HRSFANS.org

The Endowment

Where did HRSFA’s endowment come from?

In 2008, HRSFANS held a fundraising drive to help HRSFA purchase a share of the Harvard endowment. Approximately half of the $25,000 required for the purchase was contributed by HRSFA using proceeds from Vericon, while the remainder came from HRSFANS’ fundraising drive.

How does the endowment work?

The Harvard Endowment, like many hedge funds, automatically reinvests most of its earnings each year to grow the fund for the future. Unlike most hedge funds, however, the endowment is mandated to pay out approximately 4.3% of its value to the beneficiaries of the endowment each year. The College itself, of course, is the largest beneficiary, and uses this money to pay for its yearly expenses. Any student group that invests in the endowment also gets this percentage to pay for their expenses. Various levels of Harvard administration take a cut of approximately 30% to pay for their own fees/salaries/etc, leaving 3% for the organization.

If the Harvard Corporation makes 15% in a given year, approximately 10% will automatically be reinvested, i.e. each share is increased by 10.7%. If the Harvard Corporation makes 21%, more money may be distributed, and each share may go up 15%; if the Harvard Corporation makes nothing, each share goes down by a few percent. In any case, the organization still gets 3% of its share’s value to spend that year.

Judging from the past couple of decades, HRSFA’s total endowment (and thus its yearly allotment) should double every seven years, assuming there is no further investment in the fund. Of course, if HRSFA does have a profitable year (e.g. a well-attended Vericon), any excess proceeds can go into the endowment and make its allowance grow even faster.

The endowment thus provides for HRSFA in both the short and long term, ensuring a steady stream of income until the end of Harvard or the heat death of the universe. This amount distributed each year can be spent on improving the lives of that generation of HRSFA members. The endowment itself will take care of future generations.

What about the proceeds from Vericon?

Some of the recent Vericons have been extremely profittable: approximately half of the initial investment in the endowment was purchased using these funds. However, Vericon is unreliable as a long term source of funding for HRSFA. Its profitability varies greatly from year to year, depending on factors such as that the Guest of Honor, the success of its publicity, and the weather that weekend.

What does HRSFA use its money for?

HRSFA’s expenses vary from year to year depending on the interests of the current membership. There were periods when HRSFA had a strong literary bent, and most of its income went into publishing newsletters and literary magazines. More recently, much of HRSFA’s money goes into sponsoring attendance at other cons and at crossover events like the IgNobel prizes and Renaissance Fairs. Other usual expenses include munchies and supplies for SIGs.

Do you have some shiny graphs to prove it?

Yes, you can read the brochure we distributed during the fundraising campaign.