Harvard has more money than the GDP of almost 100 countries. Why does Trump's funding freeze matter?

Harvard University, with an endowment of $53.2 billion as of 2024, boasts more financial resources than the GDP of nearly 100 countries. Despite this vast wealth, a recent freeze on $2.2 billion in federal grants by the Trump administration has raised important questions about why wealthy institutions like Harvard can’t simply dip into their endowments to make up for lost government funding.

The freeze, announced by the Trump administration this week, came after Harvard rejected the administration’s demands, which included auditing the viewpoints of its students and restricting the acceptance of international students who do not align with American values. Harvard stood firm, saying it would not compromise its independence or constitutional rights. In a statement posted on its X account, the university declared, “The university will not surrender its independence or relinquish its constitutional rights. Neither Harvard nor any other private university can allow itself to be taken over by the federal government.”

Experts say Harvard’s enormous endowment cannot easily replace federal funding due to several factors, including restrictions on how the money is used. According to NBC News, endowments are not simply savings accounts, but rather, investments where much of the money is earmarked for specific purposes by donors. Catharine Bond Hill, former president of Vassar College, explained that endowments are intended to generate earnings over time to support the university’s programs, rather than being used for immediate needs. “They don’t give it as a pot of money to be spent this year,” Hill explained. “They give it as an endowment, so that the earnings can be used over time to support the thing that the donor is interested in the university doing in perpetuity.”

Additionally, there are legal and ethical obligations tied to donor restrictions. Liz Clark, vice president of policy at the National Association of College and University Business Officers, pointed out to NBC News that endowments can be seen as a collection of contracts with donors. These donors may have given money to support specific programs, scholarships, or faculty positions. At Harvard, for example, about 70% of the annual distribution from its endowment is directed toward these specific programs, leaving only 25% available for discretionary spending. “That board-designated money may have been earmarked to support need-based financial aid for undergraduates,” Hill explained. “If they spend it down on covering this research shortfall, they can certainly do it for a while, but when it’s gone, it’s gone.”

Federal funding, particularly for research, has also been crucial to Harvard and other top universities. According to experts, much of this funding comes from agencies like the National Institutes of Health and the National Science Foundation, which support research in areas like STEM, medical advancements, and national security. “It is very difficult for a university like Harvard or Columbia to conduct that kind of cutting-edge research without that kind of infrastructural support that is separate from the actual research itself,” Cecilia Orphan, associate professor of higher education at the University of Denver, told NBC News.

While Harvard's financial buffer from its endowment may help mitigate the impact of the funding freeze in the short term, the long-term consequences could be severe, particularly for research with global implications. As Orphan highlighted, cutting research funding could disrupt critical projects, such as cancer research and national security studies. "When you cut the research funding, that means that research will cease or it will be greatly diminished," she said.

The situation underscores the complexities of funding at top universities like Harvard, where private wealth, government support, and institutional autonomy intersect. Despite its financial resources, Harvard faces challenges in navigating the legal, ethical, and strategic constraints of its endowment while dealing with the fallout from a freeze in federal grants.