So why can’t Harvard just dip further into its famously steep endowment?
As the Trump administration announced a $2.2 billion freeze in grants to the university this week after the school rejected its demands, some critics have questioned why the Ivy League institution and other wealthy schools like it can’t just make up for federal funding that way.
Finance and higher education experts say endowments aren’t a simple replacement for government funding because of restrictions related to donor earmarking, legality and research priorities.
“If there’s a major source of revenue that has disappeared, which is the threat from the administration, it’s like any family with a shock to their income stream,” said Catharine Bond Hill, former president of Vassar College. “You’d have to decide how you were going to allocate your spending priorities.”
The Trump administration said in a statement Monday that it would cut the $2.2 billion in multiyear grants and $60 million “in multi-year contract value” to Harvard because of what it considers the university’s “troubling entitlement mindset.”
The freeze was announced hours after the school said it wouldn’t concede to the administration’s demands, which include auditing viewpoints of the student body and restricting the acceptance of international students who are “hostile to the American values and institutions.
“The university will not surrender its independence or relinquish its constitutional rights,” the university’s X account said in a statement Monday. “Neither Harvard nor any other private university can allow itself to be taken over by the federal government.”
Harvard has the largest endowment among U.S. universities, at $53.2 billion in 2024. That is higher than the gross domestic products of almost 100 countries. Yale University has the second-highest endowment, hovering around $41.4 billion.
But those elite schools don’t represent the norm. A 2024 National Association of College and University Business Officers study of 658 U.S. colleges and universities found that the median endowment was $243 million. And 30% of the participating universities had endowments of $100 million or less.
While Harvard no doubt has substantial funding, it doesn’t mean it can rely on its endowment to make up for loss, experts say. Hill, managing director of the research and consulting organization Ithaka S+R, compared the endowment to a pot of financial assets that are invested in a variety of things, from stocks and bonds to real estate.
Much of that pot of money, Hill said, comes from donors, including alumni, foundations, local community members or anyone else looking to support the institutions’ spending. And it’s not to be used immediately.
“They don’t give it as a pot of money to be spent this year,” Hill said. “They give it as an endowment, so that the earnings can be used over time to support the thing that the donor is interested in the university doing in perpetuity.”
There are also other restrictions. Liz Clark, vice president of policy at the college business officers group, said that essentially, endowments can be seen as a “collection of contracts” with donors.
“Donors may have given to support scholarships, they may have given to support faculty positions, perhaps they donated to support a specific area of scientific inquiry or medical research,” Clark said. “The university has a legal responsibility to uphold that contract and agreement.”
At Harvard, for example, donor terms direct 70% of the annual distribution of its endowment to specific programs or departments or other purposes. That leaves around 25%, Hill said, for discretionary spending approved by the board. It’s still a large amount; however, Hill said that “you can burn through that pretty quickly.” And the school may have to make financial trade-offs.
“That board-designated money may have been earmarked to support need-based financial aid for undergraduates,” Hill said. “If they spend it down on covering this research shortfall, they can certainly do it for a while, but when it’s gone, it’s gone. It may mean that they have to reduce spending in some other areas where that money was being used.”
Federal funding has also historically played a critical role in research, experts said. Cecilia Orphan, an associate professor of higher education at the University of Denver, said the funding often comes from the National Institutes of Health, the National Endowment for the Arts and other major agencies.
And those sources often come with national strategic priorities attached to them, Orphan said. The National Science Foundation, for example, has been making concerted efforts to increase the country’s competitiveness in STEM, she said.
When a university receives a grant, Orphan said, it is usually broken up in a variety of ways to support things like materials for research, staffing costs or construction of physical spaces to conduct research.
“It is very difficult for a university like Harvard or Columbia to conduct that kind of cutting-edge research without that kind of infrastructural support that is separate from the actual research itself,” Orphan said.
Experts say it remains to be seen how universities will adapt to such federal funding freezes. But, Orphan said, the impact on research could be devastating.
“The larger implication here is a university like Harvard is doing research that has global benefit across a variety of areas, including cancer research and weapons development and other strategic concerns that we might have as a country and the world has,” Orphan said. “When you cut the research funding, that means that research will cease or it will be greatly diminished.”
