Private Dollars for Public Education: The University Funding Model of the Future is Here

News out of College Park, Maryland, last month points to another example of “lighting bolt philanthropy” in which a longtime funder makes a massive, game-changing gift after decades of support. 

The A. James & Alice B. Clark Foundation awarded a $219 million gift to expand scholarships, endow new faculty positions, and fund investments in buildings and programs at the University of Maryland’s (U-Md) flagship school. Like previous mega-gifts from Kenneth Ricci to the University of Notre Dame and the Hellen Miller Foundation to the University of California at San Francisco, Clark’s seemingly out-of-the-blue donation comes with a deep backstory.

Yet even more importantly, the gift is an example of state schools in the face of increasingly stingy legislatures turning to private dollars to keep tuition in check, fund scholarships and pay for ambitious capital expenses. Philanthropy is stepping forward as government steps back. 

I'll dig into this portentous component of the gift momentarily. But first, let’s start with the backstory.

A History of Support

A. James Clark, who died in March 2015, graduated from U-Md. in 1950 with a civil engineering
degree, and became a major figure in construction and development in the Washington region. U-Md’s engineering school was named for him in 1994 in acknowledgment of a $15 million gift. University officials estimate that Clark gave the school $50 million to $60 million during his lifetime.

We’ve kept an eye on the foundation’s work in the STEM field as of late. Most recently, the foundation gave the Hoboken, New Jersey-based Stevens Institute of Technology a $15 million endowment to establish the A. James Clark Scholars Program, an innovative STEM program that combines engineering, business, leadership and community service.

That gift found Clark exporting its signature academic initiative to a school outside the traditional Beltway region. Its $219 million gift to U-Md, meanwhile, has the foundation staying closer to home and going all-in on its namesake's alma mater.

Big Gift, Big Aspirations

The gift will fund three financial aid initiatives: the "Clark Challenge for Maryland Promise" to help the university raise money through matching funds to support need-based scholarships, targeted help to 40 engineering majors a year who transfer from Maryland community colleges, and scholarships to 40 engineering undergraduates a year, with priority for in-state students.

The gift will endow eight "distinguished chairs" in engineering and five "leadership chairs" in
interdisciplinary fields. It will also support construction of a new engineering building, expansion of another, and fund engineering research and doctoral fellowships.

Given the sheer size and scope of the gift, it's as if the Clark Foundation is a proxy state legislature, funding initiatives that normally fall within the purview of appropriators in Annapolis. (It also reminds me of Paul Allen's $50 million gift to the University of Washington. Both scenarios find funders seeking to elevate a school's engineering program with a shock-and-awe gift.)

This is yet another of many examples we've seen lately of state schools relying on private philanthropy to endow chairs, erect new buildings, and fund scholarships in the face of declining state appropriations as a share of total revenue.

Emulating the Private University Model

U-Md. President Wallace D. Loh said the gift reflects the new fiscal reality for public flagships across the country. To contain tuition increases, he said, public university leaders must emulate their private counterparts and cultivate philanthropic support. (Last year, the board of regents approved a 2 percent tuition increase for in-state residents.)

Public schools soliciting private dollars is “the overall pattern,” according to Loh. “It’s a pretty accurate description of what’s happening nationwide." Loh's sentiments echoed those of University of Illinois Urbana-Champaign Chancellor Robert J. Jones after the school received a $150 million gift from alumni Larry Gies. "More and more, you're going to see philanthropy as a greater part of the financial model for public universities, as it's always been a part of the financial model for private universities," Jones said.

Jones leads the same U. of Illinois school, by the way, that rescinded a tenure job offer in 2014 to a scholar—an almost unheard of move—after he posted tweets about the Israeli-Palestinian conflict that reportedly angered powerful donors. The U. of Illinois system has experienced some of the deepest budget cuts of any state schools, putting more clout in the hands of increasingly vital private supporters. 

This trend is likely to accelerate in coming years as state budget woes proliferate amid rising pension costs. Meanwhile, more funders like the Clark Foundation and donors like Paul Allen and Larry Gies will keep arriving on the scene, willing to dish out hundreds of millions of dollars. Given these circumstances, why wouldn't public schools emulate the private model?