Posted by: Louis Lavelle on December 03, 2008
Looks like no one’s immune from the downturn, not even Harvard. The Harvard Crimson and Associated Press are reporting that Harvard’s endowment—the nation’s biggest—has lost $8 billion in just four months.
For many years now, Harvard and other big endowments have moved away from garden variety equities and bonds, toward hedge funds, natural resources, venture capital, and other types of investments. They’ve been rewarded with double-digit gains for several years.
But the party’s over. As of June 30, 2008, the Harvard endowment was worth $36.9 billion. The $8 billion hit amounts to 22%, the endowment’s largest decline in modern history, and an amount that is larger than the entire endowments of all but just four other universities, according to the Crimson.
What's this mean for Harvard? Belt-tightening, for one. University President Drew Faust and Executive VP Edward Forst, in a letter to deans informing them of the loss, said it will require Harvard's faculties to take a “hard look at hiring, staffing levels, and compensation,” the Crimson reports.
Harvard isn't alone. Universities across the country have been reporting endowment losses and hiring freezes/spending cutbacks to accomodate them. And there will probably be more schools caught in the economic downdraft before this recession is over.