But the single greatest income source for all the schools is Harvard’s endowment. The University’s mammoth endowment broke records in fiscal year 2004, yielding a return of 21.1 percent, to reach $22.6 billion.

The payout to schools from the endowment is set far in advance. In December 2004, the Corporation voted to increase the endowment payout for next year—fiscal 2006—by just 4 percent.

But the Corporation also authorized the payment of an additional 4 percent in endowment payout for programs that have been touted as top priorities of Harvard administrators.

All of Harvard’s schools plan to devote the extra increase to financial aid and the hiring of new faculty, Berman wrote in her e-mail late last month. Many schools will also spend the funds on “other aspects of support for the student experience,” Berman wrote.

In March, Berman called the response to the extra 4 percent “very positive.”

“I think all the deans are very focused on a set of priorities and this is encouraging them to figure out how to start making some progress on those priorities,” she said.

SHUFFLE AT THE TOP

But the extraordinary endowment returns come at a time when Harvard Management Company, which invests the endowment, is seeking to fill a very large pair of shoes. The management company’s president, Jack R. Meyer, is scheduled to leave at the end of June after 14 years at the helm. He will start his own investment firm with four other Harvard colleagues.

In January, Harvard announced that a search committee will try to find a new chief for the management company. And in March, the University said it had hired an executive search firm, the New York-based PrinceGoldsmith LLC, to aid in the search process.

Meyer is not alone in his decision to depart. Vice President of Trusts David W. Scudder ’57, who helped Harvard get clearance from the Internal Revenue Service (IRS) to allow donors to invest their charitable trusts in the Harvard endowment, will leave July 1 to start an investment management firm in Boston. And in July 2004, foreign equity manager Jeffrey B. Larson left Harvard along with 14 members of his team to start a hedge fund, Sowood Capital Management.

The University’s investments this year were also targeted by students and faculty who pressured Harvard to divest from the oil company PetroChina because of its ties to the government in Sudan. The Corporation voted to sell its shares last month.

RAKING IT IN

For the second consecutive year, Harvard led higher education in fundraising, pulling in $540.3 million from donors in fiscal year 2004.

The University has also set its sights on a colossal capital campaign that will likely be the largest ever announced in higher education.

The campaign is currently in the “quiet phase,” a time when the University plans the direction of the campaign and seeks donations from top donors, hoping to raise 20 to 30 percent of the total. For most universities, the process takes about two years, but Harvard may spend more time in the quiet phase, Vice President for Alumni Affairs and Development Donella Rapier said last month.