Should We Worry That More Big Gifts Are Flowing to Top Universities? Yes and No

Last year, we ran a sad story about LaGuardia Community College in New York City celebrating a $2 million gift from Goldman Sachs. The gift was the largest ever for a school that mainly enrolls lower income kids of color, and what was so pathetic was that it would nearly double LaGuardia’s endowment.

Meanwhile, nearly every week, Inside Philanthropy reports on yet another eight- or nine-figure gift to elite universities that are already rolling in dough.

Now comes new data for 2015 that showed that higher ed giving hit a record level, with $40.3 billion raised, and that the inequities in such contributions are just as bad as you think. The annual survey by the Council for Aid to Education found that the top 20 fundraising schools—which make up less  than 1 percent of the nation’s colleges—raised 28.7 percent of all gifts last year.

Many of the schools bringing in the biggest bucks already have some of the largest endowments in the nation, including Harvard, Stanford, Princeton and Columbia.

This shower of wealth to the Haves in higher ed comes amid an ongoing divestment in state universities and community colleges. A report last year found that these public schools have yet to recover from major spending cuts made after the 2008 financial crisis, cuts that hiked tuition for struggling students and threaten “to put college out of reach for more students.”

Like many of the trends fueling inequality, a self-fulfilling dynamic is at work in higher ed funding. Plenty of grads from elite universities become economic winners and have spare cash to give back to their alma maters. Few grads from places like LaGuardia will ever be in such a position.

Philanthropy has long drawn fire for the way that it is used by the wealthy to boost institutions to which they have a personal connection—with taxpayers helping foot the bill. But that longstanding critique has lately gained more steam amid growing anxiety about inequality and a tighter fiscal climate. It’s hard to watch the wealthy boost certain private institutions upward while so many public institutions are struggling. As a practical matter, also, that $40 billion given to top schools last year will cost the U.S. Treasury a lot of money at a time when Congress has been paring back Pell Grants, citing budget deficits.

All that said, higher ed giving by the rich is not quite as disturbing as it looks. For one thing, the latest data shows that public universities were among the top beneficiaries of private giving last year, as in years past. Six of the top 20 fundraising institutions in 2015 were public universities—including four University of California schools, which lately need all the help they can get.

We write often about big gifts to public universities, and not just the well-known ones like UC Berkeley. Private donors have boosted such schools all over the country, a trend which reflects the ever larger and more diverse ranks of the far upper class. While it’s true that a stunning percentage of billionaires have graduated from Ivy League schools, the great wealth boom of the past few decades has made many grads of state schools insanely wealthy, too. And more of these folks are now giving back.

In fact, thanks to surging giving by public university graduates in the past decade or two, some of these schools have huge endowments. The University of Texas system has the largest endowment in the U.S., after Harvard. The University of Michigan is No. 8 on the list, while the UC system is No. 14. Ohio State University has a bigger endowment than Brown, while the University of Minnesota has a larger stash than NYU. Thanks in part to private money, some of America’s public universities rank among the very best in the world. And, as we’ve reported, one reason that some major donors have stepped forward in recent years to help public universities is because they’ve wanted things to stay that way—and counteract cuts to these schools.

I know: This is not such a pretty picture—philanthropy propping up public institutions that shouldn’t be faltering to begin with—but it is at odds with the prevalent image of higher ed donors feathering the nests of their own class.

Another reason to think happier thoughts about all the money flowing to top universities is to look at what much of this money is actually for. Some of the biggest gifts, as we report often, are for medical and scientific research with the potential to benefit all of us. John Paulson’s controversial $400 million gift to Harvard, for example, was to bolster engineering and applied sciences (SEAS)  at the school. We weren’t among those piling on in criticizing that gift—which actually seemed pretty cool to us. As a Harvard press release said at the time:

Through research and teaching, SEAS faculty and students address some of the greatest challenges facing society. SEAS laboratories have achieved remarkable discoveries, including recent breakthroughs such as an organ-on-a-chip platform that can be used for drug testing, a swarm of self-organizing robots, novel nanotechnology devices that are changing optical electronics, an implantable cancer vaccine, new knowledge about the links between atmospheric chemistry and climate change, and a robot that can assemble itself from a flat sheet.

If you know anything about medical and scientific research in the U.S., you know that much of it is conducted at top universities. When government agencies give money to these schools for such research, we cheer. We should also cheer when people like John Paulson provide such support, even as we recognize the problem with private individuals driving research priorities as government research is money is cut.

Among the schools receiving the most private support last year was the University of California-San Francisco. It came in at No. 4, with just over $600 million in gifts. What was all that money for? Well, the biggest gift, for $100 million by Chuck Feeney, was for a new Global Brain Health Institute initiative that “will train 600 global leaders over 15 years in the U.S., Ireland and across the world... to carry out dementia research, deliver health care, and change policies and practices in their regions.”

That sounds like money well spent to us. Another big gift last year to UCSF was for HIV research. Over recent years, the school has pulled in a whole bunch of big private gifts for scientific and medical research.

Look, there’s no shortage of major gifts to elite schools that fit into the stereotype of the wealthy looking out for their own institutions in narrow ways. We could name a few big ones from 2015. But so often, the eight- and nine-figure gifts actually fund important work. Here again, in other words, is yet another example of how Big Philanthropy is a pretty complex phenomenon.