Harvard Business School’s Endowment Is Now A Record $5.4 Billion

Harvard Business School’s endowment reached a record $5.4 billion last year, up $300 million thanks largely to impressive returns of 9.6% on the school’s investments. The endowment for the business school alone is larger the endowments for the entire universities at Carnegie Mellon, Boston College, or Georgetown University. In fact, it is more than double the size of the endowments at Tufts University or Tulane University.

That healthy growth helped Harvard funnel $53 million in fellowships to its MBA students in fiscal 2024, ending June 30th, or 28% of total tuition for all students.

In its annual financial report, the most public accounting of a business school’s budget, Harvard said that 46% of the school’s MBA students received fellowship money in fiscal 2024. Total funding for MBA fellowships was up $2 million from the previous year and a whopping $13 million more than the $40 million HBS doled out to students in fiscal 2021.

Average fellowship support per student totaled nearly $47,000 in fiscal 2024, an increase of 7% from the prior year total of nearly $44,000. Fellowships now cover an average of more than 50% of recipients’ total tuition. The increase was attributable to higher tuition per student and an adjustment to account for Fhe higher cost of living incurred by students. The dramatic increase in scholarship money also reflects a recent decision to provide need-based financial assistance to cover the total cost of tuition and fees for 10% of the school’s MBA students with the greatest need.

Over the past six fiscal years, the school’s average two-year MBA fellowship award has grown from more than $42,000 for the Class of 2019 to well over $92,000 for the class of 2025.

ONLINE GROWTH STALLS AT HARVARD BUSINESS SCHOOL

Amidst the positive news, however, there was a sign that growth in delivering programs online may have peaked.

Despite an expansion in online programming, participants in its programs stalled last year at 41,800. The new online courses, including offerings in Digital Marketing Strategy, Business and Climate Change, and AI Essentials for Business, helped to increase online revenue at Harvard by $2 million to $70 million. But the school made clear that this was “significantly below our forecast.” HBS said it failed to meet its projections for the online business due to “increased competition and higher costs to acquire online learners.”

In fact, the number of participants in its very first online offering, CORe (Credential of Readiness), has now fallen dramatically. In fiscal 2024, CORe had 4,141 students, down from 7,687 in fiscal 2021 (see below). Harvard, however, noted that the percentage of women in its online programs increased from the prior year while enrollment of international and minority participants declined. The overall completion rate for its online programs was 88%.

That is a story that is playing out across business education. Yet, Harvard remains optimistic about the online market for this year. “HBS Online has set an ambitious revenue goal for fiscal 2025, projecting double-digit growth,” noted Richard P. Melnick, the chief financial officer of Harvard Business School. “The group plans to enhance its educational offerings and operational efficiency. In addition to launching courses on a new university-wide Learning Experience Platform, HBS Online will develop new courses in leadership, finance, marketing, and customer experience, alongside a program focused on digital strategy.”

HBS EXPENSES GREW AT TWICE THE RATE OF ITS REVENUE IN 2024

Melnick expressed some caution over the results. “In fiscal 2024, we saw operating expenses increase by 6%, twice the rate of revenue growth,” he said. “While these expenditures supported the School’s crucial research initiatives and strategic priorities, this trajectory is not sustainable long-term.”

He added that HBS HBS concluded the year with an operating surplus of $36 million, or 3% of revenue, down from the previous year’s surplus of $64 million, or 6% of revenue. “As anticipated,” explained Melnick, “the lower surplus reflected, among other things, additional investments in the faculty and staff to support the School’s goals, programs, and growth initiatives, as well as increased operating costs related to the higher inflationary environment.”

Even so, the school’s total revenues increased by $31 million to $1.10 billion in fiscal 2024.

IN 2024, HBS LAUNCHED A NEW REQUIRED DATA SCIENCE COURSE FOR FIRST-YEAR MBAS

In the MBA program, fiscal 2024 marked the launch of a  new Data Science for Managers course in the in the first-year Required Curriculum (RC) class. “In keeping with the school’s emphasis on technological innovation, the course provided advanced artificial intelligence tools to all RC students,” wrote Melnick. “As expected, revenue from MBA tuition and fees decreased by $2 million, or 1%, to $150 million, as the RC class returned to its regular size following the post-COVID deferrals of the prior two years. As a result, HBS enrolled 1,970 students in fiscal 2024, 3% fewer than the previous year.”

First-year MBA tuition in fiscal 2024 increased by $1,470, or 2%, to $74,910. That was the first increase in many years because HBS had been holding the line on tuition increases since the pandemic. “Despite this increase,” added Melnick, “combined tuition and fees for the fiscal year remained lower than that of peer business schools. MBA tuition and fees accounted for 14% of total revenues in fiscal 2024, which is consistent with the prior year.”

Harvard also disclosed that the acceptance rate for its MBA program fell to 12% in 2024, down from 14% a year earlier and 15% in 2022. That was a function of application volume which grew to 9,856, highest in at least five years, and well above the 8,149 who applied in 2023. Yet, the school’s yield–the percentage of accepted applicants who actually enroll in the MBA program–also declined to 85% from 87% in the prior year.

EXECUTIVE EDUCATION CAME ROARING BACK WITH RECORD REVENUES

Executive education surpassed expectations, generating record tuition revenue of $245 million in fiscal 2024—an increase of $21 million, or 9% from the prior year. “Although total participation decreased 3% to 12,385 in fiscal 2024, the group’s innovative content continued to attract a diverse global audience. Focused Programs on leadership development and business strategy were among the key drivers of the group’s revenue growth, as was higher enrollment in global programs,” said Melnick.

Harvard said revenue from exec ed increased across all program categories increased year over year. The group delivered 171 programs—including 133 residential programs, 25 hybrid programs, and 13 virtual programs—that attracted 12,385 participants from around the world.

More than 7,200 Executive Education students participated in the 81 Focused and Comprehensive Leadership Programs conducted in fiscal 2024. The group also delivered 79 Custom Programs that drew more than 4,500 participants. International participation in Executive Education’s open enrollment programs increased by 1 percent from the prior year. Overall, executive education tuition accounted for 22% of the school’s total revenues in fiscal 2024, compared with 21% in fiscal 2023.

HARVARD BUSINESS SCHOOL SOLD 16.8 MILLION CASES LAST YEAR

“Although circulation of its flagship Harvard Business Review (HBR) declined in fiscal 2024, HBP remained the School’s largest single revenue component at $304 million, or 28% of total revenues,” he added. “This was 2 percent below our forecast, attributable primarily to lower revenue from the group’s Corporate Learning and Harvard Business Press components, as well as to a decline in advertising revenue. Focusing on long-term financial growth, the group continued its investment in new product development, content enhancements, and advanced HBR digital with the launch of a more robust mobile app.”

Harvard said it sold 16,797,000 cases last year, up from 16,456,000 a year earlier. In 2020, the school sold 15,209,000 cases.

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