When It Comes To Union Negotiations, Harvard’s $37.6 Billion Endowment May Be A Minus

After a three-week strike, Harvard University and the union representing its cafeteria workers have reached an agreement. Harvard administrators have agreed to the workers’ biggest demand: the equivalent of $35,000 a year.

Ever since the issues between Harvard and the cafeteria workers surfaced, many have maintained that one of the wealthiest universities in the world should be able to pay its low-wage workers more.

Union officials, workers and Harvard professor have pointed to the school’s $35.7 billion endowment and asked why a school with so much money can’t spend a few million dollars extra each year for salaries and benefits.

But while there are ways a university can generate money for salaries, a huge endowment fund isn’t necessarily one of them.

Hundreds of cafeteria workers have been on strike for the past three weeks, demanding a $35,000 salary and health care benefits.

Outside Massachusetts Hall in Harvard Yard, chef Emanuel Amaral said the university should be able to pay its workers higher wages, in part, because of its wealth.

“We know that they have a lot of money,” Amaral said. “You see all the brand new buildings being put up. It’s really out of control. They’re just being greedy.”

Harvard said it can’t use more of its endowment to boost dining hall staff wages because donations to the endowment “are intended by their donors to benefit both current and future generations of students and scholars.”

In other words, the majority of funds is restricted.

Peter McDonough, vice president and general counsel with the American Council on Education, says an endowment isn’t just one big pile of cash that a school can spend as it wants.

“An institution’s endowment is a collection of funds,” McDonough explained. “Each of which may have specific instructions.”

At Harvard University, for example, there are more than 13,000 endowment funds, and each is intended for specific means like researching income inequality and poverty, constructing new science buildings, or providing financial aid to students from Iowa or Rwanda.

These donor-restricted funds make up 84 percent of Harvard’s endowment. That still leaves about $6 billion unrestricted, but the university already uses the interest from those funds to support operating expenses, including salaries.

McDonough says Harvard and other elite institutions do have a responsibility to spend endowment funds morally.

“With great opportunity comes great responsibility and, periodically, challenges associated with that,” McDonough said.

McDonough says protesters, politicians, and the public should better understand how endowments work before dictating how institutions should spend them. He says if endowment dollars dedicated to financial aid or research were allocated for another purpose — like a raise and benefits for dining hall workers — it would put the future use of those funds in jeopardy.

WGBH News intern Dina Kleiner contributed to this report.

[Cross-posted at On Campus: the WGBH News Higher Education Blog]

Kirk Carapezza

Kirk Carapezza is the lead reporter for On Campus. Kirk has reported for Wisconsin Public Radio in Madison, Wis., and Vermont Public Radio in Montpelier, Vt. He's been a writer and producer at WBUR in Boston; a teacher and coach at Nativity Preparatory School in New Bedford, Mass.; a Fenway Park tour guide; and a tourist abroad.

Kirk received his B.A. from the College of the Holy Cross and earned his M.S. from Columbia University's Graduate School of Journalism. When he's not reporting or editing stories on campus, you can find him posting K's on the Wall at Fenway.