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The Harvard Faculty of Arts and Sciences closed fiscal year 2024 with a $3 million surplus — its smallest surplus since 2020, the school announced last week in its annual financial report.
The surplus marks a sharp decline from the $62 million surplus the FAS recorded in fiscal year 2023. The FAS’s unrestricted reserves dropped by $14 million to $191 million, accounting for nearly 11 percent of cash operating expenses and meeting the University’s benchmark of 10 percent for the third consecutive year.
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Even as the University faces a more than $150 million decline in donations after its controversial initial response to the ongoing war in Gaza, “fundraising for the FAS endowment grew by 13.7 percent” in fiscal year 2024.
In the report, the FAS highlighted that it had increased funding for undergraduate financial aid by 6 percent in light of a 3.5 percent rise in Harvard College tuition, board, and lodging fees for the 2023-2024 academic year.
“As the FAS continues to return to historical levels of undergraduate enrollment and remains committed to affordability, growing philanthropic support for financial aid is a core priority to reduce reliance on our unrestricted funds and to ensure long-term financial sustainability,” the report stated.
Because of the increased financial aid expense, net undergraduate tuition revenue decreased by more than 5 percent, according to the report.
While current-use gifts to the FAS fell by $38 million compared to fiscal year 2023, the report stated that the drop was largely attributable to the absence of a one-time $35 million gift received in the previous fiscal year. Across the University, current-use gifts rose by $42 million over fiscal year 2024.
The FAS attributed the smaller surplus to an $112 million increase in expenses, driven primarily by rising compensation costs and inflation impacting operations and maintenance. Total expenses rose by more than 7 percent, while revenue increased by just over 3 percent — or $52 million — due to higher endowment distributions and increased interest on reserves.
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The Harvard Management Company — which stewards the University's $53.2 billion endowment — recorded a particularly successful fiscal year, boasting a 9.6 percent return in 2024.
Compensation — including salaries, wages, and benefits — continued to account for the largest portion of the FAS budget, comprising 46 percent of total expenditures. Although salary and wage growth slowed compared to the previous fiscal year, faculty recruitment and retention had become more competitive, according to the report.
“FAS welcomed new ladder faculty, responded to retention pressure, and funded one-time payments related to a faculty retirement incentive program,” the report stated.
Non-compensation expenses for space, occupancy, supplies, and equipment increased nearly 8 percent compared to fiscal year 2023. The FAS attributed this increase to rising utility rates, construction costs, and renovation expenditures, with major expenses incurred because of renovations at the Harvard Quantum Initiative, Adams House, and the Naito Chemistry Lab Building.
Closing the report, the FAS expressed cautious optimism for its future financial health, pledging to review its administrative functions, invest in technologies to improve operational efficiency, unlock additional unrestricted funds, and collaborate with individual departments to generate additional revenue.
“Moving forward, to ensure long-term financial sustainability, the FAS must remain disciplined in managing our expenses,” the report stated.
—Staff writer Dhruv T. Patel can be reached at dhruv.patel@thecrimson.com. Follow him on X @dhruvtkpatel.
