What Does the Billionaire Donor Revolt at Ivy League Schools Mean for Higher Ed Philanthropy?

University of Pennsylvania. Jay Yuan/shutterstock

Editor's Note: This article was originally published on November 8, 2023.

Over the past few weeks, several high-profile billionaires — including Leslie Wexner, Seth Klarman, Leon Cooperman, Bill Ackman, Mark Rowan, John Huntsman Jr. and Kenneth Griffin — have ceased donations, threatened to withhold donations, or publicly criticized leadership at their Ivy League alma maters over schools’ responses to the Israel-Hamas war. Each case has varied a little, but donors have charged administrators with failing to forcefully condemn the October 7 Hamas terrorist attack in Israel, showing insufficient support for Israel following the attacks, and fostering a hostile environment for Jewish students.

The situation is ever evolving, and has launched a heated debate about academic freedom, what speech is and is not allowed in American universities, and concerns over campus “wokeness.” But a few key takeaways and more than a few questions have also emerged regarding the donor revolt’s implications for higher education philanthropy.

First, it’s become clear that the level of pushback we’re now seeing is unprecedented. There have been cases in the past of donors furtively intervening in personnel decisions and privately complaining to fundraisers about administrators who “wilt before the activists like flowers.” But we’ve never seen multiple billionaires publicly threaten to withhold donations, much less encourage their fellow alumni to do so. It represents new territory in how affluent donors are wielding their influence on campus.

Second, while the conflict could put a real dent in the finances of the schools in question, it still seems unlikely that it will have much of an impact on higher ed philanthropy overall. Ivies can withstand the loss of support from a handful of donors like Ackman, but the arithmetic starts to look problematic if alumni trigger what CNN’s Nathaniel Meyersohn called a “financial domino effect,” starting at the top of the donor fundraising pyramid and spreading to smaller donors, and, possibly, to a broader range of schools. At least for now, though, it appears the pushback is relegated to a handful of Ivies. If it’s slowing down fundraising at other universities, it’s happening in private.

Nevertheless, it’s a big deal that Ivy League alumni have very much taken the public route, on the brightly lit stage of the country’s most-respected academic institutions. That raises a question: Will this vocal backlash evolve into a larger and more lasting version of donor activism? Publicly withholding donations is, after all, just one of many ways donors can bring about their desired outcomes.

Counting the dominos

We’ve seen a lot of cases of donor pushback in higher ed giving in recent years, but this one is unlike any other and it’s more difficult to tidily sum up. That’s in part because the donors in question don’t fall neatly along partisan lines, or even share the same faith or cultural backgrounds. There’s some overlap with the long-running backlash to campus “wokeness,” but it’s only partial.

The recent uproar at the University of Pennsylvania (Penn) is unique in its focus on a controversial on-campus event, but it has been among the most extensive and public, making it a useful example.

On October 10, Apollo Global Management CEO Mark Rowan submitted an op-ed to the Daily Pennsylvanian calling on “all Penn alumni and supporters who believe we are heading in the wrong direction to ‘close their checkbooks’ until President [Elizabeth] Magill and Chairman [Scott] Bok resigned.”

Among his many critiques, Rowan cited the pair’s “moral failure to condemn” September’s Palestine Writes Literary Festival, which “featured well-known antisemites and fomenters of hate and racism, and it was underwritten, supported and hosted by various Penn academic departments and affiliates.” The letter also criticizes “politically constrained speech and unwillingness to accept or even allow the debate of uncomfortable facts or data,” with references to political bias and “fear of cancellation” calling to mind the ongoing wokeness debate. Following Rowan’s letter, a handful of alumni, including billionaires Ronald Lauder and Huntsman Jr., said they had either closed their checkbooks or were considering doing so. 

From a fundraising standpoint alone, this has put university trustees in a fraught position. On one hand, they’re wired to be responsive to the concerns of their billionaire patrons who are the lifeblood of the fundraising apparatus. But they also want to avoid the kind of optics that suggest they’ve capitulated to donor demands. Rowan “is attempting to strong arm the university using the classic Apollo playbook and we are not going to succumb to these tactics even if it results in lower donations,” said trustee and venture capitalist Andy Rachleff. “The soul of the university is not for sale.” 

Penn sits on a $21 billion endowment and philanthropic gifts accounted for a meager 1.5% of its $14.4 billion in revenue last year. It won’t furlough workers or cut an entire academic department if three or four megadonors pull their gifts from their table. But need is a relative concept, and changes at the top of the donor pyramid can have a notable impact on a school’s finances. Just ask Harvard, where, in response to a separate backlash, reps have told the courts that “[t]here would be substantial costs if Harvard were to stop considering whether applicants are the children of alumni.” Similarly, the number of affluent Penn alumni who have publicly sided with Rowan suggests the school could incur substantial costs if the donor dominos fall.

Rowan and his wife donated $50 million to the business school in 2018, while Huntsman Jr. has donated “tens of millions of dollars.” Lauder, who said he’d withhold donations unless the school took a stronger stance against antisemitism, has given “millions,” while in a letter to Magill, hedge fund manager Cliff Asness wrote that he recently “finished a large, five-year pledge to Penn and will not be considering another until such meaningful change is evident.” If their past giving informs future largesse — and on the whole, it usually does — that’s a substantial amount of money that doesn’t end up in Penn’s coffers. 

Now throw in canceled donations from millionaires who have cut ties with the school, like financier Jonathon Jacobson and philanthropist David Magerman, plus any of the 4,500 individuals who signed an open letter urging Magill to denounce the Palestine Writes Literary Festival’s “platforming of outright antisemitism.” Lastly, consider the investment acumen of Penn’s investment team, who, based on previous performance, can turn a $10 million endowment gift into $23 million in 10 years. So while it's fair to say Penn would withstand the loss of a donor or two, the financial outlook can significantly change if the revolt spreads.

Limited impact on higher education overall

This brings us to the big question: whether the dozen or so individuals publicly pushing back against administrators at Ivies reflect a larger trend at the other 2,800 four-year universities in the United States. If they do, the collective impact could create a dent in the sector’s fundraising machinery, which drummed up $59.5 billion for the 2021–22 academic fiscal year, according to the Council for Advancement and Support of Education (CASE). But that doesn’t seem to be the case, at least for now.

To be clear, we can’t write off the possibility that advancement officers at the University of Iowa or Santa Clara University or Texas A&M are fielding calls from donors channeling similar concerns over the schools’ support for Jewish students or administrations’ responses to the Hamas attack. It’s also possible that many other affluent donors, like Rowan, believe that administrators have supported environments where certain, usually left-leaning opinions are overly dominant on campus.

But even if we assume fundraisers and administrators have been having these conversations for the past month — or, for that matter, the past 10 years — we’d be hard pressed to find any historical correlation between episodes of donor discontent and reduced giving at the aggregate level. In fact, the $59.5 billion raised by universities during the 2021-22 academic year — a period that overlapped with what some critics would describe as “peak woke” — represented a 12.5% increase over the previous fiscal year. One could even argue that the “woker” schools have become, the more cash they’ve pulled in. I don’t see any evidence to suggest that the current backlash will have a meaningful impact on the sector as a whole.

More donor activism on campus?

This latest, unprecedented conflict between donors and their alma maters may not have an impact on the finances of higher education as a whole, but that doesn’t mean it won’t have an impact on campuses, and not just those currently in the spotlight. So what, if any, change might come about? And is this the start of a more widespread campaign of donor activism at American universities?

As far as the backlash at Penn is concerned, an October 26 Bloomberg piece reported that Bok and Magill were consolidating donor support and attempting to quell opposition led by Rowan. Around the same time, Magill announced Penn’s Action Plan to Combat Antisemitism. As part of the effort, Penn is launching a new University Task Force of faculty, student, staff and alumni leaders to guide efforts to address antisemitism and will recruit “a new, experienced leader with expertise in preventing and responding to antisemitism, Islamophobia, and other forms of hate.”

We’ll see if the move resonates with Rowan, Lauder and other donors whose demands have included creating a safer environment for Jewish students, but also resignation of administrators and larger course corrections regarding “double standards” in on-campus speech overall.

But if they so choose, the latest wave of fed-up alumni donors have other tools they could use to bring about changes on campus, beyond just threatening to withhold gifts. In a recent New York Times column titled “Why Big Money Can’t Easily Change Campus Politics,” Ross Douthat lays out scenarios in which donors could take a more active role in shaping the culture of higher ed. That could include “founding or funding centers or programs within universities that are committed to heterodoxy in some form,” giving money to “student associations that seem to foster free debate” and “finding a smaller or poorer school where… your opportunities to effect real transformation will be ample.” 

Not mentioned in the piece is the catch that these approaches run counter to megadonors’ DNA. Billionaire alumni prefer massive gifts earmarked for institutes, capital projects, academic programs and medical centers. Douthat’s to-do list asks billionaires to commit to standing up alternative paradigms of learning and culture in what they see as the belly of the woke beast. These are pretty big asks that, if implemented, could very much increase donors’ influence in academia.

But if this controversy has taught us anything, it’s that the underlying issue isn’t whether donors will continue to wield influence — as long as there’s philanthropy, they will — but rather, what that influence looks like. We could see more public showdowns over donations, more subtle efforts to shape university culture, or a combination of both.