“I remember like yesterday when I got the letter from HBS saying I had been admitted,” confides Harvard Business School super star professor Clay Christensen. “I thought, ‘Oh my gosh, how are we going to pay for this thing because I was newly married. We had no money and a baby on the way. When I found out that HBS was going to help me, I was so grateful. Who I am is in part what the Harvard Business School allowed me to become.”
Christensen, the world’s foremost authority on disruptive innovation, is speaking from the school’s iconic library surrounded by shelves of books and antique desk lamps. In the background, a series of gentle, heart-tugging piano notes set the mood.
The brief video is part of an ambitious capital campaign publicly announced on Friday (April 25) by Harvard Business School to raise an unprecedented $1 billion, the largest fundraising effort by a business school in history. The goal is part of Harvard University’s $6.5 billion campaign announced last September. The last HBS campaign brought in $600 million between 2000 and 2005.
HBS’ ENDOWMENT EXCEEDS SUCH PROMINENT UNIVERSITIES AS BROWN & JOHNS HOPKINS
Yet, HBS is also the richest and most endowed professional school in the world. The school’s endowment is $2.9 billion, nearly three times the size of the next largest endowment at rival Stanford University’s Graduate School of Business. The business school’s endowment is so large it already exceeds the endowments of many of the country’s most prominent universities, including Brown University, Johns Hopkins University, Boston College, and the University of North Carolina at Chapel Hill.
The business school also boasts among the most lavishly appointed facilities of any institution of higher learning, with a massive 118,000-square-foot fitness center, a separate chapel for what the school calls “quiet contemplation, and a 10,978-square-foot Georgian Revival-style residence for the dean. Only a day before the fundraising announcement, HBS broke ground on what will be its 35th separate building on the business school campus.
And when Harvard unveiled its new online learning initiative in March called HBx, the school revealed that it had hired 32 full-time staffers to support it. As for helping students with their tuition, HBS already hands out more scholarship money than any professional school in the world: $32 million a year to just 1,860 MBA students.
MAKING THE CASE FOR THE MONEY WHEN YOU’RE ALREADY RICH
So why does Harvard Business School need another $1 billion?
The school, which has already collected more than $600 million in gifts and pledges as part of the campaign’s “quiet phase,” which began in 2012, said it wants the $1 billion to support priorities such as student financial aid ($150 million), faculty research ($250 million), globalization ($150 million), and curricular innovation ($200 million), as well as enhancements to the school’s residential campus. HBS plans call for a 5% to 10% expansion of the faculty, which numbered 227 full-time equivalents at the end of fiscal 2013.
In a new multi-media section of its website, HBS largely makes the case for additional funding by noting the impact of the school’s alumni on business and society and the need to help future MBAs afford the cost of their education. The school cites a spate of statistics: 96% of the Top 25 universities, 84% of the Top 50 U.S. arts organizations, and 72% of the Top 25 liberal arts colleges in the U.S. have an HBS alumnus on their boards.
HARVARD MBAs HAVE SENIOR LEADERSHIP ROLES IN 139 OF THE FORTUNE 500 COMPANIES
The school says that 139 of the Fortune 500 companies have an HBS alumnus in a senior leadership position and 50 of the Fortune 500 chief executives have earned their MBA from Harvard. One in four of the Standard & Poor’s health care CEOs with MBAs went to Harvard. What’s more, 33% of the school’s 80,000 alumni in 165 countries serve on non-profit boards and 13% of the enrolled students are the first in their family to attend college.
Without more funding, fewer people who can’t afford a Harvard MBA would have access to one. This fall, the “sticker price” of an incoming Harvard Business School MBA—including the school’s own estimate of living expenses for someone with a “moderate lifestyle”—is now $95,100 a year. That sum does not include the opportunity costs of taking two years off from a job that likely pays $75,000 a year or more. Even with HBS discounting tuition and fees by more than $30 million annually for roughly half of its students, Harvard says its MBAs borrow an average $73,926 each to get through the two-year program. In 2013, about 61% of its graduates left the school with debt.