The world's wealthiest university just got richer.

Harvard has received its largest gift ever: a $400 million dollar bequest from hedge fund manager John Paulson to further expand its campus across the Charles River and into Allston.

Paulson is a Harvard Business School graduate and made a fortunes on Wall Street history, betting that the subprime mortgage market would collapse.

Harvard says his gift will establish an endowment for the school of engineering and help its expansion into Allston.

That's where Harvard owns hundreds of open acres surrounding its business school and has long planned to build an engineering campus there.

"Harvard's expansion into Allston can go one of two different ways," says Harry Mattison, a community activist and member of the Harvard-Allston Task Force.

On the whole, Mattison is underwhelmed with Harvard's plans. "It can go the way of Cambridge, where the campus and Harvard Square are really intermingled," he says. "Or it can be more like the business school campus, which is this hermetically-sealed bubble of a campus that has really no interaction with the outside neighborhood at all."

Community members worry Harvard's expansion across the Charles will also pressure Boston's housing supply and displace low- and middle-income families.

Paulson's gift comes in the middle of Harvard's $6.5 billion dollar campaign...

To recognize his generosity Harvard will rename the school the John A. Paulson School of Engineering.