Harvard University is considering putting $1.65 billion worth of bonds up for sale after donations from wealthy donors dried up in the wake of the anti-Semitism row that cost its president her job.
The move was discovered by billionaire Bill Ackman, who predicted that the university would have to cut expenses after its wealthiest benefactors eliminated more than $1 billion in donations.
Its president, Claudine Gay, resigned in January after Ackman accused her of allowing anti-Semitism to “explode” on campus following the Oct. 7 attack on Israel.
But the university remains mired in claims that its diversity, equity and inclusion (DEI) programs foster a climate of anti-Jewish bias, and Ackman warned that donors “won’t be back for some time.”
“At the very least, alumni will want to know who the next president is and the state of DEI and anti-Semitism on campus before resuming donations,” the hedge fund boss tweeted.
Harvard alumnus Bill Ackman, who helped organize a multimillion-dollar boycott in the wake of the anti-Semitism row, uncovered the university’s attempt to get its finances back on track.
Former Harvard President Claudine Gay resigned last month amid fury over her handling of allegations of anti-Semitism on campus and her disastrous testimony before Congress.
“At the very least, alumni will want to know who the next president is and the state of DEI and anti-Semitism on campus before resuming donations.”
On Tuesday, the university filed its plan to sell $750 million in taxable fixed-rate bonds the week of March 4 and $900 million in tax-exempt bonds in April.
The University of Massachusetts has a AAA credit rating and is the richest university in the world, with a total endowment of about $50 billion, larger than the economies of 120 countries.
But most of its assets are invested in property, venture capital and long-term investments, and donations covered 45 percent of revenue expenses in 2023, leaving it vulnerable to a cash flow squeeze.
And Republican lawmakers have threatened to target the university’s federal funding, which accounts for another 11 percent of its spending.
“Like most endowments, Harvard shapes fund distribution expectations when considering its liquidity,” Ackman wrote.
‘Harvard also makes assumptions about income from alumni donations.
‘The model likely did not predict a decline in liquidity events from private equity, real estate and venture capital nor the dramatic decline in donations.
Anti-Israel protests have rocked the Massachusetts campus since the Hamas attack.
Thirty-one student organizations signed a letter blaming Israel solely for the October 7 attack.
The university is believed to have lost more than $1 billion in donations in response.
“That’s likely why Harvard announced this recent bond offering, which comes in an environment of substantially higher interest rates than a couple of years ago.”
Ackman, who is Jewish, has donated tens of millions of dollars to the university that taught him in the 1980s, but asked his fellow billionaires to turn off the taps in October.
Len Blavatnik, whose family foundation has donated to the Ivy League at least $270 million, halted donations citing “rampant anti-Semitism on campus,” and Leslie Wexner, former CEO of L Brands, the parent company of Victoria’s Secret, also joined the boycott.
Israeli billionaire Idan Ofer and his wife Batia withdrew their support over Ms Gay’s muted response to a letter signed by 31 student organizations blaming Israel for the Hamas attack.
“President Gay’s failures have led to billions of dollars in donations to the university being cancelled, paused, and withdrawn,” Ackman wrote in December.
“I am personally aware of more than $1 billion in canceled donations from a small group of Harvard’s most generous Jewish and non-Jewish alumni,” he added.
Gay, the first Black woman to head an Ivy League university, resigned in January after a disastrous congressional hearing in which she could not say whether calls for genocide would constitute harassment.
University of Pennsylvania President Liz Magill also resigned after hedge fund manager Ross Stevens threatened to withdraw a $100 million donation in light of his testimony before the same committee.
Last week, a teaching organization claiming to support Palestine posted an anti-Semitic cartoon on Instagram showing a Jewish man choking black and Arab men.
And earlier this week, the Harvard Jewish Alumni Alliance announced plans to audit courses offered at the university to root out what they believe is causing anti-Semitism to fester in the Ivy League.
“There are entire Harvard courses, programs and events that are based on anti-Semitic lies,” said Dana Horn, a Harvard graduate who served on an anti-Semitism advisory board organized by former President Gay.
Billionaire couples Leslie and Abigail Wexner, and Len and Emily Blavatnik are among those who stopped donations to the university.
More details about Harvard’s finances may be revealed if Harvard moves forward with its proposed bond sale next month.
“It would be interesting to understand how much the modeled cash flows have decreased from original expectations,” Ackman wrote.
‘I wouldn’t be surprised if Harvard announced a substantial cost-cutting program soon.
“I suspect alumni donations won’t return for some time.”