But what dictated the timing of this return totraditional policy seems to have been aconvergence of extraordinary financial strengthand the expectations of donors who gave toHarvard's Capital Campaign.

Last spring, according to Huidekoper, PresidentNeil L. Rudenstine and the rest of the Corporationbegan discussing the possibility of a concretechange. They met with the deans of Harvard's tenschools, who embraced the chance to receive morefunding for their schools, according to Huidekoperand Fineberg.

The change was made, according to Knowles, fortwo reasons: to improve the quality of students'education and to improve the opportunity forfaculty research.

Fineberg adds one more reason, the University'snearly-finished $2.1 billion Capital Campaign.

"A lot of people have contributed a lot ofmoney," Fineberg says. "And I think it will bevery helpful to be able to point and see how thatmoney is having an effect today."

Harvard's money managers say they are confidentthey can see this welltimed payout through amarket downturn, like the one earlier this year inwhich Harvard lost $1.3 billion.

Fineberg calls the $1.3 billion dollar drop inthe endowment "a blip," and Huidekoper says evenan actual decline in endowment value would notpush the payout percent too high.

Jack R. Meyer, president of the HarvardManagement Company, Harvard's full time financialstewards, says the change will in no way changethe University's investment strategy.

Leader of the Pack?

Though some were quick to speculate thatHarvard's move would spawn a wave of imitation inthe Ivy League, that seems not to be the case.

In fact, Harvard is not even leading the Ivypack as it makes this move. Cornell Universitybeat Daniel and company to the punch over a yearago, having raised their payout nearly 13 percentin 1997 and a whopping 35 percent this year.

But Harvard's $95 million leap onto thebandwagon might inspire imitators in highereducation, according to some.

"If it's in the papers that Harvard hasincreased the payout, there will be that much morepressure at other schools," says James, S. Clark,Cornell's chief investment officer. However, othersimilarly-endowed schools have announced no suchplans.

Yale has maintained a healthy 5 percent payoutrate since 1995 and has no intention of changingit, according to Tom Conroy, Yale's actingdirector of public affairs.

Emory University has also stayed above 4percent, which it considers the outer bounds ofconservatism, and also sees no reason to increaseits payout.

Harvard's changes may put it back on track withits peers, but the size of the University'sendowment-the largest in higher education-willactually give a higher dollar output than itspeers.-David A. Fahrenthold contributed to the reportingof this story.