We know about the big banks and the over-leveraged risk that almost brought down the economy last year, and triggered the recession that still hampers American society. But did you know that the economic crisis was also Harvard’s fault? It’s true, according to a tough new report from the Center for Social Philanthropy in Boston: educational institutions with large endowments were helped threaten financial stability.

The report profiles the six privately endowed New England colleges and universities: Boston College, Boston University, Brandeis University, Dartmouth College, Harvard University, and MIT—all of which come in for some withering criticism. Among the findings: endowment managers have fallen in love with high-risk gambling, governing boards have massive conflicts of interest, and institutions’ tax-exempt status leaves taxpayers footing the bill.

Says the report: “The Endowment Model 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. The financial crisis has revealed that the risks of the Endowment Model of Investing—of volatility and illiquidity—are much higher than previously understood, particularly when amplified by the use of leverage.”

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