MBA News: Will Shrinking Endowments Affect Me?

Yesterday, Harvard’s President Drew Faust sent a letter to Harvard’s deans, informing them that the school’s endowment has shrunk by $8 billion (yes, $8 billion, but they still have $36 billion left.) While this figure represents the amount lost by Harvard as a whole and not by HBS exclusively, the fact remains that many business schools—which typically manage their own endowments—may now be facing significant losses. This could negatively affect the operating revenue generated by the endowments, thereby resulting in a reduction in scholarships being offered, an inability to hire or retain top professors, potential increases in tuition and more. Although it is not yet time to sound the alarm, candidates should pay some attention to this situation. Still, when interviewers ask, “Do you have any questions for us?” we would not recommend responding with “How is your endowment performing?”