The reason cited is alumni control of Harvard’s Board of Trustees.
Coming back to the question of why Harvard is No. 1, Mehta said Harvard’s Board of Trustees has been controlled by its alumni since the early 1700s. In the early years, the school was a state school where the trustees were appointed by the state of Massachusetts. However, the State legislature which controlled the appointments was dominated by Harvard alumni, and therefore the Board was controlled by the alumni. The one time when this was not the case, he said, was when the legislature was no longer controlled by the alumni, due to large-scale immigration into Massachusetts. The result was so bad that Harvard eventually proposed a radical solution by asking the State to make the Board completely controlled by alumni in 1865. Another caveat was that faculty would not serve on the Board. This change which was implemented in Harvard started a similar trend in other universities. Because of this change, endowments trebled in Harvard from 1869-1978 and rose three times again in the following two decades, propelling the university to the No. 1 spot. And the reason why Harvard continues to be No. 1, Mehta says, is because its Board has been controlled by alumni for 200 years more than other universities.
Mehta also focused on reasons why alumni-controlled Boards seem to work much better. Alumni, he said, were the people who cared most about advancing the interests of their school, as they are keen to increase “the value of their sheepskin”. Transferring control of the Board to the alumni, he said, is transferring power to those who care the most about the quality and the reputation of the school. The alumni do not have to act as a unified body, as is rarely the case. The diverse views of the alumni provide for better governance in a system where governance and management of the university is separated. In order to facilitate the management, the trustees need to agree on a specific direction for the school and find a president who can deliver it on that strategy.
In conclusion, Mehta said that the Harvard model is easily transferable and reinforces the importance of meritocracy.