What Are Endowment Funds?

Although their specific use varies, endowment funds have a common purpose: to support activities not just for one year, or even one generation, but in perpetuity. The Harvard School of Public Health follows investment and distribution policies that will maintain the value of the endowment and provide a steady flow of funds to support current operations. The Harvard Management Company, a subsidiary of the University, manages the endowment assets of the School.
 
Q. What is the value of the Harvard School of Public Health’s endowment?

A. As of June 30, 2008, the Harvard School of Public Health’s endowment had a market value of $1.323 billion, which represents just 3.6% of Harvard University’s total endowment. The value of the endowment grows as new gifts are received and fluctuates with the performance of the market. The average rate of return for the ten-year period ending June 30, 2008 was 13.8%.

Q. How much income does the endowment generate each year for the School?

A. Although the value of the endowment has varied greatly from year to year, the rate at which income was made available for spending has remained fairly constant. During fiscal year 2008, the School’s distribution rate was 3.6% of the market value—consistent with the historical spending rate of the School and that of other large universities—and was used to support 13.3% of that year’s operating budget. The difference between the rate of return and the distribution rate helps to protect the purchasing power of the funds against fluctuations in the market, to keep up with inflation, and to meet the projected rise in School expenses.

Q. What is the difference between restricted and unrestricted endowment funds?

A. Restricted funds are earmarked for specific uses, such as professorships or scholarships, while unrestricted funds provide the flexibility to support areas of greatest need in the School, including student financial assistance, field projects, and seed money for junior faculty. Currently, the School’s endowment funds are:    

72% Restricted                 
28% Unrestricted