The CFO was asked whether the school could survive another recession.
We’ve done a lot of recession-based scenario planning, and the University is in a much better position than we were following the 2008 financial crisis with respect to liquidity and the capacity to withstand stress. Thanks to purposeful planning by Narv Narvekar and his colleagues at Harvard Management Company, the endowment is comparatively liquid, does not have any substantial derivative exposures, and is not broadly leveraged. In addition, the University itself, which provides working capital to the operating activities across campus, is in a healthy and liquid position. This means that the University is positioned to withstand an interruption in normal operations, an economic downturn, and other stress scenarios. These efforts put us in a good position and give us the ability to focus on aligning our resources behind our academic mission, but they will not eliminate adversity or difficulty in the event of a recession. Given what is happening, we expect to see a decline in revenues due to, for example, increased financial aid needs, a slowdown in philanthropy, and a lower distribution from the endowment, and we will need to adjust our spending accordingly.
Read more about surviving the recession at Harvard and other schools here.
Post by Marcelino Pantoja