Fiscal year 2007 “proved to be an excellent financial and operational year for Harvard Business School,” declared CFO Richard Melnick (MBA ’92) in the School’s newly released annual report. He cited continued growth in the global economy and strong demand for management education and research as the primary factors driving the School’s success.

Consolidated revenue for the fiscal year — which ended June 30, 2007 — grew by $37 million, or 10.1 percent, to $405 million, while expenses increased by $30 million, or 8.7 percent, to $375 million.

Executive Education and Harvard Business School Publishing (HBSP) together contributed more than half of the School’s revenue growth. Executive Education revenue increased by $10 million, reflecting a positive market response to the newly launched Comprehensive Leadership Programs and expanded offerings in custom programs. Publishing revenue grew by $9 million on the strength of higher circulation and foreign edition royalties for Harvard Business Review; growth in sales of cases, teaching materials, and HBS Press books; and expansion of HBSP’s eLearning business.

Another year of strong investment returns for the School’s endowment, valued at $2.8 billion on June 30, 2007, contributed $7 million to revenue growth. The market value of the HBS endowment and current use funds has grown at a compound annual rate of 16.1 percent for the past five years.

For the first time in the School’s history, endowment distributions last year exceeded MBA Program income. And an “extraordinary” jump in unrestricted giving accounted for $5 million in new revenue. In his summary statement, Melnick noted that “unrestricted current gifts are the School’s major source of funds for strategic innovation.” Since 2005, unrestricted giving has more than doubled.

The remaining $6 million in revenue growth came from the planned increase in MBA tuition and fees and growth in interest income.

While global competition for top faculty talent is becoming increasingly intense, the School had a strong recruitment year in fiscal 2007, the report notes. As a result, full-time faculty grew from 206 in fiscal year 2006 to 219.

The annual report also looks ahead to fiscal 2008 and projects continued growth in MBA fellowship spending. Including MBA and doctoral candidates, fellowship spending is projected to increase by $4 million, or 18.2 percent in fiscal 2008 to $26 million. The School’s goal is to ensure that the growth in fellowship awards outpaces the rise in tuition.

HBS invested $92 million in faculty research and course development in fiscal 2007. That investment is projected to grow in excess of 13 percent in fiscal 2008 to more than $104 million.

These and many more details are laid out in the report’s charts, tables, and narrative. The 49-page document also highlights a number of campus innovations, including the new joint-degree program with the Kennedy School, foreign and domestic winter break immersion programs that give MBA students a structured academic experience, and a custom Executive Education program on microfinance.

To read the entire report, visit www.hbs.edu/about/annualreport/.

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