Money and Man at Yale

McGeorge Bundy, a Skulls and Bones Yalie, one of the Best and Brightest of the Vietman War, President of the Ford Foundation, almost managed to destroy both Yale’s and the Ford Foundation’s endowments. Following McGeorge Bundy’s investment recommendations, Yale’s endowment lost half of its value between 1968 and 1978. You could tell that times were tough when you visited Yale. Paint was peeling, and lawns were unkempt.

Things got better beginning in 1985 when Yale hired the amazing Mr. Swensen to manage the endowment. Under David Swensen’s management, the endowment has compounded at 16.1% per year over the past 20 years, which means that the endowment has increased more than tenfold. It is an amazing record. Yale’s endowment is now $18 billion.

Harvard’s endowment is $29.2 billion. But Harvard has just under 20.000 students, while Yale has 11.400. Yale’s endowment is $1.58 million per student, Harvard’s is $1.49 million (Princeton endowment is $1.71 million per student, but Princeton is not part of the Harvard-Yale rivalry). The endowments provide about one third of the operating budgets both at Yale and at Harvard. If David Swensen can keep it up, Yale should be able to give Harvard a real run for its money.

In the beginning of 2005 at Harvard, Larry Summers, Harvard’s president at the time, got rid of Jack Meyer, who had managed Harvard’s investments. Jack Meyer had presided over fifteen years of success in running the university’s endowment, during which time Harvard’s endowment grew from $5 billion to $23 billion. Larry Summer’s move against Jack Meyer was widely seen as a bad move by wealthy alumni donors, but Harvard has managed to do quite well since then.

There is more information about David Swensen and a brief interview on NPR.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s