Contribution to annual giving funds this year broke the University record, but may not be enough to balance Harvard's books.

Private benefactors donated $7,441,238 to nine University funds, topping the previous record--set last year--by over $850,000.

Yet even with last year's high cache, total University income in 1971 fell almost $1.4 million short of expenses.

Though the 1971-2 expenditures have not yet been tabulated, David W. Davis, budget consultant in the office of the financial vice president, guessed there will be a deficit again this year, "but less than was predicted".

The directors from both the Harvard and Radcliffe College funds attribute the increase in donations to recognition by alumni of colleges' recent financial troubles.

"Alumni are now aware that colleges are in bad financial straits," Rufus W. Peebles '64, associate director of the Harvard College Fund said yesterday.

Harvard is in better shape than most colleges. After two decades of surpluses from 1940 to 1960, even Harvard spent more in the last ten years than it took in from gifts, tuitions, the endowment and the government.

Nationally

Harvard's situation parallels that at many other American colleges and universities. Nationally, private giving to higher education also set a record, possibly exceeding $2 billion. This is 8 per cent over last year.

Although donations to colleges and universities have more than doubled in the past ten years, spending on higher education has nearly quadrupled.

Ten years ago, gifts covered 12 per cent of college spending. In 1970 they covered only 7 per cent, according to figures from the Department of Health, Education and Welfare.

Three Records

Three of the nine University funds--Radcliffe College, Harvard College, and the Law school--set individual records.

Donations to Radcliffe were the most spectacular. Radcliffe alumnae gave $404,111, about 50 per cent more than last year. Seniors gave $3252, almost 60 per cent over last years $2087. And parents gave almost $110,000, an increase of 320 per cent.

Harvard College fund donations increased 9 per cent this year over last year's record-breaking $4,046,555. The Law School Fund received $1,344,061, a record for the third consecutive year.

In a 1967 report William G. Bowden, now president of Princeton University, claims that it will become increasingly hard for Universities to support themselves.

The study, entitled "The Economics of the Major Private Universities," is now considered "the conventional wisdom" on the subject of university financing, according to David W. Davis, budget consultant in the office of the financial vice president.

Bowden says that University education will become increasingly expensive compared to other commodities because productivity does not increase as it does in other "industries."

As an example, Bowden compares education with the auto industry. If an auto worker through technological improvements annually increases his output per man-hour by 4 per cent, the auto worker's wages can also increase 4 per cent a year "with no rise in prices necessary to maintain company profits."

But since college education is not prone to increased efficiency or productivity through technological improvements, raises in faculty salaries add directly to the cost of education