As we've noted in the past, philanthropy, despite incremental progress toward the contrary, remains a black box, and we think that's a rather appropriate analogy. After all, if you discover the black box and actually look into it, you may be unnerved by what's inside.
To see what we mean, we turn our attention to Detroit, where Michael and Marian Ilitch, founders of the Little Caesars Pizza chain, donated $40 million gift to build Wayne State University’s business school. We initially reported on this development back in the fall of 2015, and on the surface, it sounded like standard philanthropic fare (pun intended). Then local reporters at the Detroit Free Press and local blog Motor City Muckraker filed Freedom of Information Act requests and dug a bit deeper into the donor agreement.
Their efforts shine a light on the current state of big-money higher ed philanthropy, where increasingly hands-on donors negotiate an inordinate amount of influence and in the process, raise various red flags around issues like academic freedom and curriculum design.
Let's start with the high-level components of the gift. The agreement calls for the Michael and Marian Ilitch Foundation to give $35 million to build a new 120,000-square-foot business school for Wayne State. It also calls for the foundation to donate $5 million to establish an endowment fund at the business school once construction is complete by the beginning of 2018.
As with most gifts, context is key, and it's worth noting that the couple has been pouring money into a high-profile Detroit development as of late. As Inside Higher Ed notes, one of their other business interests is a development company currently working on a major overhaul of an area of the city just north of downtown. The couple also owns several other business interests including the Detroit Tigers and the Detroit Red Wings.
Needless to say, the Ilitches aren't the first philanthropists to support the construction of a new building that dovetails with its nearby urban revitalization efforts. But a closer look at the donor agreement surfaces some rather unique stipulations.
First, the donation agreement calls for the school to be named after Michael Ilitch in perpetuity. While we can see the benefits of such an approach—for starters, it could, at least theoretically, avoid nasty lawsuits down the road—it's nonetheless one element of the donor agreement that's out of step with the current higher ed landscape, according to Cedric Richner, co-founder and president of fund-raising consulting firm Richner & Richner: "The days of significant naming opportunity in perpetuity without any long-term mitigation strategies or caveats is becoming more and more unusual," he said.
But there's more. According to Inside Higher Ed:
Wayne State also agreed to several other stipulations, including, controversially, that it would honor requests from the Ilitches or their foundation to consult regarding the business school's curriculum. It agreed the business school's dean and senior staff will be compensated at levels consistent with other positions of similar standing.
What's more, it specifically says the scope of several types of consultation will not be limited: "on providing business school courses on food, hospitality, sports, entertainment and events management; on creating an internship program with Ilitch companies; on developing or serving on advisory boards for the business school; and on improving the rankings of the school."
These are sectors in which the Ilitches own businesses.
As you can imagine, faculty members are concerned about the Ilitches exerting undue influence over various aspects of university life. School administrators counter by arguing they and they alone have "sole right" over all decisions. Clearly, time will tell.
So what are the takeaways here?
First off, when it comes to gifts of such magnitude, you get what you pay for. (Or perhaps it's "you pay for what you get.") Susan E. Burns, president of the Wayne State University Foundation described the gift as larger and "more robust" than a typical agreement, something that’s to be expected for a $40 million gift.
Secondly, the stipulations have a certain logic when you realize that the donors in question made their business fortune by running a tight operational ship. And if their gift ensures that the school doesn't overpay its faculty—they're essentially setting salaries here—well, again, that's the nature of the results-driven beast. The Ilitches certainly aren't alone in this regard.
Add it all up, and this is what we find when we peer into this particular philanthropic black box—highly detailed donor agreements whereby a university realizes a short-term gain while potentially kicking some undetermined yet ominous can down the road.
Beth Gazley, a professor who directs the master of public affairs program at Indiana University’s School of Public and Environmental Affairs, told Inside Higher Ed that she finds this brave new world of highly complex donor agreements "a little frightening, because it just ends up in more and more intricate legal documents, which create more and more opportunities for lawsuits."