Trump vs. Harvard

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Trump’s war against the institutions of the American establishment has ramped up a notch, as he takes aim at federal support for “woke” Ivy League schools. The administration’s threatened funding cuts to major schools, while designed to stamp out progressive politics on American campuses, risks gravely damaging the country’s world leading higher education and research sectors. 

Though it has levelled different accusations at different schools, the White House’s primary contention is that the universities have coddled liberal academia and campus activism that is antithetical to its notion of American values. They believe that universities are institutionally biased against conservative viewpoints, such as limits on trans rights or support for Israel, and that government action is needed to enforce ‘ideological diversity’.

Throwing red meat to its anti-elite MAGA base, the administration has started its campaign with prestigious, East Coast schools. So far, it has threatened funding cuts of more than $5bn to seven universities. 

Source: AP

This week, Harvard was the first big institution to push back against the administration’s efforts, with the school’s president Alan Garber stating that Harvard “would not surrender its independence or relinquish its constitutional rights”.

As the world’s richest university with an endowment (a pool of donations to the university) of $53 billion, Harvard’s fight against Trump will be instructive in how the broader battle between Ivy League vs. White house plays out.

While many Ivy League schools have massive endowments, the reality of their funding is more complex. 

• US schools generally have several major funding sources: tuition fees, grants and contracts from the state and federal government, donations, service revenues (for example, medical fees from university hospitals) and endowment payouts.  

• The relative size of these varies by school, but in most cases government grants and contracts represent a significant component of university incomes. 

• The federal government therefore has control over a large share of university finances, both directly and indirectly through compliant governments in Republican states.

Harvard is, of course, better insulated than most against funding cuts. It received only 11% of its revenue from federal grants and contracts, with 21% coming from tuition fees and 45% from donations and its endowment payout.  

Source: Harvard University Financial Report Fiscal Year 2024

But other schools receive a markedly smaller share of their funding from philanthropy and their endowment funds, making them more dependent on the government. 

Cornell, for example, looks particularly vulnerable, receiving only 8% of its revenue from endowment payouts, versus 24% from government grants and contracts.

And even if schools like Harvard and Princeton have large endowments, there are limits to how they deploy this. Most university endowments have a fixed payout rate of around 5%, meaning they cannot easily and immediately access more cash from these funds. At the same time, endowment funds are often put to prescribed uses by donors, meaning that universities are not free to reallocate cash away from donor-specified projects in order to meet the shortfall in federal funding. At Harvard, for example, 70% of endowment funds are subject to donor restrictions on where and how they are spent.

The culture wars are not just a problem for specific universities that fall into Trump’s crosshairs. It is a major risk for American science and research more broadly. 

Government grants and contracts are even more important when you zoom out and look at university research and development spending as a whole. 

• Federal funding accounted for 54.8% of the $108.8 billion spent on R&D by US higher education institutions, dwarfing private sector and non-profit funding. 

• The Department of Health and Human Services accounted for more than 55% of this, providing $33bn in grants and contracts, while the Department of Defence was a distant second with $9bn. 

• This critical research helps to drive innovation in everything from defence technologies to life saving drugs and medical therapies. 

The Ivy League and US academia more broadly is therefore presented with a choice: submit to Trump’s demands at the expense of academic freedom, or face steep budget cuts with limited alternative funding routes. The irony of Trump’s pursuit of intellectual rigour and ideological diversity is that he is curtailing both of them, with long-term costs for American academia and society more broadly.