Major tax impact on MIT and its mission

Dear members of the MIT community,

As you are likely aware, last week President Trump signed a major tax and spending bill into law.

The bill burdens MIT and several other universities with a new 8% tax on the annual investment returns from their respective endowments – the so-called “endowment tax.”

Like the other institutions affected by this tax hike, MIT has turned endowed gifts from generations of alumni and friends into a substantial charitable resource; we use the bulk of the income these endowed gifts generate to support financial aid, research, and education.

For MIT, this new 8% tax rate will cost in the range of 10% of our annual central budget – a significant financial impact. In addition, we remain very concerned about further threats to our financial model and mission, including ongoing efforts by federal agencies to cap their reimbursement of research infrastructure and administration expenses (“F&A”) well below actual costs, and dramatic proposed cuts to research grant funding in next year’s federal budget. These latter issues are, in different ways, currently pending before the courts and Congress.

While we continue to advocate for robust federal support for university research, we are simultaneously considering additional steps required to address these strains on our budget. The Financial Scenarios Working Group, a team of faculty and staff experts that we co-chair, began meeting in the spring to consider and model a range of options to help us respond to these new constraints and to others that may emerge. We are grateful to former Provost Cynthia Barnhart for her leadership in establishing this group.

We will share updates on the working group’s efforts early in the fall. And as President Kornbluth has said often, please know that we will continue to fight strenuously in Washington, D.C., to protect MIT’s great mission.

Sincerely,

Anantha P. Chandrakasan 
Provost

Glen Shor 
Executive Vice President and Treasurer

Financial Scenarios Working Group

Anantha P. Chandrakasan, Provost, co-chair

Glen Shor, Executive Vice President and Treasurer, co-chair

Members

Cynthia Barnhart, Abraham J. Siegel Professor of Management, Professor of Operations Research

Renaud Fournier, Chief Officer for Business and Digital Transformation

Bill Garrett, Senior Associate Dean & Chief Administrative Officer, MIT Sloan

Katie Hammer, Vice President for Finance

Paula T. Hammond, Executive Vice Provost

Michelle Hanlon, Deputy Dean for Faculty and Research, MIT Sloan

Dan Huttenlocher, Dean, MIT Schwarzman College of Computing

Elizabeth Lennox, Assistant Provost for Administration

Richard M. Locke, Dean, MIT Sloan School of Management

Nergis Mavalvala, Dean, School of Science

Ed McDonough, Director of Budget & Financial Analysis, Office of the Vice President for Finance

Melissa Nobles, Chancellor

John Parro, Associate Director of Budget & Financial Analysis, Office of the Vice President for Finance

Agustin Rayo, Dean, School of Humanities, Arts, and Social Sciences

Hashim Sarkis, Dean, School of Architecture and Planning

Antoinette Schoar, Stewart C. Myers-Horn Family Professor of Finance, MIT Sloan

Mary Ellen Sinkus, Assistant Provost for Finance

Ian A. Waitz, Vice President for Research

Maria C. Yang, Interim Dean, School of Engineering

Kim Haberlin, Chief of Staff, Office of the Executive Vice President and Treasurer, Staff to the Working Group