Can Harvard, Up Against an Antagonistic President, Go It Alone and Set a Precedent for Other Ivies To Follow?

The fiscal and political quandary facing Harvard is about as dire as it comes. Some $2.2 billion in federal funds have been frozen, and another $7 billion more is on the line. An adversarial president is threatening its non-profit status, calling it “a Political Entity.” The very notion that a marquee university — let alone hundreds of others further down the academic food chain — could lose its status as a “public good” is in question.Harvard’s president, Alan Garber, has some challenging days ahead. It was Mr. Garber who, on Monday, distinguished his alma mater as the first university in America to directly challenge President Trump’s demands for extensive reforms and the jettisoning of the “woke” orthodoxy that dominates higher education. Harvard, he said, will not “surrender its independence or its constitutional rights.”Federal officials swiftly retaliated, declaring that Harvard’s refusal to comply with civil rights laws will result in the revocation of federal funding that has been the lifeblood of the sprawling research university. Now, the question emerging among a chorus of Harvard supporters and critics is: can America’s oldest and wealthiest university survive on its own?Critics point out that its endowment stands at over $50 billion — greater than the gross domestic product of nearly 100 countries. “If anybody can disentangle themselves from federal strings, Harvard could,” a senior fellow and director of constitutional studies at the Manhattan Institute, Ilya Shapiro, tells the Sun. “It’s not an overnight operation, but if they were serious about it, they could eventually restructure their endowment.”Mr. Shapiro suggests that though it would be an unlikely move, Harvard could liquidate portions of its endowment for the purposes of replacing federal funding. An example could be set for other elite universities that are — if not already — sure to find themselves in Trump’s crosshairs. “The joke,” Mr. Shapiro says, “is that so many of these institutions are hedge funds with schools attached.”A chorus of online commentators are urging Harvard to somehow become totally financially independent. In response to Mr. Garber’s insistence on Monday that Harvard maintain “its independence,” Hillsdale, the conservative liberal arts college in Michigan that accepts zero federal or state funding precisely in order to avoid the situation Harvard finds itself in now, posted on X: “There is another way: Refuse taxpayer money.” The school went so far as to say that “Harvard may well become the Hillsdale of the East.”It wouldn’t be so simple, however, for Harvard to dip into its trust fund. Seventy percent of endowment distributions are restricted by donors to specific programs, departments, or purposes, and only 20 percent of funds can be used for discretionary spending such as bailing out programs and grants cut by the Trump administration.“Harvard’s endowment is sufficiently great that it could do without federal funds, but it would require very substantial belt-tightening, and that’s something that it clearly doesn’t want to do,” the head of the Brandeis Center and a former Assistant Secretary of Education during the first Trump administration, Kenneth Marcus, who is spearheading litigation against campus anti-semitism, tells the Sun. “Research universities have gotten completely addicted to federal money and will find it extremely difficult to break the habit.”Harvard’s most recent financial report from the 2024 fiscal year shows that federal funding of $686.5 million made up approximately 68 percent of total sponsored revenue from that year and about 16 percent of operating revenue. The school of public health is the most reliant on “sponsored support,” at 59 percent of its operating revenue, followed by the school of engineering at 37 percent and the medical school at 35 percent.Absent federal funding and sufficient private dollars, the ethos of the university could be upended. Some university programs and centers would be at risk of shutting down. Financial aid policies might change. Broad swathes of faculty could face firings and graduate students could be suffocated financially. Harvard would likely transform into more of an everyday liberal arts college, unrecognizable from the sprawling institution it is today. Adding to that dystopian portrait are the reputational repercussions, according to a visiting fellow at the Heritage Foundation and a former deputy assistant secretary at the Department of Education, Adam Kissel. “I think it would be extremely embarrassing to Harvard for the long term if it said to the world, we would rather have the amount of antisemitism that we have and not come into compliance, and give up billions of dollars in federal money,” he says.President Trump indicated in a Truth Social post on Tuesday that he is seriously considering pulling another powerful lever against Harvard: stripping it of its long-enjoyed non-profit status “if it keeps pushing political, ideological, and terrorist inspired/supporting ‘Sickness?’” Trump wrote. “Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!”Most universities are exempt from federal income taxes because they are classified as providing a public good. This exemption allows Harvard a host of benefits, including relief from traditional property taxes and permission to sell bonds that pay tax-exempt interest, which lures investors and helps lower borrowing costs. According to Bloomberg News, Harvard’s tax benefits totaled at least $465 million in 2023.It’s unclear if Mr. Trump is threatening Harvard’s non-profit status purely to discourage the school from aggressively fighting his edicts and compel it to the negotiating table to accept a deal on the president’s terms. Yet it is clear that if Harvard were deprived of non-profit status, it would be the most high-profile university to face such a revocation. Fierce First Amendment litigation would likely follow, says Mr. Kissel. There is some historical precedent. In 1983, the Supreme Court affirmed that the IRS was justified in revoking tax-exempt status from the private Christian university, Bob Jones University, due to the university’s ban on interracial dating or marriage. It took more than three decades for the school to regain its federal tax-exempt status, after it revised its admissions policies and practices to eliminate racial discrimination and align with federal standards. Higher education leaders at Harvard and beyond have vociferously criticized proposals to tax or otherwise disrupt the endowments of Harvard and other universities, which currently are classified as providing a public good. Mr. Marcus acknowledges that “the remedies that the government is seeking could be viewed as somewhat aggressive, but that is often the case in the event of remedies for violation of federal law,” he says. “There are strings attached when one accepts billions of dollars in taxpayer money.”

Can Harvard, Up Against an Antagonistic President, Go It Alone and Set a Precedent for Other Ivies To Follow?

Can Harvard, Up Against an Antagonistic President, Go It Alone and Set a Precedent for Other Ivies To Follow?

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