Harvard, Dartmouth, MIT Made Financial Crisis Worse: Report

05/20/2010 03:38 pm ET | Updated May 25, 2011

According to a new report, Harvard, Dartmouth, MIT, Boston College, Boston University and Brandeis University all took on too much risk in the fiscal year ending last June and exacerbated the financial crisis.

BusinessWeek has more:

Investment losses at the endowments in the year ended June 2009 led to cutbacks and delayed construction projects, draining at least $1.35 billion from local economies for the next three years, said the study by Tellus Institute, a research and advocacy group in Boston.

"Harvard highlights how terribly wrong the endowment model can go when pushed to certain extremes in a climate of leadership crisis," said the 81-page report, which was released today. The endowment model, pioneered by Yale University's investment chief, David Swensen, relies on alternative assets including commodities, real estate and private-equity holdings to boost returns.

The report also states that "the endowment method of investing is broken":

"Whatever long-term gains it may have produced for colleges and universities in the past must now be weighed more fully against its costs -- to campuses, to communities and to the wider financial system that has come under such severe stress."

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