Harvard Endowment Down $8B, Further Losses Expected

Harvard University’s endowment, the largest in higher education and historically a major investor in venture capital funds, has dropped a scary 22 percent, or $8 billion, from its $36.9 billion value on June 30, the Harvard Crimson student newspaper reports.

The impact of the big decline is already being felt. The Crimson reports that university departments have already instituted hiring freezes, and president Drew H. Faust says that departments should reevaluate hiring, staff levels, and compensation. What’s more, Harvard officials expect the school’s endowment to shrink by as much as 30 percent in the current fiscal year ending June 30, 2009.

The decline in Harvard’s endowment, which itself is bigger than most school’s total endowments, is no doubt a harbinger of what’s going on at other universities. Besides the impact on universities themselves, the drop in value also spells more bad news for the innovation community, including VCs on the hunt for investors to raise capital for funds: many venture funds have received significant backing in the past from major university endowments at Harvard, Duke University, and the like. Harvard is already looking to shed $1.5 billion in private equity assets at cut rates to balance its portfolio, according to published reports like this Bloomberg News article.

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