with Treasurer Timothy R. Barakett and CFO Ritu Kalra writing that the “result could have been worse” given the magnitude of the disruption. They acknowledged the university community acted “quickly and with resolve” to mitigate the impact.
Spending Patterns and Gift Contributions
According to the analysis, Harvard spent $2.5 billion from its endowment in FY2025, funding approximately 40% of overall operations. More than $750 million reportedly went toward student financial aid, including $250 million in need-based scholarships benefiting 55% of Harvard College undergraduates and over $500 million supporting graduate students.
Current-use gifts reached a record $629 million, increasing by approximately $100 million from the previous year, while gifts to the endowment dipped slightly from $368 million to $364 million. The report suggests that despite concerns about donor reactions to political controversies, the heightened media attention might have actually attracted more private support for the embattled institution.
Institutional Response and Challenges
In response to the financial pressures, sources indicate Harvard implemented several austerity measures including hiring freezes, staff layoffs, salary freezes, project scaling, and reduced operating expenditures. The university also issued $1.2 billion of long-term debt to boost liquidity and provide “strategic flexibility” during uncertain times.
This debt issuance prompted the U.S. Department of Education to place Harvard on “heightened cash monitoring” status, requiring the institution to post a $36 million irrevocable letter of credit to ensure it meets financial obligations.
Future Outlook and Structural Changes
University officials warned that “daunting challenges await,” citing declining federal research support, forthcoming increases in the endowment tax, challenges hosting international students and scholars, and ongoing litigation. According to their statements, “structural changes and reductions across our Schools and units will be necessary, and they will not be easy.”
Harvard President Alan Garber described fiscal year 2025 as “extraordinarily challenging” even by the institution’s centuries-long standards, requiring “difficult but necessary choices.” He noted the university has intensified efforts to expand funding sources and is examining operations at every level to achieve greater adaptability and efficiency.
The university’s overall net assets reportedly grew to $68.7 billion, a 6.8% increase from the previous fiscal year, while operating expenses increased by $367 million or 6%. The complete financial details are available in Harvard’s official FY2025 financial report and financial overview.
This coverage follows other significant financial developments in education and institutional funding, including recent asset sales in the technology sector, funding strategies in international development, and institutional challenges in project implementation.
This article aggregates information from publicly available sources. All trademarks and copyrights belong to their respective owners.
