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A Tale of Two Universities

March-April 2021

Tolstoy’s Anna Karenina famously begins, “All happy families are alike but an unhappy family is unhappy after its own fashion.” To abuse that classic brutally, one might say that in flush times, all Ivy League schools seem similar, but at moments of crisis their differences and vulnerabilities emerge.

The eight Ivy universities encompass colleges, graduate and professional schools, and myriad scholars devoted to research. Their surroundings and scale vary, as do their disciplinary profiles (Princeton is a liberal-arts institution with limited professional schooling; Yale is renowned for the arts; other campuses are more heavily weighted toward professions or sciences). Even so, they are enough alike to share a public image, and to serve as a standard of comparison for outstanding (relative) newcomers such as Duke, Stanford, and the University of Chicago.

But these common traits don’t explain each institution’s distinctness. How they react to adversity (and seize opportunities) can be instructive. The challenging year just past illuminates some of those differences.


With the onset of the U.S. pandemic last March, Harvard battened down the hatches. For the fiscal year ended June 30, 2020, revenues declined 2.5 percent: about 5 percent from the income projected just before the crisis set in (and, unnervingly, an annualized rate of decline of about 18 percent). In response, expenses were trimmed, falling 2.5 percent from fiscal 2019: again, about 5 percent compared to the forecast for the year. On a Generally Accepted Accounting Principles (GAAP) basis, the University reported a $10-million fiscal-year deficit. Yet Harvard would have been in the black, to the tune of nearly a quarter-billion dollars, had large one-time charges been excluded (see “The Financial Fallout…So Far,” January-February, page 16). Administrators forecast a revenue shortfall of as much as $750 million for fiscal 2021. Facing large operating deficits, the University has slashed construction budgets, halted new hiring, frozen salaries, and so on. Most consequentially for future research and teaching, Harvard essentially stopped faculty searches.

Down I-95, meanwhile, Yale reported a GAAP surplus of $203 million. In financial terms, Yale is about 80 percent Harvard’s size ($4.2 billion in revenues vs. $5.4 billion). Its leaders reported a quarter-billion dollars in lost revenues and increased expenses associated with the pandemic through September: about in line with the impact at Harvard. So during fiscal 2020, both schools were in the black on an operating basis, in part because they froze wages and squeezed discretionary expenses as the pandemic surged (and the outlook for their endowments seemed grim, too).

But Yale is a very different creature. It consolidates its hospital: $1.1 billion of those revenues are medical-services income, even as the spring crisis reduced clinical revenues by $80 million. Harvard’s hospitals are affiliates, who pay fees to the Medical School for that privilege (given the cessation of most discretionary procedures last spring, the fees were waived, effectively lessening fiscal 2020 current-use gifts): their multibillion-dollar medical revenues are not part of the University’s operations. Without its medical revenues, Yale’s budget would be much smaller and more dependent on endowment distributions than Harvard’s is ($1.4 billion in New Haven vs. $2.0 billion in Boston and Cambridge). And the Eli schools’ wet-lab infrastructure—the costliest kind of research to support—is considerably smaller than the Crimson counterpart.


Not surprisingly, the institutions have chosen sharply divergent paths since autumn: Harvard is all austerity, and Yale is seemingly all animal spirits.

In a fall-semester letter, Yale’s provost and senior vice president for operations announced “new actions to support [Yale’s] communities and advance academic priorities.” Those include partially lifting the faculty hiring freeze to authorize “at least” five dozen new and continuing searches across the institution; and continuing construction projects, while launching an expensive renovation of a core science tower. In his academic overview, President Peter Salovey outlined work on an expansive neuroscience institute, a Planetary Solutions Project applying university expertise to climate change, and initiatives in quantum science, data science, policy-oriented domestic and international social science, and more.

Why the two roads, exiting what looks like the same forest? Some of the differences are structural. Harvard has bet heavily on professional and executive education: a $500-million business in fiscal 2019 that was largely shut down as travel ceased and in-person instruction closed last March. That crimped the flow of unrestricted cash to the tune of tens of millions of dollars late in the year, and much more in fiscal 2021. In contrast, COVID-19 has turned an apparent Yale vulnerability into an unexpected benefit. With many undergraduates living off campus (given New Haven’s cheaper rents), Yale has had lesser losses from tuition and dining fees despite remote instruction, leaves of absence, and deferred enrollments. At Harvard, with undergraduate residence on campus nearly universal, spring 2020 rebates loomed large as most students went home, and fall semester income shrank when relatively few returned to campus.

But there are differences of timing and temperament, too. Lawrence S. Bacow was less than two years into his presidency, and Harvard Management Company was midway through a sweeping overhaul, when this crisis struck. Salovey took office in 2013, so his priorities were well in place. Furthermore, Yale is in the quiet phase of a capital campaign, gathering pledges to support his initiatives. Demonstrating progress, rather than unremitting belt-tightening, thus becomes more feasible (and encourages donors further).

In contrast, Harvard had just finished a nearly $10-billion drive, so it was too soon to gear up again (and the pandemic put such planning out of mind). The University is hardly without discretionary resources: Bacow has funded a $5-million program to explore Harvard’s engagement with slavery; a $25-million investment in an MIT venture fund; $20 million to help deans defray COVID-19 costs; and new positions focused on diversity and inclusion (a priority for most schools, too). Investments in Allston continue—including planning and operation of the conference center within the privately developed “enterprise research campus” near the Business School. But other, academic investments seem to be reined in.

Institutional priorities ebb and flow, as each Ivy’s leaders consider their means and goals. For now, Harvard appears focused on academic consolidation, extending back in some ways to the shocks of 2008-2009. Even as they weather the pandemic, Yale, Princeton (also pursuing a major campaign), and others look eager to attract academic talent, erect needed facilities, and extend themselves. Over time, such competition has been good for each Ivy (if not for schools with thinner wallets). But living through such cycles can be disquieting at the places where, for the nonce, certain dreams must be deferred. 

~ John S. Rosenberg, Editor

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