Financial Sustainability Criteria for Waqf Institutions: Harvard University as a Model

Abstract

This study seeks to highlight the best of the Western models in the field of university endowments. It is a model that has been ensconced at the top of the educational pyramid in the United States and Europe for decades. This is due to the management, the investment methodologies and board policies adopted in this model regarding its holdings, investments and disbursements during the past decade. The exemplar of this model is Harvard University, one of the strongest scientific and academic universities in the United States of America; in fact, in the world. It is renowned for its academic strength and financial independence thanks to its endowments, which continue to manifest clear, strong growth. There is no doubt that the approach adopted by the University during the past decade has been very clear, especially in the area of protecting its endowment assets and in reducing expected losses in the area of investments of its endowment assets. This has been done by adopting the investment methodology and performance policies of the Governing Council, in addition to the exceptional performance of its arm for attracting new endowment assets and donations over the last decade. To discuss this experience, the research looks at the financial sustainability criteria adopted by the University to preserve its endowment assets and how the University deals with the risks that beset them. It has itself suffered several investment losses in its endowment assets, as is evident from the company's annual investment management reports. In addition, the University's endowment governance structure with regard to transparency, governance, and internal and external monitoring of its financial assets are discussed. There is no doubt that Harvard’s endowment experience has been pursuant to the endowment activity that has prevailed in several American and European universities, as well as those of Canada, Japan, Singapore and other countries. However, the most prominent and best in performance and investment are the American universities, which have benefited from the legislation in the United States in support of the phenomenon of endowments for the benefit of university education. The study will be limited to Harvard University, while taking into consideration the practical factors that led to the rise of the educational endowment phenomenon in the American university sector in the last two decades. This is approached through two subtopics. The first comprises the most prominent indicators of financial safety of endowment entities. The second is Harvard University Endowments as a model for financial sustainability.