That’s half of Harvard’s…


Harvard Goes from Being a Hedge Fund with a University Attached…

… to a university with a hedge fund down the street.

Insanely rich obsessively money-hoarding Harvard (closing in on $40 billion) is jest ’bout fit to burst with all that dough; and some folks – I mean, hah hah, jest some folks, but, still, some folks – been saying that they got themselves so “fat, rich, and stupid” (says here) that they jest don’t know what all to do with it (ain’t like there’s a world of pain out there they might give some of it to or whatever!) so they been handing it out like candy to anyone who happens to work at the investment fund…

And well that plus other shit that tends to attach to the ownership by one university – one anything – of forty billion dollars seems to have embarrassed Harvard to the point where they’re kind of trying to make it all go away by outsourcing their investment activity.

Now UD‘s here to tell you that Harvard’s gonna be disappointed if it thinks that a non-profit which hoards obscene wealth except for what it hands out in twenty-million-dollar a year salaries to its investment managers will be less noticeable to journalists and alumni and the tax-paying public after it moves this activity off campus. UD wants you to know that Harvard’s greed and depravity – and the absurd lengths to which it goes to maintain this greed and depravity – will continue to be front and center, wherever it locates itself.

With losses like these, they should hire Donald Trump to do their books.

A situation where [Harvard’s] in-house investment managers are getting paid 50 times more than university professors, while delivering lackluster returns, is “politically not feasible,” [one expert] says.

Indeed, the news about Harvard’s endowment [the school just lost two billion dollars] led many to question the university’s approach and its costs. Mark J. Perry, a professor of economics and finance at the University of Michigan at Flint and a scholar at the American Enterprise Institute, estimates that Harvard spends at least $70 million on its endowment-management office. That’s almost enough to cover Harvard’s $45,000 tuition for its 1,600 freshmen.

… [I]f Harvard had passively invested in a standard mix of 60 percent stocks and 40 percent bonds, it would have gotten a higher rate of return — 8.9 percent over the past five years, versus 5.9 percent with its active in-house management …

UD has never understood why the fact that some universities have amassed endowments of $25, $35 billion doesn’t appall many people.

It appalls her, and if you put endowment in her search engine, you’ll find years of UD being appalled.

These endowments are a classic rich-get-richer phenom, in which a hedgie, say, decides the best thing to do with his or her hundreds of millions of dollars is to give them to Harvard, so that Harvard’s endowment can go from $35 billion to $35 billion plus. To make matters worse, schools like Harvard hoard their endowments.

You don’t have to be Peter Singer to know that this is an unconscionable use of money.

Malcolm Gladwell has begun podcasting about how disgusting it is that “the biggest donations go to institutions that already have endowments larger than some countries’ gross domestic products.” Good.

And while we’re on the subject of massive tax evaders massively endowing Harvard University…

… What, if anything, do you do when you’re a socially conscious sociologist whose professorship turns out to have been endowed by a man who cheated on virtually all of his various tax obligations,” Manhattan U.S. Attorney Preet Bharara said. “To top it off, when the IRS auditors examined his returns, Zukerman allegedly schemed to defraud and obstruct the IRS auditors who were examining his false tax returns.”

Morris Zukerman faces 28 years in prison. If guilty, he stole almost fifty million dollars from the United States. (Probably stole more than that. There’s a limit to what governments can do by way of identifying stolen goods and getting them back.) A veteran, contemptible, big-time criminal.

You are Harvard’s M.E. Zukerman Professor of Sociology, your professional name ever-emblazoned with, your children fed and your articles underwritten by, a man alleged to be one of America’s most socially destructive liar/thieves. This man’s wife is a “Trustee of Earthwatch Institute, an international environmental volunteer organization, which engages people worldwide in scientific field research and education to promote the understanding and action necessary for a sustainable environment,” and you better believe her family knows how to sustain environments. For itself.

Among the false deductions claimed by Zukerman on his Forms 1040 were those based on the fraudulent claim that Zukerman had contributed a total of $1 million in 2009 and 2011 to a conservation charity whereas, in truth and fact, Zukerman made no charitable gift and instead used the $1 million to purchase for himself and his family over 240 acres on an island off the coast of Maine.

See how the understanding and action necessary for a sustainable environment goes? Lie on your tax form and say you made a charitable land gift and then just take the land for the wife and kiddies! Sustain that sucker in the family!

So okay that’s just one teeny example of the beneficence of Mary Waters’ benefactor.


So what’s a person with that, er, ironic name on her professorship to do?

Let’s see.

1. Nothing. Who gives a shit. If Harvard really cared about the provenance of gifts, it would never get anywhere. So a larcenous piece of shit endowed my professorship. So what. How do you think these people made all their money, anyway? As Fran Leibowitz says, “You don’t earn a billion dollars. You steal it.”

2. Tell sardonic jokes. Assuming Waters has a sense of humor, she can respond to the raised eyebrows her title provokes by saying “Best I could do. It was a choice between that and the Enron Professor of Economics.”

3. Wait til he’s in jail (he’ll be found guilty but won’t go to jail – but anyway…) and mutter that he’s paying his debt to society.

4. Ask Harvard if it can strip his name from your professorship. Can the school keep the stolen goods and lose the Zukerman? Or will Waters be in the embarrassing position of having the federal government seeking to claw back her salary?

American taxpayers to Harvard University: We love to play our part.

A Song of Praise to Harvard
Overseer Morris Zukerman
And the Ghost of Finn Caspersen
And Countless Other Harvard
Benefactors Like Them —
From the American Taxpayer

Dodge fiercely, Harvard,
Dodge, dodge, dodge!
Demonstrate to us your skill.
Albeit you possess the cash,
Nonetheless we foot the bill!

Endowment’s almost up to forty bill
Tax breaks plus tax evasion filled the till –
How jolly!
Caspersen and Zukerman
Dodge, dodge, dodge!

Caspersen stole one hundred mill
Zukerman forty five
How many of those gains got-ill
Helped Harvard U to thrive?

We payers love to play our part
To keep you tax exempt
The thought of helping donor-thieves
Makes all of us verklempt.

Not so bizarre – Harvard’s a mega-billionaire, and it’s been doing it for years.

The prospect of a controversial billionaire accepting taxpayer funding would be one of the more bizarre twists of the 2016 campaign. But for a struggling Trump, it might be worth pursuing — especially with rising doubts about whether he can fill his coffers.

“No one earns $100 million. You steal $100 million.”

With Fran Lebowitz’s words in mind (UD, you recall, interviewed Lebowitz not long ago), let us once again, very gingerly, sidle up to the Sketchy Benefactor problem — the problem with your university taking hundreds of millions of dollars from people who… eh… meh… bleh…

Take Michael Milken. Start with him because he’s local – I mean, local to ol’ UD, because he bought her university a very beautiful building which houses a very fine school of public health, which he also bought for us.

If there is a poster boy for the redemptive powers of philanthropy, it’s Michael Milken. In 1993 the former junk bond king of Drexel Burnham Lambert emerged from a minimum security federal prison after serving 22 months of a 10-year sentence for securities fraud. He seemed a new man — partly because he had abandoned his toupee — and this revised Milken took advantage of his freedom by dedicating himself to giving back. (His finances quickly recovered after he paid the $600 million in fines and restitution; his current net worth is estimated at more than $2 billion.) In the decades since, he has donated consistently and significantly: more than $60 million to teachers and $50 million to George Washington University’s school of public health. His Prostate Cancer Foundation has raised $210 million. There is plenty of evidence that these good works are sincere. Is it also useful? Well, when news of a new SEC investigation into whether Milken’s involvement with Guggenheim Partners had violated his lifetime ban from the securities industry, Milken’s official denial in Fortune magazine read like a recap of his past 20 years of giving.

So no problem with Milken’s name being all over the GW landscape because he paid his debt to society and though in a perfect world we might prefer not to be associated with someone who had to do that in the first place, okay. But what if, while no longer flagrantly stealing, he’s still a sketchy person who when cornered on alleged continued sketchiness points directly at my university and what he gave it in order to exonerate himself?

Yes, GW’s had to deal with sketchy performers and sketchy honorary degree recipients lately; but this is small-time one-off stuff compared to (switching universities here) putting Steven Cohen or Bernard Madoff on your board of trustees or plastering sketchy names all over your most prominent buildings.

I mean… Seton Hall!

Or, staying with Catholic schools here, there’s the lawsuit against Georgetown University for failing to put a donor’s name on a building he bought just because the donor was convicted of insider trading. A long lawsuit between the guy and the university ensued, and if you go to the campus today you can take in the Scott K. Ginsburg Sport & Fitness Center — although, curiously, when you click on the Google link to an article in a university publication titled GEORGETOWN LAW CELEBRATES THE SCOTT K. GINSBURG SPORT & FITNESS CENTER, the connection times out. UD‘s gonna guess they caved, they settled with the guy, they put his name on the building and grimaced through its christening, and then they removed from sight all online references to having celebrated any of this…

Anyway, it’s an old story. Lure of lucre. Lure of respectability. UD only brings it up because of the very strange ongoing latest Caspersen story. The sketchy Caspersen family has a long and important donor relationship with Harvard, and as the alleged actions of the father and now the son tarnish the name more and more, there’s the question of how much tarnishing-by-association Harvard will tolerate. It’s not merely that the Caspersen name is prominent on campus; it’s that in virtually every news article about Andrew Caspersen’s court dates and bail amounts Harvard prominently appears.

You might say Harvard’s too rich and prestigious to care. You might be right. But remember that Harvard is under constant pressure from the government and the media and even from within to account in some way for its immense accumulated wealth. Fighting an ongoing battle against releasing a nickel of its money (this cartoon is out of date; the endowment’s now worth way more than 35 billion) is not made easier by one story after another about sketchy rich people who have helped put Harvard way over the top. In the case of Caspersen’s father, for instance, if it turns out that he did in fact evade taxes on a large scale (this has not been proved; he was under investigation by the IRS at the time of his death), Americans might actually stop and ask themselves why they are both giving huge tax breaks to Harvard University and tolerating donors who are tax evaders. Is zat how Harvard got so rich that the fact of its richness has now become a national controversy? Through ripping us off via tax breaks and then ripping us off again via tax evasions?

Wild Horsemen of the Apocalypse Come to Harvard!

[Sing it.]

Free Harvard/Fair Harvard
Their innocent title is
We know how vital is
Beating them down!

They want to make Harvard
Completely tuition-free
Since it’s got $40b
Sitting around …

“These devilish horses
Diminish our resources!”
Warns the director
Of financial aid.

“Our 39 billion
Will tumble to 30
If we should succumb to this
This villainous raid.”

“Fair Harvard/Free Harvard!
You’re all just like Bernie!
Expect our attorney
To sue you but good.”

Okay, feel free to correct my very rough math here, but…

… I’m thinking that if this bill passes (it won’t; we’re just playing around), Harvard will have a whopper of a problem on its hands.

A U.S. Congressman is floating an idea that’s likely to find opposition from the wealthiest colleges: devote 25 percent of a school’s annual endowment income for financial aid or lose tax-exempt status.

So I figure this would mean Harvard would have to give out close to $500 million each year in financial aid. How the hell do you dispense that much money? Where do you find the students?


I mean, maybe I’m wrong. In 2012, “Harvard spent about $242 million from its endowment on tuition assistance.” Maybe they’ve doubled it since then? (UD can’t find current figures.)

Even more appallingly, under this bill Harvard might be forced to reduce the tens of millions of dollars it pays many of its fund managers. Talk about income inequality!

Quotation of the Day.

“Of course there’s income inequality,” says John Griswold, executive director of the Commonfund Institute, the research arm of Commonfund, which manages college endowments. “To say that a small number of wealthier colleges should try to solve that is utter nonsense.”

UD loves the let-them-eat-cakery of this statement about American universities with endowments in the tens of billions of dollars. First there’s the languid of course. Of course some universities are richer than half of the world’s economies. Routine stuff. Totally unremarkable. Only an idiot would want to make something of the disparity among college endowments that these numbers represent.

And then there’s the even better, second part of Griswold’s statement, in which he violently disparages a claim that no one has made. No one says that Harvard should “solve” endowment inequality. What people say is that Harvard should stop hoarding so much of its money. What people say is that Harvard graduates should consider directing their donations to needier causes. What people say is that Harvard should give its students a serious break on tuition and other costs. What people say is that if Harvard doesn’t act more responsibly in regard to its unconscionable accumulated wealth, there should start to be tax implications.

But of course… utter nonsense! It’s the Lady Augusta Bracknell school of public utterance.

As American Law Schools Troll for Applicants, They Adopt the Arguments of the For-Profit Colleges.

All the way down (and I mean way down) the line, Noah Feldman’s defense of basically accepting any applicant for law school follows the talking points of the scummy for-profit colleges.

Law school has always had a shaky time thinking of itself as flying at a similar altitude to med school, but as the profession downsizes, and schools like UD‘s own George Washington University, for instance, start stealing students from American University, while Georgetown University steals students from GW, things are really moving toward the death spiral.

Feldman’s argument against the “infantilization” of people who want to assume $200,000 in debt to law school (even though their scores and grades make it obvious they won’t be good students and will either drop out with lots of debt or will fail to get a job that will allow them to repay the debt) is just as inspiring as Corinthian College’s spokespeople who for all the years it was in existence (it was recently forced to shut down its federal-tax-syphon operation) remonstrated against us for the same thing: How dare you, in an America founded on personal liberty and Horatio Alger etc etc etc how DARE you keep every person who fantasizes that she can be a lawyer from going to law school and sticking the American taxpayer with their loans? Our law schools are heroically reaching down into non-traditional places (the for-profits, for instance, hang out at homeless shelters and sign people up) and finding the inspiring social activists of this country’s future…


Feldman argues that “A standardized test score, taken alone, shouldn’t determine your future.” Hell yeah!

But no school accepts students merely on the basis of their scores… Jordan Weissmann is even unpleasant enough here to suggest that Feldman’s “very much arguing against a straw man” throughout his essay…


Feldman teaches at Harvard and is very worried that schools like his will be “accused of elitism and denial of opportunity” if they don’t override the conspiratorial pope-like “infallible admissions process” with its oligarchical buttressing of this country’s evil “technocratic elite.”

Thank God this doesn’t come anywhere near describing the Harvard of today, and thank God Feldman’s right there to make sure nothing like that happens in the future.


UPDATE: Paul Campos, a friend of this blog, adds this:

[Feldman] ignores the rules under which law schools are actually required to operate. ABA-accredited law schools have something close to a complete monopoly on qualifying American students to sit for state bar exams (California is the major exception), and in order to be an ABA law school, you at least in theory have to abide by the organization’s rules of accreditation, which both forbid schools from admitting students who don’t appear capable of passing the bar, and threaten with de-accreditation schools that have insufficiently high bar passage rates.

… Bar exams, ABA rules, and indeed law schools themselves are all designed as barriers to entry. This is especially true of law schools, which require people to invest three years and many hundreds of thousands of dollars in direct and opportunity costs after acquiring an undergraduate degree, before their graduates even have the right to try to take the bar exam. Now the public-regarding justification for these barriers is, not surprisingly, to protect the public from incompetent and/or crooked lawyers. Nowhere in his piece does Feldman even allude to this core regulatory function.

Glenn Reynolds means his modest proposal – abolish the Ivy League – in the same way Jonathan Swift meant his about eating the children of the poor.

But who cares? Those of us who want the obscene endowments of schools like Harvard Yale and Princeton seriously spent down will take our allies where we can. And UD thinks Reynolds is serious about these specific things:

We should eliminate the tax deductibility of contributions to schools having endowments in excess of $1 billion. At some point, as our president has said, you’ve made enough money. That won’t end all major donations to the Ivy League, but it will doubtless encourage donors to look at less wealthy and more deserving schools, such as Northern Kentucky University, recently deemed “more inspirational than Harvard” in the London Times Higher Education magazine.

We should require that all schools with endowments over $1 billion spend at least 10% of their endowment annually on student financial aid. That will make it easier for less wealthy students to attend elite institutions.

Many are called. None are chosen.

University Diaries has long
chronicled the efforts of dozens of
thoughtful people who feel called
to do something about this:


All sorts of people have stepped up
with good ideas about how to stop
one school from hoarding billions
and billions of dollars. Hoarding
them. Not using many of them, for
educational or charitable or whatever
uses. Just sitting on them. Or handing
out huge gobs of them to their
fund managers.

How did the money grow so fast and
get so big? A combination of
tax benefits – “Harvard’s income
from capital gains, interest, and
dividends is all tax free,
and the donations it receives
are tax deductible.”

and the inexhaustible ego of
hedgies who can’t think of anything
better to do with hundreds of millions
of charitable dollars than throw
them at one of the world’s richest
institutions. That way, they get
their name associated with Harvard.

All sorts of proposals have come
forward, most having to do
with messing up those exemptions,
although a few appeal directly to
Harvard alumni to divert their
contributions to actually worthy causes.

About ten years ago, when people realized
that this non-profit was paying several
of its money managers 35 million a
there was an upsurge in outrage
and in proposals for change.
You can type harvard endowment into
UD‘s search engine if you want to track
years and years of reform proposals from
many different people.

As my post’s headline suggests,
none of this reformist activity
has had the slightest effect.
Harvard keeps hoarding what it
has and supplementing it with
hedgie vanity thingies.


If you’re aware of this history,
you tend to respond to the like-clockwork,
beginning of the academic year,
New York Times op-ed about this
with a certain wryness. You begin to
recognize the ritual by which
Harvard acknowledges the fact of
complaint and bats it down with
the familiar bullshit (Everyone needs
a rainy day fund!)
and then the
whole thing goes away for another year.

But anyway. (Deep mournful breath.)
Here’s the latest gesture, this one from
a professor who’s a tax attorney.

“We’ve lost sight of the idea that
students, not fund managers, should
be the primary beneficiaries of a
university’s endowment. The private-equity
folks get cash; students take out loans.”

So (world-weary sigh) here’s the latest
go-nowhere proposal:

“Congress should require universities with
endowments in excess of $100 million to spend
at least 8 percent of the endowment each year.
Universities could avoid this rule by shrinking
assets to $99 million, but only by spending the
endowment on educational purposes, which is
exactly the goal.”

Yes, yes, hear, hear, good fellow.
Jolly good fellow.



Some good snark from Malcolm Gladwell.

Yale’s endowment spent $480 million paying its hedge fund managers last year and $170 million on its students.


I was going to donate money to Yale. But maybe it makes more sense to mail a check directly to the hedge fund of my choice.


Why doesn’t Yale spin off its university division and concentrate on its core money management business?


It came down to helping the poor or giving the world’s richest university $400 mil it doesn’t need. Wise choice John!

[John Paulson Gives $400 Million to Harvard for Engineering School

The gift from Mr. Paulson, a billionaire hedge fund manager, is the largest in the university’s history.]


If billionaires don’t step up, Harvard will soon be down to its last $30 billion.

“We’re … subsidizing wealthy organizations sitting in the middle of poor towns. Yale University has an endowment of about $25 billion, yet it pays very little to the city of New Haven, which I (as a resident) can assure you needs the money. At the prep school I attended (current endowment: $175 million), faculty houses, owned by the school, were tax-exempt, on the theory that teachers sometimes had students over for dinner, where they talked about history or literature or swim practice.”

And there’s more.

Conservatives are footing the bill for taxes that Planned Parenthood, a nonprofit, doesn’t pay — while liberals are making up revenue lost from the National Rifle Association. I could go on. In short, the exemption-and-deduction regime has grown into a pointless, incoherent agglomeration of nonsensical loopholes, which can allow rich organizations to horde plentiful assets in the midst of poverty.

Readers who’d like to (re)visit UD‘s long-running amazement that Harvard University, sitting on close to 36.4 billion dollars (No, that’s silly. That’s crazy. “[W]hen it comes to these fancy universities the official endowment figures are a drastic understatement of the real wealth of the university. Harvard’s real-estate assets are mind-bogglingly valuable, for example, but not part of the endowment.“), continues to enjoy non-profit benefits, can click on the category harvard: foreign and domestic policy. You’ll find it at the bottom of this post.

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