John A. Paulson (from right) with Harvard President Drew Faust and Harvard Business School Dean Nitin Nohria meet in front of Massachusetts Hall. (Rose Lincoln/Harvard University).

The world's wealthiest university is getting a lot wealthier. Harvard University has received its largest gift ever: a $400 million dollar donation from hedge fund manager John Paulson to expand its engineering campus across the Charles River. 

Paulson is a Harvard Business School graduate who made one of the biggest fortunes in Wall Street history, betting that the subprime mortgage market would collapse. 

Harvard says Paulson's gift will allow the school to establish an endowment for its School of Engineering and Applied Sciences, and help move the school's engineering campus to Boston's Allston neighborhood. That's where Harvard already owns hundreds of open acres surrounding its business school, and has long held plans to build state-of-the-art engineering research and teaching facilities. 

Harry Mattison is a community activist and member of the Harvard-Allston Task Force. He's underwhelmed with Harvard's plans.

"Harvard's expansion into Allston can go one of two different ways," Mattison said. "It can go the way of Cambridge, where the campus and Harvard Square are really intermingled, 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." 

Related: Harvard's Drew Faust Defends the Value of College

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

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

“For 379 years, Harvard has had a profound global impact across a multitude of disciplines that benefits all of humanity," Paulson said to the Harvard Gazette. "Today’s gift will help continue that legacy by making SEAS a 21st- century engineering leader. It provides a solid endowment for faculty development, research, scholarships, and financial aid.”

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