Harvard has a weapon in the fight against Trump. Here’s why the university isn’t using it.

For the past month, President Donald Trump has been stalking the richest universities in the world like a horror movie serial killer picking off a group of frightened teenagers one by one. Why aren’t they using their multibillion-dollar endowments to fight back?

The spree started in early March, when the administration announced it was holding $400 million in federal grants to Columbia hostage until the university agreed to a lengthy list of demands. As experts immediately noted, this is plainly against the law. And Columbia has plenty of money to temporarily fill in the gap while hiring legal counsel — its $14.8 billion endowment grew by more than $1 billion just last year.

But instead of lawyering up, Columbia gave in to the demands. Emboldened, the administration next threatened to freeze $175 million in grants to the University of Pennsylvania. Penalties for Princeton and Brown followed, and just this week the administration announced it would freeze $1 billion in funding for Cornell and $790 million for Northwestern.

Trump is also going after the biggest target of all: Harvard and its $9 billion in federal contracts and grants. An April 3 letter demanded that Harvard effectively put its hiring, admissions, discipline, governance, leadership, and academic oversight under the thumb of the administration.

Hundreds of faculty members urged the university to resist. “Harvard has the capacity to withstand the blow,” said a professor who studies authoritarian regimes. Former Harvard president Lawrence Summers confirmed that “ways can be found” to use the university’s $53 billion endowment to cover lost federal funding in an emergency. But current university president Alan Garber offered a conciliatory response, prompting the Harvard Crimson to declare that “Garber Must Change Course — or Resign.” (Columbia’s interim president did resign after agreeing to the Trump administration’s demands.)

University administrators will tell you it’s complicated; endowments can’t be immediately repurposed to make up for canceled federal grants. But the real reason is that endowments have become the single biggest signifier of excellence in higher education leadership, and college leaders can’t imagine making them smaller, even in the face of existential threat.

To understand how endowments work, let’s take the example of Harvard. The world’s richest university is by no means representative of most institutions. But that’s exactly why Trump is targeting them — if the most prestigious, wealthiest university won’t fight back, how will anyone else? And other endowments are smaller versions of the same basic model.

An endowment is not like a checking account that presidents can pull from whenever and however they like. It’s more like a hedge fund. Endowments are made up of private donations, often from alumni, which are then invested in the financial markets. Because most universities are nonprofits, they don’t pay capital gains taxes on the endowment, although Congress did create a 1.4 percent tax on net endowment earnings in 2017.

Harvard’s enormous pile is actually 14,000 separate funds pooled together. Most of them are “restricted” — a donor might say, “I’ll give you $20 million, but only if you use it to pay for the ‘My Name Endowed Professorship of Things I Care About,’ and admit my son who I promise is a good kid despite that incident with the BMW and the school crossing guard.” Harvard has 12 different schools — business, law, medical, divinity, and so on — each of which owns a piece of the larger pie.

Still, about 20 percent of the Harvard endowment is “unrestricted,” so the money can be used for any purpose. That’s more than $10 billion.

Harvard earned almost 10 percent on its total investments last year, which is typical for Ivy League financial managers. And the university only uses about 5 percent of the endowment for operating costs. The rest of the earnings goes back onto the pile. That, and more donations, is why endowments get bigger every year.

That means Harvard could spend an extra $500 million from the unrestricted pool to resist Trump this year and end up no worse off financially than it was in 2023. While $500 million isn’t $9 billion, the university absolutely has enough money to avoid giving in to the administration’s demands and mount a lawsuit. It could keep people employed and labs open while its lawyers fight an administration that is becoming politically toxic due to a ruinous trade war, Elon Musk, and other discontents.

But that kind of bold action is clearly seen as a last resort. In general, people become university administrators by building consensus and avoiding political controversies, not creating them. At Columbia in particular, some faculty, students, alumni, and members of the university board agree with Trump’s charge that the university failed to protect Jewish students from discrimination during recent campus protests.

It’s also not a coincidence that Columbia, Penn, and Harvard are the three universities whose presidents resigned after their disastrous testimonies to Congress in 2023 and 2024. An interim leader at the mercy of a divided board has little leeway to make bold decisions.

Christopher Eisgruber, by contrast, has been president of Princeton for almost 12 years. Eisgruber’s recent essay repudiating Trump was a strong, unambiguous defense of academic freedom. As Harvard economist Susan Dynarski recently observed, Princeton is especially well-positioned to resist Trump. Because it doesn’t have schools of education, medicine, or public health, it has fewer federal grants to hold hostage. And the same day the Trump administration suspended some $200 million in grants to Princeton for suspicion of antisemitism, the university said it was considering selling $320 million in bonds.

The administration knows that endowments give universities crucial resources to resist coercion. As a senator, Vice President JD Vance introduced a bill that would have increased the endowment tax from 1.4 percent to 35 percent (for endowments over $10 billion). Other Republican lawmakers have proposed higher taxes on endowments this year.

The key to understanding university psychology in this moment of crisis is time. University leaders are the ultimate long-term investors. Most of the Ivies are older than the nation itself, and plan to exist “in perpetuity.” They have no shareholders demanding stock buy-backs or dividends. All of their budgeting and long-term planning is based on the assumption that the numbers go up, forever. Every dollar of the annual endowment payout is spoken for, and nobody ever thinks they have enough.

If universities start eating into their endowments, long-term earnings and payouts decline, and nobody wants that. Research universities in particular require a lot of money to run, and they’re already reeling from a whole separate batch of illegal Trump efforts to gut university-based science and slash funding for research facilities, supplies, equipment, and support. It’s easy to see the next four years as a blip when you’re about to celebrate your 400th birthday.

Spending the endowment goes against everything university presidents have been told about succeeding at their job. Consider the late John Casteen III, president of the University of Virginia from 1990 to 2010. The Washington Post published his obituary on March 21, the same day Columbia capitulated to Trump’s demands. Casteen was a gentleman, a scholar, and a leader of one of the nation’s most prestigious public universities. But the official story of his life is mostly about a single accomplishment: he grew UVA’s financial reserves tenfold. When the phrase “increasing its endowment” shows up in the first line of your obituary, people notice. “Shrank the endowment” is therefore the ultimate failure.

This can be an admirably selfless philosophy in normal times. It’s the rare university president who purposefully squanders his or her institution’s future so they can live larger in the present. Most of the people who take those jobs are genuinely committed to leaving legacies for the next generation. But that can make it harder to recognize when the future is now.

The Ivies have the financial wherewithal, in both endowments and sterling credit scores that enable borrowing, to fight Trump’s illegal demands — if they so choose.

If they don’t, the consequences for American higher education will be severe. The list of fabulously wealthy universities is top-heavy with famous names, but not especially long. The Trump strategy of intimidation is to use violent punishment to make a few high-profile examples and intimidate everyone else into complying in advance. This is already working with Big Law.

The handful of institutions at the top of the higher education pyramid have to decide, sooner rather than later, whether to use the fortunes they inherited to stand up on behalf of millions of students, faculty, and workers nationwide, and defend the values of intellectual freedom that have produced the greatest higher education system in the world. It may be risky, and expensive, and not what anyone signed up for. But those are the circumstances that require courage most of all.