# Financial Overview

Summarized financial information for the year ended June 30, 2019

The University’s operating surplus for the year was $298 million, or 5% of operating revenues. The balance sheet was strengthened this past year as net assets increased by$2.3 billion to $49.3 billion. The increase in net assets was driven by investment returns on the endowment, generous contributions, and a disciplined focus on financial management. Moody's and Standard & Poor's both reconfirmed Harvard's AAA rating this past year ## Operating Revenue Total operating revenue increased 6% rising to$5.5 billion. Harvard’s diversified revenue portfolio relies on three main sources of revenue: education or tuition, sponsored research, and philanthropy.

### Sources of Operating Revenue for Fiscal 2019

 Endowment income made available for operations 35% Education/Tuition 22% Research 17% Gifts for current use 8% Other 18%

## Operating Expenses

Total operating expenses increased by 4% to $5.2 billion. Compensation expense (i.e. salaries, wages and benefits), which represents approximately half of the University's total operating expense, increased 4%. ### Operating Expenses for Fiscal 2019  People: Salaries and wages, benefits 50% Space: Space and occupancy, depreciation, interest 18% Other Operating Expenses 32% ## Harvard's Endowment Harvard’s endowment is a dedicated and permanent source of support for the University and its mission of teaching and research, in the present and forever. The aggregate endowment is made up of more than 13,000 individual endowments created over the last 350 years, which support faculty and students, including professorships and financial aid for undergraduates, graduate fellowships, and student life and activities. Donor contributions to the endowment have enabled leading financial aid programs, groundbreaking discoveries in scientific research, and hundreds of professorships across a wide range of academic fields. Distributions from Harvard’s endowment provide a critical source of funding for the University. The endowment distributed$1.9 billion in the fiscal year 2019.

While the endowment is a critical source of funding, 70% of the annual distribution is restricted to specific programs, departments, or purposes and must be spent in accordance with the terms set forth by the donor. Funds without donor restriction are more flexible in nature and are critical in supporting structural operating expenses and transformative, strategic initiatives.