Harvard University’s Elizabeth Mora

With a $35 billion endowment to oversee, the school's CFO is in the eye of a continuous storm over how the funds should be spent.

To universities with smaller endowments, overseeing finance at the world’s richest school might seem easy. But Harvard University CFO Elizabeth Mora can tell you it is a juggling act. The 47-year-old CFO advises on a $35 billion endowment, and watches costs on everything from the school’s student-loan program to a 50-year, multi-million-dollar expansion from her office overlooking the Old Yard. Complicating matters is that everyone wants a piece of the institution’s vast resources. From the economics department’s pleas for a new building to donors’ requirements for world-class books, opinions vary on how Harvard should use its coffers. Lately, even the government is weighing in. In January, Harvard and 135 other wealthy academic institutions received letters from Congress hinting strongly that a percentage of their endowments should be used annually to lower tuition costs. At stake may be their tax-exempt status. The requirement is similar to those imposed on foundations. But as Mora points out, “We are not just like a regular foundation.” And running Harvard’s finances is far from academic. (Update: Since this interview was conducted, Harvard announced that Mora would step down from her position in mid-May after the completion of university-wide budgets for the 2008-2009 fiscal year. Dan Shore, the university’s director of budgets and financial planning, has agreed to serve as acting CFO until a replacement is named.)

Some members of Congress believe universities should spend 5 percent of their endowments to lower tuition, just like foundations. Do you agree?

No. We are not a foundation; we are an educational enterprise. Some years we have big spending needs and some years we don’t. We need to preserve the purchasing power of the endowment so that in the “need to spend” years we have the money to do it. We have an operation to run here [with] thousands of students, hundreds of buildings, millions of square feet. We are developing 200 acres of land in Allston over the next 50 years. We have to think of the endowment in terms of intergenerational equity.

So were you surprised by the recent request from Congress for details about how you manage your endowment?

It did kind of drop out of the sky. The letter was trying to concretely link the value of the endowment to the cost of tuition. What was missing was the realization that the endowment is restricted [by donors]. But I think we saw the letter as an opportunity to educate the Senators on how the endowment works, what the restrictions mean, and why we are not just like a regular foundation that can [regularly issue] a payout.

How much of the endowment does Harvard typically spend each year?

Our target is 5.25 percent. But we are somewhat at the mercy of our returns. If the returns are strong, the fraction will come down as a percentage. If they aren’t, the fraction will go up. But that doesn’t mean the amount distributed is not large in number and fair in spirit.


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