On the other hand, the government has every right to decide what activities it will and won’t fund, including to which universities it will issue grants. Harvard has no absolute right to government funding and students have no right to government funding of their study at institutions of which government does not approve.
The gray area is what Harvard chooses to do with NGO-provided funds which originated in government grants of taxpayer contributions. I’d argue that passing public funds through one or more NGOs doesn’t magically make them private.