The University has advised its schools to plan for a 4 percent rise in the value of the endowment payout for the next fiscal year, marking the first yearly increase since the beginning of the financial crisis in 2008.
The figure—confirmed by University spokesman John D. Longbrake yesterday—represents the percentage of the endowment that will likely be available for University schools to spend during the next fiscal year, which begins July 1.
The news comes less than two weeks after the University announced that the endowment had grown to $27.4 billion in the year ending June 2010, reflecting an annual investment return of 11 percent.
The Harvard Corporation, the University’s highest governing body, adjusts the payout rate based on endowment performance and strives to keep a consistent amount of money available for budgeting. During the years before the financial crisis, the University aimed to spend between 5 and 5.5 percent of the total endowment value.
In an interview last Friday, School of Engineering and Applied Sciences Dean Cherry A. Murray said that she had recently been informed of the change in the payout rate.
According to Murray, universities often adjust their payout rates after looking at endowment performance over the past three years, rather than just the past year. Given the financial downturn over the three years, Murray said that the rise in endowment payout represented “good news.”
“If you do a rolling average of the past three years, we would not be at plus 4 percent,” she said.
The payout fell 12 percent last year and 8 percent the year before, reflecting the precipitous 30 percent drop in the value of Harvard’s endowment between June 2008 and June 2009.
Read the full story at the Harvard Crimson.
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