The Harvard Corporation — the University’s highest governing body — moved to maintain a typical endowment payout of around 5 percent for Fiscal Year 2021, Dean of the Faculty of Arts and Sciences Claudine Gay wrote in an email last week.
The decision reverses administrators' previous announcement that the endowment payout would be reduced by 2 percent to compensate for financial losses brought about by the coronavirus pandemic.
The decision was “based on the current performance of the capital markets” and an improved economic outlook for the University, Gay wrote.
“We are gaining a clearer understanding of the costs associated with the many elements of our fall plan, though we do not yet have final estimates,” she wrote. “We do know, however, that we will have more resources to put against those costs than we had initially anticipated.”
“This is good news, but we still will find ourselves operating in deficit and will need to continue carefully managing resources in the coming year,” Gay added.
University spokesperson Jason A. Newton confirmed Gay’s message, but declined to comment further.
The Corporation previously voted to make 3 percent of all restricted funds in the endowment and make them available for immediate use as part of a “special assessment.” Around 80 percent of the endowment — which is made up of over 13,000 individual funds — is typically restricted to a specific program, activity, or school by its donor.
Newton confirmed that the special assessment will remain in place for the coming fiscal year.
Around 75 percent of Harvard undergraduates will learn remotely during the coming semester, per Gay’s email.
Thomas D. Parker ’64 — a senior associate at the Institute for Higher Education Policy — wrote in an email that the change could be due to increased need from Harvard’s 12 degree-granting schools.
“In a universe that doesn't follow previous patterns, planning gets to be a bit difficult. It's no surprise then that financial policies would also be in flux,” Parker wrote. “I can only guess the Harvard specifics, but it's certainly possible that as income and spending projections came into sharper focus over the summer, it became apparent that the Schools needed more endowment draw to meet basic needs.”
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