The Faculty of Arts and Sciences (FAS) just had a remarkable fundraising year. It raised roughly $800 million in gifts and pledges in fiscal year (FY) 2026, which ended June 30 — up from $463 million the year before and far above its $500 million target.
Meanwhile, its summer administrative restructuring eliminated 165 staff positions and is expected to save FAS roughly $20 million annually.
How can FAS raise that much, cut costs, and still not close a $350+ million structural deficit — even after recent “annual results” that have shown surpluses or relatively small deficits?
The answer is that those figures measure different things — and the $800 million fundraising total doesn’t reveal, on its own, how much FAS’s underlying financial position improved. Three questions help explain why:
What’s a structural deficit?
Why don’t FAS’s cost cuts and $800 million in fundraising erase it?
How does Harvard’s endowment fit in?
Quick refresher: What’s a structural deficit?
FAS’s “annual results” and structural estimate answer different questions:
Annual results: Did FAS’s reported revenue cover its reported expenses that year?
Structural deficit: Can the resources FAS expects to have over time cover the costs it expects to face over time?
To use concrete numbers: FAS reported a $78.7 million surplus in FY23, a $2.9 million surplus in FY24, and a $7.7 million net deficit in its unaudited draft FY25 report. Those figures describe whether reported revenue covered reported expenses each year, but they don’t establish whether FAS can keep paying for its commitments over time, including building upkeep and renewal.
In 2024, at the request of FAS administration, Harvard economics professors John Campbell and Jeremy Stein calculated that underlying balance by applying FAS’s long-term budgeting framework to FY23 data. Unlike FAS’s annual financial statements, their calculation compared FAS’s expected future resources with its expected future costs, including capital spending (e.g., construction and renovation costs). They estimated that annual gap — FAS’s structural deficit — at roughly $327 million.
FAS has since raised that estimate to more than $350 million, reflecting higher building-renewal needs and the new 8% federal endowment tax, which could reduce annual FAS spending capacity by as much as $100 million. At a 2025 FAS faculty meeting, Stein said that FAS would need to spend an average of roughly $400 million per year over the next 15 years to renew its more than 250 aging buildings.
Why don’t the cost cuts and $800 million erase the deficit?
The estimated $20 million in savings per year from the layoffs closes only about 5% of the gap. The effect of fundraising depends on more than the $800 million headline total:
How it compares with what FAS already expected to raise. FAS’s structural deficit calculation already assumes some level of annual fundraising (though FAS hasn’t publicly disclosed how much). So the relevant question is how much of the $800 million exceeded that assumption. FAS raised $300 million more than its $500 million FY26 target, but that target isn’t necessarily the amount assumed in the calculation.
What the donations pay for. Gifts often fund new commitments like professorships, programs, or research initiatives. Those gifts don’t necessarily help cover FAS’s existing costs contributing to its structural deficit. Gifts supporting expenses FAS already expects to pay, like financial aid, can.
When and how the money can be spent. The $800 million includes pledges that donors will pay over time, not just gifts FAS received this fiscal year. Some gifts are for current use, while endowed gifts are invested and FAS generally spends only a portion of them each year. And some gifts are unrestricted, while others can be spent only on purposes specified by the donor.
Consider the most extreme hypothetical: suppose all $800 million were available immediately and could be used to cover a $350 million annual structural gap. It could cover that gap for only about two years. But unless FAS sustainably increased its resources or reduced its expected costs, it would face a Groundhog Day problem: the same gap would reappear the next year.
What about Harvard’s $56.9 billion endowment?
In FY25, annual payouts from the endowment provided roughly $942 million — or 52.9% of FAS revenue. FAS’s structural deficit calculation already accounts for the endowment.
FAS could theoretically take larger payouts from its own endowment, which makes up 40% of Harvard’s total $56.9 billion endowment. But 82% of Harvard’s endowment funds are earmarked for specific uses — not to mention, Harvard’s endowment is intended to support the University indefinitely. Withdrawing more today would provide additional resources now, but leave less invested to support teaching and research for future generations.
Where does FAS go from here?
In her October 5th message, Hoekstra said FAS is developing a 10- to 20-year plan for capital spending, with guidance from the Faculty Resources Committee. “We need to set ourselves on a longer-term path of sustained progress, making disciplined decisions and recognizing trade-offs,” she wrote.
Those trade-offs come down to a short list of options in essence: bringing in more revenue to support FAS’s existing costs (rather than for new commitments), finding less expensive ways to meet existing commitments, and reconsidering which commitments FAS can sustain. As Hoekstra said, “There is urgency to this work: each year the deficit persists, it further constrains our choices and makes more challenging the burden we carry forward.”
Keep sending us your questions about Harvard’s finances and we’ll keep trying to answer them!
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Events
Los Angeles, CA — October 21 from 6:00-8:30 p.m. PT: Meet HKS Dean Jeremy Weinstein at this HKS on the Road series event. Register here.
FYIs
HBS Gifts and Pledges More Than Double to $278 Million Despite 11% Drop in Donors
Harvard Business School (HBS) released its Fiscal Year (FY) 2026 Report on Giving, reporting $278 million in gifts and pledges from 8,301 alumni and other supporters. That’s more than double the $121 million raised from 9,285 donors in FY25 — even as the number of donors declined about 11%. The FY26 total also far exceeded the $135 million raised in FY23 and $145 million in FY24.
Giving to the flexible-use HBS Fund rose much less, from $55 million in FY25 to $57 million in FY26.
The number of HBS Fund gifts exceeding $1 million rose from 13 to 15, while the number of gifts under $1,000 across the School fell 17%, from 5,353 to 4,446.
Donors established 22 new assistant professorship chairs, up from four in FY25. HBS reports that philanthropy provides an average of 27% of the School’s total revenue.
Federal Government Investigates Harvard J-1 Visas; Invests $100M+ in Training American Scientists
Vice President JD Vance announced on October 8 that the federal government is investigating Harvard and eight other universities over potential fraud involving the J-1 Exchange Visitor Program, which allows foreign nationals to temporarily study, teach, or conduct research in the U.S. The Department of Labor’s inspector general said the agency has subpoenaed the universities for information related to J-1 visas, foreign financial ties, and potential foreign influence.
Vance alleged that the nine universities employ J-1 visa holders on federally funded research projects at a rate of roughly 61%, compared with 38% nationally, and accused them of using foreign researchers to suppress wages for American graduate students and researchers. Vance didn’t explain how the administration calculated those figures.
According to the Harvard International Office, Harvard currently sponsors visas for 10,158 international students and scholars, with 4,531 in the latter category.
In July 2025, the State Department launched a separate investigation into Harvard’s eligibility for the J-1 Program. On October 6, a government lawyer told a federal appeals court that President Trump would likely reissue a proclamation barring international students from entering the U.S. to study at Harvard if the court lifted the injunction blocking the now-expired order.
Separately, the federal government announced it will invest more than $100 million toward initiatives training American researchers in science, technology, engineering, and math. The effort includes fellowships for U.S. citizens pursuing science and engineering PhDs and the revival of the National Science Foundation’s Young Scholars program.
Nature Exposes Deceptive Scientific Organizations That List Harvard Professors as Members
A Nature investigation has identified a network of suspicious scientific organizations, including the European Academy of Engineering (EAE), National Academy of Artificial Intelligence (NAAI), and Austrian Academy of Engineering. Nature found that organizations in the network fabricated or misrepresented their histories, locations, and institutional partnerships; listed prominent scientists as members or leaders without their knowledge or consent; and offered some memberships and academic credentials for a fee.
At least three current Harvard faculty are listed among the EAE’s newly elected 2026 members: computer scientist Leslie Valiant, Harvard Medical School professor Stuart Orkin (MD ‘72), and materials scientist Joanna Aizenberg. The EAE claims more than 400 members, including 35 Nobel laureates, but Nature found doctored images, plagiarized website content, and researchers listed in leadership positions they said they never accepted.
Nature found that the societies appear to use the names and reputations of prominent Western scientists to build legitimacy, while offering paid memberships and academic credentials to other scholars — particularly in China, where academic honors can carry significant weight in research evaluations.
Yale and Dartmouth Consider Changes to Undergraduate Grading
Yale and Dartmouth are examining their undergraduate grading practices, following Harvard’s move last academic year to address grade inflation. At Harvard, 60.2% of undergraduate grades were A’s in the 2024-25 academic year, and faculty voted in May to cap A grades at 20% of course enrollment plus four students beginning in fall 2027 (read more about the other components of Harvard’s new grading policy here).
Yale’s Committee on Teaching, Learning and Advising is expected to issue recommendations on grade inflation in November, followed by a faculty vote as early as December. At Yale, 81% of undergraduate grades were an A or A- in the 2024-25 academic year. In April, Yale’s Committee on Trust in Higher Education suggested a college-wide 3.0 mean or another common grading standard, but Yale College Dean Pericles Lewis said the new committee won’t necessarily adopt that proposal.
Dartmouth is gathering student input as it considers potential changes to its grading policies. An ad hoc faculty committee launched a survey in September on grading standards, student well-being, course choices, and AI and academic integrity. The committee is considering reforms ranging from “deflat[ing] or decompress[ing] grades” to deemphasizing grades or making transcripts more informative, and plans to propose potential changes for a faculty vote in the spring.
According to the Daily Pennsylvanian, Penn President Larry Jameson has also said that Penn’s Office of the Provost has taken initial steps to reevaluate the school’s grading policies — but “there’s certainly no decision we’ve made at this point.”
More News
More News at Harvard
The Crimson: “Harvard Weighs $25 Million Investment to Double University-Wide AI Computing Capacity”
The Crimson: “Harvard Grad Union Votes to Authorize Another Strike After 40-Day Walkout”
The Crimson: “Jake Sullivan, Ylli Bajraktari Warn of Narrowing Gap in AI Development Between U.S. and China at IOP Forum”
The Crimson: “At Harvard Republican Club Event, Steven Crowder Criticizes Danielle Allen for Pulling Out of Debate” — feat. Harvard University Professor Danielle Allen (PhD ‘01)
Harvard Gazette: “What Role Should ‘Diversity,’ ‘Pluralism’ Play in Higher Education?” — feat. HKS professor and former NAACP president Cornell Brooks and Heritage Foundation president Kevin Roberts
The Crimson: “FAS Dean Hoekstra Addresses Cornell Sexual Assault Case, Calls Description ‘Horrific’”
The Crimson: “Three Years After Oct. 7 Attack, More Than 100 People Gather for Vigil Mourning Victims”
The Crimson: “Hate Crimes, Violent Crime at Harvard Rose in 2025, According to HUPD Annual Report”
The Crimson: “Harvard Kennedy School Requires Video Essays for Non-Native English Speakers”
Chronicle of Higher Education: “‘Has Harvard Indeed Lost Its Mind?’” — interview with history professor Jill Lepore
The Crimson: “Unfinished Construction, Unreliable Utilities: Residents Detail First Months Living in Luxury Apartments on Harvard’s ERC”
FAS Current: “Pope Leo XIV Presents Scientific Honor to Astrochemist Karin Öberg” — feat. Harvard astronomy professor and senior vice provost for faculty Karin Öberg
The Crimson: “When Conservative Scholarship Belongs at Harvard” — editorial by The Crimson Editorial Board
The Crimson: “Reboot AI” — op-ed by Harvard English professor Derek Miller, chair of the FAS Standing Committee on Information Technology
The Crimson: “Islamism, the Subject We Still Avoid at Harvard” — op-ed by Charles Covit (AB ‘27)
The Crimson: “The Harvard Mismanagement Company” — op-ed by Khadija Khan (AB ‘28)
The Crimson: “Grading Is Dead, and AI Has Killed It” — op-ed by Evan Tsingos (AB ‘27)
The Crimson: “From Speech to Debate” — op-ed by Catherine Previn (AB ‘27)
The Crimson: “To the Editor: Look to Alumni for Phone Policy Advice” — letter by stem cell and regenerative biology professor and Council on Academic Freedom at Harvard member Michael Segal (AB ‘76)
More News Beyond Harvard
Wall Street Journal: “Zuckerberg’s Biohub Partners With DOE, NIH to Invest $1.8 Billion in Biological Data for AI Models”
Wall Street Journal: “Colleges Slash Tuition as U.S. Higher Education Price War Grows”
New York Times: “A College-by-College Guide to Which Majors Pay Off — or Don’t”
JNS: “Jewish Student Suing Parsons School of Design in NYC Faced Jew-Hatred in ‘Every Form You Can Imagine,’ Her Lawyer Says”
Columbia Daily Spectator: “Columbia Apologizes for Mislabeled ‘October 7th’ Pasta Sauce”
Columbia Daily Spectator: “Pro-Palestinian Student Groups Protest ‘3 Years of Genocide’ on Third Anniversary of Oct. 7 Attack”
Stanford Daily: “SJP and JVP Host Oct. 7 Vigil, Call for Stanford Divestment”
Haverford College: “A Message From President Wendy Raymond” — on the arrest of a Haverford professor charged with antisemitic online harassment
Columbia Daily Spectator: “Columbia Announces Distinguished Fellows Program, Which Will Bring Accomplished Professionals to Campus”
Yale Daily News: “YCC Passes Statement of No Confidence in Lewis, Rejects Tempered Wording”
Yale Daily News: “As Federal Grant Cuts Hit Social Sciences, McInnis Worried About Funds”
Daily Pennsylvanian: “Penn Forms Committee to Spearhead Search for Next University President”
Brown Daily Herald: “New AI Literacy Seminar Helps Faculty Create, Redesign Courses With AI in Mind”
Brown Daily Herald: “As AI Reshapes Coursework, Humanities Professors Rethink the Role of Take-Home Writing Assignments”
The Tech: “Faculty Adapt Teaching Strategies to Address AI Use”
National Bureau of Economic Research: “How Heavily Are PhD Students Offloading Their Scientific Writing to AI? Evidence from US STEM PhD Dissertations”
Vanderbilt Hustler: “AAUP Hosts Brian Soucek for Lecture on Institutional Non-Neutrality”
Chronicle of Higher Education: “The President Who Won’t Shut Up” — feat. Wesleyan University President Michael Roth
Chronicle of Higher Education: “The End of the Comprehensive Research University”
Financial Times: “Business School Research With Impact, Ranked”
Kyle Saunders: “Mapping the Structural Divide” — interactive map of 1,557 U.S. colleges by Colorado State University professor Kyle Saunders
STAT: “Will Claude Ever Win a Nobel Prize for Medicine?” — op-ed by HMS professor and former HMS Dean Jeffrey Flier
Kyle Saunders’s Substack: “Higher Ed, We Have to Realize That Fewer People Take Our Word for It Anymore” — by Colorado State University professor Kyle Saunders
Daily Pennsylvanian: “Make Penn’s Critical Writing Seminars AI-Free” — op-ed by Penn digital humanities, archaeology and anthropology professor Emily Hammer (PhD ‘12)
Vanderbilt Hustler: “Vanderbilt Is the Ideal School for Jewish Students” — op-ed by World Jewish Congress board chair Chella Safra