The Financials Behind the Harvard-Stanford Rivalry

by John A. Byrne on

Harvard Business School across the Charles River

Harvard Business School across the Charles River

Stanford vs. Harvard. No matter what different rankings of the best business schools show, the general agreement among those in the know is that these are the two best business schools in the world. The two giants of business education get more applications for their MBA programs than any other schools. Stanford, given its smaller entering class size of 390, is the most selective business school in the world. Harvard, with an entering class of 910, is not far behind.

We’ve compared these two schools on the basic academic and cultural differences in one of our B-school smackdown reports. We’ve also taken a look at how their initiatives in entrepreneurship stack up against each other. But how would these two schools compare if they were companies instead of educational institutions? Unlike many schools, Harvard and Stanford produce annual financial reports that allow a rare inside glimpse of both powerhouses. Stanford’s just released its investors report for the fiscal year ended Aug. 31. Harvard has yet to publish its report for the fiscal year ended June 30th, but the 2009 document is available online.

Stanford's Graduate School of Business

When you look at the underlying financials of both institutions, you quickly understand that Stanford is the David to the Goliath that is Harvard. Stanford’s annual revenue of $155 million in 2010 is about a third of Harvard’s $472 million in 2009. Predictably, that’s because every line item in the budget at Harvard is significantly larger than Stanford, whether it’s tuition and fees or endowment income.

Stanford saw a decline in endowment income in 2010 to $52 million from $58.8 million a year earlier. The school largely offset the decline by rising tuition and fees from students which brought in $70.9 million last year, up from $64.5 million in 2009. The result: Student tuition and fees now account for 46% of Stanford’s annual operating budget, up from 42% in 2009.

What else do these reports tell you about the East Coast-West Coast rivalry between the two best schools in management education?

  • Stanford alums seem more loyal and committed to their alma mater than those from Harvard. Some 41% of Stanford alums made gifts to the school in 2010, compared to  24% of Harvard’s MBA alumni in 2009 (though HBS had a near 30% participation rate in 2008).
  • While a higher percentage of Stanford alums open their wallets to the school, Harvard’s much larger alumni base ultimately means that HBS gets more in cash gifts annually. Stanford’s take from annual gifts and its business school fund was $26.8 million last year, versus Harvard’s $37 million in cash gifts in 2009 (a year earlier, before the recession hit, HBS brought in $51 million).
  • Harvard Business School’s endowment totals $2.8 billion, more than triple Stanford’s $825 million. The endowment at Columbia Business School, in contrast, is just $409 million for fiscal 2010.
  • When it comes to tuition and fees, Harvard brings in a remarkable $191 million a year. That compares with Stanford’s $70.9 million in 2010. The biggest difference, besides the larger size of the Harvard class, is executive education. Harvard brought in $107 million in tuition from exec ed in 2009. Stanford did not break out its exec ed revenue.
  • Not surprisingly, Harvard gets significant cash each year from its publishing operations which are the envy of every business school in the world. In 2009, Harvard sold a record number of case studies: 8,334,000, up from 6,958,000 five years earlier. The school also sold 1,478,000 copies of Harvard Press books, along with 2,863,000 copies of Harvard Business Review reprints. All told, the school’s publishing gold mine brought in $137 million in revenue. At Stanford and most other schools, it’s pretty much zero. Put another way, what Harvard brings in annually in publishing revenue is more than double Stanford’s endowment income.
  • Harvard is more generous with fellowship support to its MBA students than Stanford. Stanford said it spent $14.3 million on student fellowships last year, down about $300,000 from the previous year. About 56% of the MBA received fellowship support with an average award of $20,240. At Harvard, the average annual award came to just over $24,700, with a two-year MBA fellowship of $49,500, up from $24,500 five years earlier. Total financial aid for students at Harvard in 2009 was $33 million.
  • Inquisitive Mind

    Great article! Any way to get a similar comparison for the top 10 schools? Maybe just the basics in a simple spreadsheet like format? I’d love to see all these details like endowment size, alumni giving, average fellowship, etc. Thanks!

  • Arthur Dullsworthy

    When is more the same? When the numerator and denominator change at the same rate.

    In this case, the numerator of total financial aid at Harvard is 131% greater than financial aid at Stanford (33mm/14.3mm – 1). But the number of students at HBS is greater than the number of students at Stanford by only 126% (1937/858-1). Meaning that per student financial aid at Harvard exceeds per student financial aid at Stanford by only 2% (231/226-1).

    Is Harvard 2% more generous than Stanford or is a difference of 2% what most people would consider to mean “exactly the same.”

  • mbaonwild

    So you are suggesting a virtually 4460 dollars difference / year per student is “virtually no difference”? …. I guess the #s can be interpreted in multiple directions, but you must be a long time fan of Stanford GSB.

  • Arthur Dullsworthy

    It’s a difference in the way they allocate funds. Harvard provides grants to a smaller percentage of its students. Otherwise, there’s no difference at all.

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