Tariffs consume so many headlines that you may have missed Harvard, the pinnacle of the Ivy League, struggles to agree with the simple, undeniable reality.
Trump & Co. is tired of Ivy’s attitude. The race on admission, the far left of professors, and of course, one of the most heinous crimes in history, on October 7th, is blatantly ignored by the law by considering accepting blatant anti-Semitic protests in favor of one of the 2023 Islaela Masachikure.
Trump wants to stop all of the above, and to make it happen, he is now adjusting federal funds and threatening his tax-free status, but the GOP Congress is aiming to donate schools.
And, if you understand the donation system, Harvard, along with an array of weapons at his disposal, would appreciate that there are few options in this fight, but he would also appreciate that he would surrender like Colombia, another hotbed of anti-Semitism after October 7th.
That’s why it’s a bit baffling that Harvard actually has a Chatspa to fight Trump. President Alan Gerber has announced a lawsuit against the White House after Trump freezes $2.2 billion with federal aid on half-hearted attempts to eradicate Day and all forms of anti-Semitism.
As you can imagine, Gerber was cheered by the political left for his rebellion. People like Barack Obama and Larry Summers – both Harvard alumni. Summers once ran through the place – framed it as a heroic attempt to protect academic freedom from invasive government. This will fail the logic test. Harvard allows for academic freedom to practice, not taxpayer expenses.
It also fails financial logic tests. Simply put, based on the numbers, this is a battle that Harvard cannot win if it is to maintain the size, range and height of the Elite Academia.
Harvard’s donations are huge. At $53 billion, it’s bigger than most Wall Street hedge funds. But it funds budgets that rely heavily on federal aid. What courts say federal funds don’t have strings? Dive deeper, you will fully understand why the donation doesn’t have the money to cover what Trump wants to cancel. First, many of the donations are allocated to specific needs based on the terms presented by the donor. Additionally, there are significant investments in private equity, one of the more illiquid assets on the planet.
PE accounts for almost 40% of its $53 billion portfolio. So a $2 billion freezing of federal funds looks like a $2 billion freezing as money needs to come from somewhere and is tied up somewhere with investments in early stage non-public companies and other non-liquid assets. There are only a few highly specialized buyers, and they are looking for bargains.
exacerbate Harvard’s problems: Trump threatens university tax-free status. Donors cannot deduct money from taxes. In addition, the GOP House and the Senate could consider legislation that would increase taxes on donation returns from 1.4% to 35%. VP JD Vance once wanted such a move, and Trump isn’t too late.
As originally reported by your humble correspondent about 10 days ago, Harvard will sell its chess of PE in the rather barren market of recent buyers, as stock prices have been frozen recently. Last Thursday, the news reported that the school had hired bankers to start shopping for $1 billion chunks soon after a similar fire sales by Yale.
Yes, Harvard pays a steep price for its rebellion.
