Watchdog report: Harvard’s endowment grew $14 billion in past six years, while receiving $4.4 billion in federal tax dollars
President Donald Trump warned Harvard University on Friday that its tax exempt status could soon be gone, as the fight between the Republican administration and the Ivy League school ramps up.
“We are going to be taking away Harvard’s Tax Exempt Status. It’s what they deserve!” the president wrote Friday morning on Truth Social.
His statement comes barely a week after the university sued the administration for pausing more than $2.2 billion in funding. The reason was the Ivy League school’s refusal to comply with the Trump administration’s reforms regarding diversity, equity, and inclusion programs and antisemitism.
A Harvard spokesperson quickly pushed back on Trump’s announcement, telling Fox News in a statement, “There is no legal basis to rescind Harvard’s tax-exempt status.”
The spokesperson said students received more than $749 million in financial aid from Harvard last year.
“Such an unprecedented action would endanger our ability to carry out our educational mission. It would result in diminished financial aid for students, abandonment of critical medical research programs, and lost opportunities for innovation,” the spokesperson said. “The unlawful use of this instrument more broadly would have grave consequences for the future of higher education in America.”
However, a new analysis by the fiscal watchdog organization Open The Books found that Harvard’s endowment grew by $14 billion while receiving billions in federal tax dollars over the past seven years.
“In any given year, Harvard collected more in federal grants and contracts than they stood to gain through tuition, room & board. (This does not consider financial aid, loans, etc., but is self-reported tuition charges from Harvard),” the organization found.
“Meanwhile, even more astonishing: Harvard’s endowment has grown by $14 BILLION since 2018 (for a total of $53.2B) — that means they’re sitting on more than $7 million for every undergraduate student as they collect billions in grants and contracts,” according to its report.
Just how Trump plans to revoke Harvard’s tax exempt status is uncertain. As the Wall Street Journal reports:
The tax code prohibits the president and other senior officials from directly or indirectly asking the Internal Revenue Service to conduct or stop an audit or other investigations. After earlier Trump comments, the White House had said that any decisions to investigate universities’ tax-exempt status were happening independent of the president and that any inquiries started before the president’s statements.
Under the tax code, prohibited political interference in audits is a crime punishable with a fine and prison time. But it would also presumably require federal prosecutors to bring a case, and Supreme Court decisions about executive power and presidential immunity could be high bars to clear.
Harvard has 501(c)(3) tax-exempt status as an educational institution, which means that it doesn’t pay income taxes on any net earnings and that its donors can get income-tax deductions.
That status can be revoked after an audit that examines whether a tax-exempt entity violates the rules.
It isn’t clear what argument the administration could make against Harvard. One possibility is that its admissions policies or approach to antisemitism violate fundamental public policy. That’s the standard that the Supreme Court set more than 40 years ago, when it upheld the IRS’s decision to revoke the tax-exempt status of Bob Jones University over the school’s racially discriminatory policies.
Earlier this week, Harvard ended its tradition of hosting special, racially segregated graduation ceremonies. It also renamed its Office of Equity, Diversity, Inclusion, and Belonging — both moves being seen by some as a concession to the Trump administration, The College Fix reported.
MORE: Ed Dept. threatens to cut federal funds of universities with DEI programs
IMAGE CAPTION AND CREDIT: President Donald Trump speaks at a press conference from Mar-a-Lago. White House/YouTube
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