Major donors to colleges are accustomed to expecting their names on the building or being able to contact the admissions office. They often donated money at the end of their lives, as the end of a successful career. If they want to influence school policy, they usually work behind the scenes to achieve their goals.
However, the unrest at the University of Pennsylvania and Harvard illustrates the new rules of the game for how the wealthiest Americans exercise their influence in higher education.
There is a new class of donors who are often at the peak of their careers, having made fortunes in finance or technology, are more outspoken on politics and willing to wage war on social media to effect change.
Their lobbying campaigns resembled winner-take-all investment strategies on Wall Street, threatening to pull their money from schools that had become increasingly beholden to their largest donors.
In the past, influential donors have certainly threatened to withhold donations over issues like a losing football team or a controversial professor. But major donors are increasingly reacting to expectations of a broader role in university life, according to academics, former college presidents and people involved in philanthropy.
Last year, private donations to U.S. colleges and universities totaled $59.5 billion, up from about $14.8 billion during the 1980-81 academic year, adjusted for inflation, according to the Council for the Advancement and Support of Education, which tracks donations. In 2022, more than 80% of donations came from 1% of donors.
“The most novel part about this is the public nature of the resistance,” said Benjamin Soskice, senior research associate at the Urban Institute’s Center on Nonprofits and Philanthropy. “The donor category represents social media campaigns or even movement activism that we haven’t seen much of in the past.”
At the University of Pennsylvania, Mark Rowan, CEO of investment giant Apollo Global Management and chairman of the advisory board at Wharton, Penn’s business school, this fall publicly called on his fellow graduates to donate just $1 unless President M. Elizabeth Magill deposed. Ms. Magill resigned as president on Saturday, but that wasn’t enough for Mr. Rowan: On Tuesday, he sent an email to trustees with a call to change the school’s “culture” and improve its governance, with a list of 18 questions about the size of the board and faculty. acceptance, affirmative action, and “diversity of viewpoints.”
That was the same day, by the way, that the Philadelphia Inquirer published an opinion piece by Scott L. Bock, the former president of the Penn Board of Trustees, who resigned the same day as Ms. Magill, and which was a rebuttal to Mr. Magill’s statements. Rowan’s tough tactics: “Universities need to be very wary of the influence of money, especially a university like the University of Pennsylvania, which has a business school with a brand that is larger than the university itself,” Mr. Bock wrote. “Donors should not be able to determine campus policies or determine what is taught.”
An organization representing some Penn faculty said Mr. Rowan was seeking to attempt a “hostile takeover of the core academic functions of the University of Pennsylvania.”
“Unelected billionaires with no academic credentials now seek to control academic decisions that must remain within faculty purview so that research and teaching have legitimacy and independence from special and partisan interests,” the Executive Committee of the American Association of University Professors at Pennsylvania said. In the current situation.
The group declined to provide any Penn faculty members with an opportunity to comment, saying that professors who have spoken out about academic freedom and open expression have received death threats. He also received “violent threats” and “resisted an attempt to thwart an important business transaction,” Mr. Bock wrote.
Across the country, tensions with major donors had been mounting long before the October 7 attack on Israel by Hamas and the Israeli bombing of Gaza. Many older graduates tend to distance themselves politically from many faculty and students at elite schools, which have moved to the left on issues of identity, economics, and world affairs.
“Big donors tend to be white, older, and male,” says David Callahan, author of The Givers: Wealth, Power, and Philanthropy in a New Gilded Age.
“These are rebellious people.”
At Harvard, criticism leveled against Claudine Guy, the university’s president, by a prominent alumnus, William Ackman, the university’s president, went beyond her handling of anti-Semitism on campus.
Using the social media platform Mr. Ackman said he was told that Harvard would only consider candidates if they met its standards for diversity, equity and inclusion.
“It’s also not good for those who have been made president and who find themselves in a role they could not have had without a fat finger on the scale,” Mr. Ackman wrote.
Harvard’s board of governors said on Tuesday that Dr. Guy has its support to remain as president.
Adam F said: Falk, former president of Williams College and now president of the Alfred P. Sloan, said there has been a cultural shift among major donors, especially those who made their fortunes from hedge funds or technology startups. .
“Some of them may bring a much more transactional lens to what they might consider an investment in an organization rather than how you might think of it as giving,” said Dr. Falk, who oversaw a $1 billion increase in the Williams endowment during his tenure. . “There can be a bit of a mismatch between the mental habits that people in technology and finance use to succeed, and the habits that make college successful.”
In each of the past four years, there have been between seven and nine gifts of $100 million or more to U.S. colleges, according to the CASE Group.
While such massive gifts make up less than 5 percent of the schools’ total support annually, these major donors wield enormous influence not only within the schools but among other alumni, as Mr. Rowan, who gave $50 million to Wharton in 2018, has shown. ..
Generous donors are also increasing the size of the boards of many elite universities. (Ben’s Board of Directors includes 49 trustees.) “The desire to include more wealthy major donors or potential major donors is an important contributing factor to the growth of boards,” said Bruce Kimball, co-author of Wealth and Cost. “The Price in American Higher Education.”
Dr. Falk said the large gifts “significantly benefit” the universities. But he warned that some donors could have “an inappropriately expansive idea of the influence they should have on other aspects of the university unrelated to their gift.”
Even as donations have risen, the number of donors has declined over three decades — especially those making smaller gifts, according to a 2020 study published by two Indiana University professors with experience in philanthropy and higher education.
“With a decline in the number of donors and a decline in the number of small and medium-sized gifts, nonprofits and commentators are disturbed by the disengagement of novice regular donors from philanthropy,” the study found.
All this made the college president’s job more difficult. With presidents acting as the public face of their institutions, there are constant calls for fundraising and constant pressure to influence controversial issues, and not just on campus.
“All kinds of people have new speakers and audiences,” said Mariko Silver, former president of Bennington College in Vermont, who is now president and CEO of the Henry Luce Foundation. “So presidents have to listen differently, and they have to pay attention to a wide range of public conversations.”
While Penn and Harvard are the most prominent examples of what has been described as “the dangers of a donor revolution,” examples of tensions with donors abound.
In the mid-1990s, a member of the Bass family, Texas oil billionaires, gave Yale $20 million to expand its Western Civilization curriculum, as long as he was able to approve faculty appointments. But Yale struggled to meet his demands, and the money was returned.
At the University of California, Santa Barbara, Charles T. Munger, Warren Buffett’s billionaire business partner, offered $200 million to build a new dorm, as long as he designed it. But after strong criticism that the design, dubbed the Dormzilla, deprived students of natural light, the university abandoned the plan this year, and Munger, who died last month, withdrew his pledge.
To be sure, universities like Harvard ($50 billion endowment), MIT ($23.5 billion), and Penn State ($21 billion) are not significantly affected by any individual donation, even if the total donations may amount to hundreds of millions of dollars. But while generous donations can help fund new buildings, academic programs or theaters, they can also create an arms race mentality, reminiscent of baseball teams signing free agents to expensive contracts.
Donors also increasingly earmarked their contributions for specific operational purposes, such as research or faculty, according to a 2020 Indiana University study.
Lawson R. said: Bader, president and CEO of DonorsTrust, which advises conservative and libertarian donors on charitable giving, said more of that money is also being given with an eye toward politics, ideology, and donor intent. Sometimes, it’s for specific programming or scholarships on campus; Sometimes, it’s a new school, such as the College of Civic Life and Leadership, proposed as a center for conservative study at UNC.
“I think governors and universities have been on a collision course for a while,” Bader said. “But what’s starting to change, I think, is that you now have liberal Jewish donors.”
Mr. Badr said he is concerned about smaller colleges with modest endowments, which are more vulnerable to the whims of dissatisfied donors.
“I think we will lose some lower-tier colleges,” he predicted.
One college that faced this dilemma in 2015 was Paul Smith College in Adirondack Park in New York.
Sanford I. Weill, a Wall Street billionaire, and his wife, Joan, offered $20 million, as long as the college changed its name to Joan Weill Paul Smith College. College officials were willing, saying the money was vital to the institution’s survival. But the alumni objected, and a judge ruled that changing the name would violate the will of the school’s founder.
So the Wells withdrew.
The college’s endowment has slowly grown to $35 million, and the school has just launched a culinary program in New York City.
“They’re not dead,” said Mark Schneider, a lawyer who represented graduates opposed to the change. “They’re still in business.”
In recent years, the landscape of college philanthropy has undergone a significant shift. Donors are no longer simply writing checks and leaving it to the institutions to decide how to spend the money. Instead, they are wielding their financial power to shape policies and programs in alignment with their own beliefs and interests. This new playbook for college donors, often referred to as “power philanthropy,” has raised questions and concerns about the potential impact on academic freedom and institutional autonomy. From funding specific research initiatives to pushing for changes in campus culture, the power politics of college philanthropy are reshaping the higher education sector in profound ways.