The Trump administration announced a freeze in grants to Harvard University after the school rejected its demands, prompting questions about why wealthy schools like Harvard can’t rely solely on their endowments. However, finance and higher education experts explain that endowments have restrictions related to donor earmarking, legality, and research priorities, making them unsuitable replacements for government funding. Harvard has the largest endowment among US universities at $53.2 billion, but this doesn’t mean it can make up for federal funding cuts as most of the endowment money is from donors and comes with specific terms of use. Donors may specify where the money should go, leaving limited discretionary spending for the university. Additionally, federal funding plays a critical role in research, with sources like the NIH and NSF supporting infrastructure and materials necessary for cutting-edge research. The impact of freezing federal funding on universities like Harvard could be devastating, potentially leading to a reduction in important research projects. Overall, experts suggest that universities will need to adapt to funding freezes and make financial trade-offs to continue their operations effectively.
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