How Does the HBS Endowment Work?

The $3.5 billion HBS endowment represents 9 percent of Harvard’s total $37 billion endowment (as of June 30, 2017).

Each year, Harvard determines the payout rate—typically around 5 percent of the endowment’s prior year-end market value —that can be withdrawn and used to support activities in accordance with the donor’s intentions and the terms of each gift.

A large majority of endowment funds are earmarked for donor-specified purposes such as professorships and fellowships. Only the remaining 13 percent is unrestricted—$19 million in FY17—and can be used to help fund new ideas and initiatives.

An enduring investment: Donors who establish an endowed fund at HBS take the long view. For example, the Paul W. Kesten Memorial Fellowship was established in 1966 with a gift of $100,000. Since then, it has supported more than 100 MBA students and—as a result of appreciation over time—provided $49,000 in need-based financial aid awards in academic year 2017–2018.

The HBS endowment is managed by Harvard Management Company (HMC) as part of the Harvard University endowment. HMC, a wholly owned subsidiary of the University, is under new leadership and in the middle of a major reorganization designed to improve returns across all asset classes.