Harvard's $57 billion endowment confronts a private equity hangover with unfunded commitments soaring from $4.6 billion in 2017 to $7.9 billion in 2025. This aggressive expansion creates a liquidity challenge as CEO NP Narvekar prepares to retire by 2027. The surge leaves Harvard exposed when distributions slow but capital calls continue, creating a significant asset-liability mismatch for the university's finances.

Under Narvekar's leadership, HMC increased private equity allocation from 16% to 41%, delivering a record 33.6% return in 2021. However, the strategy backfired as higher interest rates weighed on IPOs and acquisitions. Harvard posted a loss in 2022 and returned just 2.9% in 2023, with returns still "dampened by having less public than private equity" that struggles with exit difficulties.

The situation compounds Harvard's financial pressures from federal funding cuts and a new excise tax on endowment income. The university relies on endowment payouts for over a third of operating revenue. With cash representing only 3% of the endowment, experts recommend the next chief should prioritize liquidity over chasing higher returns, warning that Harvard needs liquid assets to meet growing cash demands.