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Harvard Reconsiders Endowment Managers

Year sees harsh criticism of multimillion-dollar salaries

An abundance of press coverage examining the managers’ salaries have dogged administrators and press officers at the University, but it remained unclear whether the seven-member clan of alums who drew so much media attention this year represented a broader opposition to compensation policies at HMC.

In an April interview, Vice President for Finance Ann E. Berman said the compensation issue had been blown out of proportion by media coverage. And Joe Wrinn, the University’s chief spokesperson, agreed enthusiastically, having spent the school year personally dealing with inquiries into the HMC policy.

But the Class of 1969 alums were joined this year by student and worker activists on campus, who frequently referenced the fund managers’ salaries at rallies protesting layoffs across the University.

A dozen students and Harvard employees stood in the rain outside Lamont Library in April to protest an appearance there by Meyer.

“Lay off Jack Meyer and save millions of dollars annually,” yelled Tom Potter, a faculty secretary at Harvard Law School.

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Bowing to some of the mounting pressure, the HMC board voted in March to lower the maximum compensation for its fund managers. Summers told The Crimson that the new caps would prevent payouts on level with last fiscal year.

Still, those objecting to the salaries would like to see far greater steps. William A. Strauss ’69, who has led the group of alums protesting the salaries, said he believed fund managers should be paid no more than the University president.

Summers received $681,735 in salary and benefits last fiscal year.

CASHING IN ON THE ENDOWMENT

As the compensation issue played out loudly in local newspapers, Harvard quietly began an entirely separate program intended to boost gifts of charitable remainder trusts by allowing donors to attach those trusts to the University endowment.

Charitable remainder trusts, in their most common form, allow donors to place money in a fund which pays a set rate to the donor each year. And upon the donor’s death, the entirety of the fund is donated to the charitable organization of one’s choice.

Harvard has long offered the option of charitable trusts for its donors, but sluggish returns made the program less appealing. Thanks to a special ruling by the Internal Revenue Service, however, Harvard began allowing its donors with charitable trusts to attach those funds to the University’s lucrative endowment in the hopes of greater returns for both the donor and Harvard.

In the first few months under the new option, 70 percent of eligible trust holders—some wooed by an advertising campaign in Harvard Magazine—made the switch to the endowment, representing over $200 million in trusts.

—Staff writer Zachary M. Seward can be reached at seward@fas.harvard.edu.

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