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Financial Review

Business Model

Harvard Business School's core activities—educating students, conducting pathbreaking research, and communicating new ideas and insights worldwide—are funded with a unique mix of revenue sources.

More than 50 percent of the School's revenue comes from Harvard Business School Publishing (HBSP) and Executive Education, and thus originates in sales of products and services in markets that are highly competitive. Gifts to HBS, through distributions from the endowment and revenue from unrestricted current use giving, account for nearly a quarter of revenue. Nineteen percent of the School's revenue comes from MBA tuition and fees.

Fiscal 2007 was the first time in the School's history that endowment distributions and current use gifts contributed a larger percentage of revenue than MBA tuition. Reflecting the success of the School's campaign earlier in this decade and Harvard University's extraordinary investment returns, the endowment has become a major source of funding for the School's operations. In addition, unrestricted giving by HBS alumni and friends has set new records in each of the past two years. Unrestricted gifts provide flexible funding for new research and teaching initiatives.

Unlike other Harvard University schools, faculty at HBS do not seek grants from external sponsors such as government agencies, foundations, and corporations. Instead, their research is funded primarily by the School with revenue from HBSP and Executive Education. This business model allows faculty to pursue the research opportunities they believe have the greatest potential to create new knowledge and advance the practice of management.

In a self-sustaining cycle, Executive Education and HBSP disseminate the knowledge produced by the faculty through programs and through periodicals, books, cases, and eLearning products, respectively, enabling the School to influence the practice of management on a global scale, while generating significant operating margins. These margins complete the cycle by providing vital funding for the faculty's research.


In fiscal 2007, the School's total revenue increased by $37 million, or 10.1 percent, to $405 million from $368 million in fiscal 2006. Consolidated revenue has risen at a compound annual rate of 7.2 percent for the past five years.

Growth in HBSP sales and Executive Education tuition generated about half of the fiscal 2007 revenue increase. This continues a trend that began several years ago when the United States emerged from its last recession. As market-driven businesses, HBSP and Executive Education continued to benefit from favorable economic conditions.

Reflecting positive dynamics in the capital markets, coupled with strong investment returns, a larger distribution of income from the School's endowment contributed to the fiscal 2007 revenue increase, as did exceptional growth in unrestricted current use giving. As in prior years, MBA tuition and fees rose as well.

MBA Tuition and Fees

Tuition and fees revenue from the School's core academic program rose to $77 million in fiscal 2007 from $73 million last year, primarily due to the planned 5.6 percent increase in tuition. The School continues to set tuition at levels that recover rising program delivery costs and investments in programs designed to enrich the HBS educational experience.

First-year MBA tuition in fiscal 2007 was $39,600—near the midpoint among the 10 comparable schools tracked by the School—compared with $37,500 last year. MBA tuition and fees amounted to 19 percent of the School's total revenues in fiscal 2007, compared with 19.8 percent a year earlier.

bar chart of Investment in Research

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