HBS balances prudent fiscal management with a bold determination to fulfill its leadership mission now and for generations to come. Thanks to support from alumni and friends, the School has been at the forefront of management education for more than 100 years, but we must continue to invest in faculty, programs, and facilities to sustain and expand our leadership position.
Gifts Make a Difference
Your contributions matter. While the HBS endowment plays an important role in the School's finances, its role is strictly limited.
Managing Resources for the Long Term
The School's operating margin includes academic innovations and has averaged 8.5% over the past five years. This margin funds all capital expenditures not specifically funded by gifts or the School's use of debt.
Harvard University determines the annual endowment distribution—typically about 5%—to ensure a reliable stream of operating income over the long term.
|(dollars in millions)||FY 2012||FY 2011|
|Revenues||$ 546||$ 509|
|Cash from operations||42||53|
|Use of endowment gifts & appreciation||24||18|
|Cash available before capital activity||66||71|
|Capital expenses, net of related gifts||(34)||(31)|
|Cash available after capital activity||32||40|
|Change in debt & other||8||(60)|
|Increase/(decrease) in unrestricted reserves||40||(20)|
Multiyear Endowment Returns
|FY 2012 Performance||-0.1 %||6.71 %|
|Three-Year Performance||10.4 %||12.8 %|
|Ten-Year Performance||9.5 %||5.9 %|
|* S&P 500/CITI US BIG|
The HBS endowment is managed by Harvard Management Company (HMC) as part of the Harvard University endowment. HMC is a wholly owned subsidiary of the University. The average annual return on the University endowment for the past 20 years has been 12.3 percent. This exceeds HMC's performance benchmark by more than 300 basis points per year and the return from a simple 60/40 percent stock/bond portfolio by even more substantial margins.