Harvard’s revenue dropped $138 million in fiscal year 2020, according to the University’s Annual Financial Report. The decline was concentrated in the last three months of the fiscal year.
The University ended the fiscal year with a net loss of $10 million in operating expenses, compared to a surplus of $308 million in 2019.
Total student revenue decreased by 11 percent, to $1.1 billion. Refunds the University issued to students ejected from the dorms midway through the spring semester amounted to $32 million, and room and board revenue fell by 16 percent.
Experts had previously predicted that the University would face considerable losses from cancelled and discounted executive education programs. Net revenue for executive and continuing education totaled $410 million, following a $90 million decline due in large part to coronavirus-related program cancellations and enrollment declines.
Despite those losses, Vice President for Finance Thomas J. Hollister and Treasurer Paul J. Finnegan credited Harvard with implementing “cost control efforts” in the pandemic’s early stages.
“The loss would have been far greater without the implementation of immediate cost control efforts including cuts in discretionary spending, a freeze in new hires and raises, no bonuses or overtime work, voluntary salary cuts by senior leadership, and reduced capital spending,” Hollister and Finnegan wrote in the report.
Hollister and Finnegan also noted that the University had increased its financial aid payments by 5 percent, to total $645 million in scholarships.
The University remains focused on reducing spending to match declining revenues, finding promising investments, and staying “liquid.” Still, the pair wrote that the University could face financial challenges in the months ahead.
Harvard faces a 13 percent decrease in gift pledges compared to a year ago. Because endowment distributions and gifts constitute 46 percent of the University’s annual revenue, seeking out philanthropists remains among the University’s outstanding challenges, Hollister and Finnegan wrote.
Overall, the University’s net assets increased by $893 million to $50.2 billion as of June 30, 2020, in large part due to strong returns from Harvard Management Company.
HMC CEO N.P. “Narv” Narvekar announced in September that the endowment returned 7.3 percent on its investments in 2020. It now totals $41.9 billion, the largest sum in its history.
Narvekar wrote Thursday that Harvard has made progress on reducing its exposure to illiquid assets, including natural resources, long a source of losses for the endowment.
In addition, Narvekar wrote that 55 percent of HMC’s senior staff members are “either ethnic and racial minorities or women.” HMC had previously faced pressure from members of Congress to release diversity data.
University President Lawrence S. Bacow credited the school’s “strong fiscal management,” but acknowledged the potential challenges still ahead for the University.
“How we manage declining revenue and rising need for investment in excellence amid new and necessary health protocols will, in part, determine our successors’ ability to endure and thrive. Fortunately, the people of Harvard—and alumni and friends around the world—have come together to see the institution through uncertainty for generations,” Bacow wrote.
—Staff writer Ellen M. Burstein can be reached at firstname.lastname@example.org. Follow her on Twitter @ellenburstein.