Why Harvard’s Massive Endowment Won’t Save It from Federal Grant Freezes

Harvard University may have one of the largest endowments in the world — a staggering $53.2 billion — but that won’t necessarily protect it from the impact of losing billions in federal funding. 

The Trump administration this week threatened to withdraw nearly $9 billion in grants to U.S. universities over issues related to free speech and campus antisemitism. A federal joint task force has already announced that it would freeze $2.2 billion in funding specifically earmarked for Harvard.

Harvard says it won't back down. In a statement Monday, the university declared: "Harvard will not surrender its independence or relinquish its constitutional rights," firmly rejecting White House conditions for keeping the money flowing.

What’s the problem with the endowment?

While $53.2 billion might sound like a financial cushion few institutions could dream of, most of that money is tied up — legally and practically.

In fiscal year 2024, Harvard used $2.4 billion from its endowment to support its $6.4 billion operating budget, meaning the endowment covered around 37.5% of its expenses.

But here's the catch: about 70% of endowment distributions are restricted by donors. That means the money can only be used for very specific purposes — like funding a particular scholarship, building, or department. Only about 20% is available for general spending, including emergency needs like covering gaps in federal grants.

What does Harvard risk losing?

Federal funding made up about 16% of Harvard’s operating revenue in the last fiscal year — roughly $686 million. Losing even a portion of that, especially in the short term, would be a serious financial hit.

And the endowment can’t just be used like a piggy bank to fill the void. University officials must follow donor intent, and many endowment gifts are legally locked into specific long-term goals.

Financial pressure is already mounting

Recent numbers from the Harvard Crimson show that donations to the school dropped by over $150 million last year, as some major donors pulled back — citing the same concerns around campus culture and speech that the Trump administration has flagged.

In response to the growing financial uncertainty, Harvard imposed a temporary hiring freeze in March. It also raised $450 million in tax-exempt bonds, signaling it’s preparing for a potentially tough road ahead.

Looking forward

As political and financial pressures intensify, Harvard's situation underscores a broader challenge for elite institutions: even with enormous endowments, their financial models depend on flexibility — something that’s increasingly in short supply.

And with billions on the line, Harvard’s standoff with the Trump administration could soon become a defining test of how much power a university really holds when facing political pressure from Washington.