Comment by fancyfredbot | Hacker News Reader

Comment by fancyfredbot | Hacker News Reader

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Not sure this answers your question but Harvard does make a profit (technically an operating surplus as they are not a for profit) which they then reinvest. Although technically it might not seem like a profit motive I can see how a lot of this money might find it's way into the pockets of the administration of the university (although I'm no expert on this - presenting this as a personal view, not a fact)

Https://finance.harvard.edu/financial-overview

"The University ended fiscal year 2023 with an operating surplus of $186 million compared to $406 million in fiscal year 2022, on an operating revenue base that increased 5% or $262 million, to $6.1 billion. The reduced surplus was not unexpected and was driven primarily by expenses associated with renewed return to campus activity and strategic investments in our workforce, with increased compensation for faculty and staff, a decrease in vacancy rates, and overall growth in new workers across campus."

Sure, but that money isn’t going to shareholders is it? Why would the school’s management want to make that number bigger?

The same reasons as any other business enterprise under capitalism.

But that’s the point: Harvard literally isn’t a “business enterprise under capitalism”. It’s a non-profit organization with no shareholders. Nobody has equity in Harvard.

>Harvard literally isn't a “business enterprise under capitalism”

It literally is. "Non-profit" is a particular way of doing accounting, categorizing funds, filing taxes, but the incentives and interests are no different.

The incentives and interests are hugely different. A for-profit business is controlled by shareholders who directly own claims to its revenue. A non-profit is not. Harvard has no shareholders and the members of its primary governing board are not compensated.

Businesses tend to distribute their profits to shareholders, either through dividends or buybacks. Boards try to structure the way businesses are governed to align the interests of management with those of shareholders. But Harvard has no shareholders, so I’m not sure what you’re trying to suggest.

So that they can increase their own pay and benefits. Nonprofits still have to pay their staff and the amount of money some pay theirs can be rather... inflated.

The operating surplus is net of paying staff. If they increased their pay, wouldn’t it be lower?

The operating surplus says nothing about how they increased pay, except that they increased revenue more than they increased pay.

If you wanted to justify further pay increases this would be the best strategy - if you have an operating deficit you'll be under pressure to cut staff or pay.

Again I'm being very cynical here and I have no idea if this is actually happening. Just speculation.

Actually on reflection perhaps I'm being too cynical here. The motivation of administration doesn't need to be lining their pockets. They may simply see increased revenue as a means to invest in staff and facilities which they can use to further the university's mission of research and education. There doesn't have to be any bad intent.

Certainly when I was a student, I got the impression that my university saw its purpose as supporting research and training new researchers. One reason to like scholarships is that being a researcher doesn’t actually pay well so saddling people with lots of debt by graduation might discourage them from becoming researchers, though I’m not sure how much the university thought of that. It did feel like the majority of undergraduates who were not going to become researchers were a bit of an afterthought. However people outside had different ideas about what the university was trying to do, and the university obviously hoped to solicit donations from those students who eventually left.

The gains come from (re)investing donations, not from tuition.

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