Elite universities need big war-chests to attract and retain the top professors and to build top facilities, since those are the sorts of things that seem to attract top students, writes The Economist (Higher Education: Harvard's exit strategy. February 21, 2014).
If the donations aren't materialising then the best assets will get picked off, the university will sink to the second tier, and it might even find itself competing with vastly cheaper higher-education options.
This is hardly a problem that Harvard seems likely to face in the foreseeable future, as it topped up its already bulging ($32 billion) war-chest with a record donation from a billionaire hedge fund manager, as reported by The Boston Globe (February 21, 2014):
A Harvard alumnus who started trading stock options from his dorm room is donating at least $125 million to support financial aid for Harvard College undergraduates, the university planned to announce Thursday.
It is Harvard’s largest-ever gift specifically devoted to financial aid. The donation, from billionaire hedge fund manager Kenneth Griffin, founder of Citadel, will boost a financial aid program that is already the envy of other colleges.
With $15 million more that Griffin is giving, which may go to aid or to other undergraduate priorities, his is also the biggest donation in Harvard College’s history.
In addition, $10 million will be donated to endow a professorship at Harvard Business School, for a total of $150 million.
Indeed, Harvard's endowment is now so gigantic that even if it never received another gift it could probably fund itself indefinitely off the financial returns to its wealth, calculates The Economist.
It is tempting to agree with Matthew Yglesias, Slate's business and economics correspondent, who commented last week: Giving money to Yale is ridiculous. But giving money to Harvard is doubly ridiculous.