Number One U.S. University Also A Victim Of Global Financial Crisis

December 4, 2008 9:02 a.m. EST

Cambridge, MA (AHN) - The global economic crisis has not spared even Harvard University, the U.S. top educational institution. According to Harvard president Drew Faust, in a letter to school deans, the value of its endowment fund shrank by 22 percent or $8 billion for the past four months from July to October.

With a prolonged financial crisis expected to hit the nation, Faust said total losses of the university for the fiscal year could reach 30 percent. He wrote, "The severe turmoil in the world's financial markets has affected all major asset classes in which the endowment is invested."

The endowments account for 35 percent of Harvard's operating budget in 2007, equivalent to $1.6 billion. The share of endowments for the average U.S. university on school budget is only 15 percent.

As of end of June, only 11 percent of the university's portfolio were in U.S. stocks, while 22 percent was half invested in stocks of developed nations and the remaining half were in shares of emerging economies.

Because of the fund's contraction, Harvard will review its hiring, staffing and compensation policies, Faust said.