Harvard funding fight to be felt beyond campus

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The Trump administration’s plan to freeze $2.2 billion in multiyear federal funding for Harvard and its request that the IRS begin revoking the university’s tax-exempt status herald a financial fallout far beyond the school’s famed yard. The moves came after Harvard refused to accept sweeping demands from the White House to scrap DEI programs and overhaul academic hiring, teaching, and admissions—changes the administration says are meant to address antisemitism on campus. Trimming the ivy The funding freeze mostly targets research grants out of a total $9 billion Harvard was set to receive—a major cash source, given that federal dollars covered 16% of the university’s operating budget last year. Meanwhile, being tax-exempt frees the university from paying taxes on earnings and allows donors to get deductions for their donations. The economic reach of the university graduating people who can say they “went to college just outside Boston” extends well beyond its campus: Harvard is the fourth-largest employer in Massachusetts, with over 18,700 people on its payroll as of 2023. The Department of Education says the freeze hasn’t impacted Harvard’s teaching hospitals. But some Harvard-affiliated researchers studying medical disorders and biotech advances like human organ chips were sent stop-work orders shortly after the freeze, the Harvard Crimson reported. The overall stakes are high for more than a single metro area. Experts highlight that the university research system is a cornerstone of the US innovation pipeline and a vital driver of economic growth, since campus science often has commercial and national defense applications. But isn’t Harvard loaded? Harvard is the world’s wealthiest university, but its $53 billion endowment isn’t the bottomless piggy bank it seems. About 70% of the endowment funds are earmarked for specific programs by donors and cannot legally be used for unrelated purposes. But 20% is unrestricted and can plug budget holes. And if the administration succeeds in yanking Harvard’s tax-exemption—which would likely entail a lengthy legal fight—the school could owe taxes on that endowment and its large real estate holdings. Harvard is the first to push back…but several other prestigious universities, including Columbia, which did agree to meet some of the administration’s demands, as well as Northwestern, UPenn, and Cornell, have had federal funding suspended recently, hampering research and student financial aid.—SK