Odd Lots The Harvard Endowment Is on the Verge of Losing Its Crown
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Nov 22, 2024 Janet Lorin, Bloomberg's higher education finance reporter, discusses the perilous position of Harvard's endowment as it risks being surpassed by the University of Texas. She explores the reasons behind Harvard's decline, including management controversies and unique advantages for Texas driven by energy revenues. The conversation highlights the shifting landscape of university endowments, fundraising challenges, and the implications of investment strategies in private equity. Lorin also touches on alumni reactions to recent controversies affecting donations.
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Harvard's Endowment History
- Harvard, the oldest and richest university, benefited from compounding interest over centuries.
- Their endowment's success was envied but faced criticism for high manager salaries, leading to a change in strategy.
Endowment Investment Shift
- In the 1960s, university endowments shifted from traditional investments to illiquid assets.
- This long-term strategy included private equity, hedge funds, and eventually venture capital and real estate.
Salary Scrutiny
- Harvard Management Company's high manager salaries faced scrutiny due to public tax return disclosures.
- Yale's investment office, integrated within the university, avoided such scrutiny by employing outside managers.