A new playbook for university donors: power politics

Major college donors used to expect to have their names on a building or to call in a favor from the admissions office. They often gave money towards the end of their lives, as a bookend for a successful career. And when they wanted to influence school policy, they typically worked behind the scenes to get their way.

However, the unrest at the University of Pennsylvania and Harvard illustrates a new playbook for how the wealthiest Americans exert influence in higher education.

There is a new class of donors who are often in the prime of their careers, have amassed fortunes in finance or technology, who are more outspoken about politics and willing to wage war on social media to bring about change.

Their pressure campaigns resembled winner-take-all Wall Street investment strategies, threatening to take their money away from schools that have become increasingly dependent on their biggest donors.

In the past, influential donors would certainly have threatened to withhold donations over things like a losing football team or a controversial professor. But major donors are increasingly concerned with expectations of a broader role in university life, according to academics, former university presidents and people involved in philanthropy.

Last year, private donations to U.S. colleges and universities totaled $59.5 billion, compared with about $14.8 billion in the 1980-81 school year, adjusted for inflation, according to the Council for Advancement and Support of Education, which monitors donations keeps track. And in 2022, more than 80 percent of donations came from 1 percent of donors.

“The most novel thing about this is the public nature of pushback,” says Benjamin Soskis, senior research associate at the Urban Institute’s Center on Nonprofits and Philanthropy. “The donor class is modeling social media campaigns or even movement activism that we haven’t seen much of in the past.”

At the University of Pennsylvania, Marc Rowan, chief executive of the giant investment firm Apollo Global Management and chairman of the advisory board of Wharton, Penn’s business school, publicly called for fellow alumni to donate just $1 unless President M. Elizabeth Magill expelled. Ms Magill resigned as president on Saturday, but that wasn’t enough for Mr Rowan: on Tuesday he sent an email to trustees calling on them to change the school’s “culture” and improve its governance, complete with a list of 18 questions about the size of the board, the faculty, admissions, positive discrimination and ‘diversity of viewpoints’.

By the way, it was the same day that The Philadelphia Inquirer published an article opinion essay by Scott L. Bokthe former chairman of Penn’s board of trustees, who resigned the same day as Ms. Magill, rebutting Mr. Rowan’s hard-nosed tactics: “Universities have to be very careful about the influence of money, especially someone like Penn, which has a business school with a brand bigger than that of the university itself,” Mr. Bok wrote, adding that “donors should not be able to set campus policies or determine what is taught.”

An organization representing some Penn faculty members said Mr. Rowan was pursuing an attempted “hostile takeover of the key academic functions of the University of Pennsylvania.”

“Unelected billionaires with no scientific credentials are now seeking to control academic decisions that should remain within the purview of faculty so that research and education have legitimacy and autonomy from private and partisan interests,” said the Penn Executive Committee of the American Association or University Professors. in a statement.

The group declined to make any Penn faculty available for comment, saying professors who had spoken publicly about academic freedom and open speech had received death threats. Mr Bok wrote that he had also received “violent threats” and had “resisted an attempt to thwart an important business deal.”

Tensions with major donors have been brewing across the country well before Hamas’s attack on Israel on October 7 and the Israeli bombardment of Gaza. Many older alumni tend to be politically out of step with many faculty and students at elite schools, who have moved to the left on identity, economics and world affairs.

“Very large 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 the people who are rising up.”

At Harvard, a notable graduate, William A. Ackman, the billionaire investor,’s criticisms of Claudine Gay, the university’s president, went beyond her handling of anti-Semitism on campus.

Using the social media platform X, where he has nearly a million followers, Mr. Ackman suggested that Dr. Gay, who is black, got her job because of Harvard’s efforts to promote diversity among its leadership. Mr. Ackman said he was told that Harvard would only consider candidates if they met criteria for diversity, equity and inclusion.

“It is also not good for those who are given the office of president and find themselves in a role that they probably would not have been given without a big finger in the scales,” Mr. Ackman wrote.

On Tuesday, Harvard’s board of directors said that Dr. Gay had the support to remain president.

Adam F. Falk, former president of Williams College who is now president of the Alfred P. Sloan Foundation, 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 view to what they might see as investing in an institution rather than the way you think it is giving,” said Dr. Falk, that one saw an increase of $1 billion to Williams’ donation during his tenure. “There may be a kind of disconnect between the mental habits that people in the technology and finance worlds are used to in order to be successful, and the habits that make a university successful.”

According to the CASE group, there have been between seven and nine donations of $100 million or more to U.S. universities in the past four years.

Although such mega-gifts represent less than 5 percent of total support for schools each year, these major donors have enormous influence not only within the schools but also among other alumni, as demonstrated by Mr. Rowan, who donated $50 million in 2018 Wharton donated. .

Generous donors are also increasing the size of many elite university boards. (Penn’s board has 49 directors.) “The desire to include more wealthy people who are major donors or potential major donors is a major factor contributing to the growth of the boards,” says Bruce Kimball, co -author of “Wealth, Cost, & Price in American Higher Education.”

Dr. Falk said major gifts “do overwhelmingly good things” for universities. But he cautioned that some donors “may have an inappropriately broad idea of ​​the influence they should have over other aspects of the university that have nothing to do with their gift.”

Even as donations have risen, the number of donors has declined over the past three decades — especially those who give smaller gifts, a 2020 study found. study published by two professors at Indiana University with expertise in philanthropy and higher education.

The survey found that “as donor numbers decline and smaller and mid-size gifts decline, nonprofits and commentators are concerned about the withdrawal of mainstream, early-stage donors from philanthropy.”

All this has made the job of university president even more difficult. With presidents serving as the public faces of their institutions, there are nonstop demands to raise money and a constant pressure to speak out on controversial issues, and not just on campus.

“All kinds of people have new megaphones and new audiences,” says Mariko Silver, former president of Bennington College in Vermont who is now president and CEO of the Henry Luce Foundation. “That’s why presidents must listen differently and pay attention to a wide range of public conversations.”

Although Penn and Harvard are the most prominent examples of what has been described as “the dangers of donor revolt,” there is no shortage of examples of tensions with donors.

In the mid-1990s, a member of the Bass family, a Texas oil billionaire, gave Yale $20 million to expand the Western Civilization curriculum, as long as he was able to approve faculty hires. But Yale struggled to meet his demands and the money was returned.

At the University of California Santa Barbara, Charles T. Munger, the billionaire business partner of Warren E. Buffett, offered $200 million for a new dormitory as long as he designed it. But after fierce criticism that the design, called ‘Dormzilla’, deprived students of natural light, the university decided abandon the plan this year, and Mr. Munger, who died last month, withdrew the pledge.

To be fair, schools like Harvard (with a $50 billion endowment), MIT ($23.5 billion), and Penn ($21 billion) are not noticeably affected by any individual donation, even if it totals hundreds of millions of dollars . But while splashy 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 increasingly exorbitant contracts.

Donors have also increasingly directed their contributions to specific operational purposes, such as research or faculty purposes, according to the 2020 Indiana University study.

More of that money is also given for politics and ideology donor’s intention, said Lawson R. Bader, president and CEO of DonorsTrust, which advises conservative and libertarian donors on charitable giving. Sometimes it concerns specific campus programming or scholarships; sometimes it is a new school, such as the School of Civic Life and Leadership, envisioned as a center for conservative study at New York University University of North Carolina.

“I think conservatives and universities have been on a collision course for some time,” Mr. Bader said. “But what I think is starting to change is that you now have liberal Jewish donors.”

Mr. Bader said he worried about smaller colleges with modest resources being more susceptible to the whims of hapless donors.

“I think we’re going to lose some lower-tier universities,” he predicted.

One college that faced this predicament in 2015 was Paul Smith’s College in New York’s Adirondack Park.

Sanford I. Weill, a Wall Street billionaire, and his wife, Joan, had offered $20 million as long as the college changed its name to Joan Weill-Paul Smith’s College. University officials agreed, saying the money was critical to the institution’s survival. But alumni objected and a judge ruled that a name change would conflict with the will of the school’s founder.

So the Weills withdrew.

The university’s endowment has slowly grown to $35 million, and so has the school launched a culinary program in New York City.

“They didn’t die,” said Mark Schneider, an attorney who represented alumni who opposed the change. “They are still active.”