Last year, I wrote a piece titled "Campus Fundraisers: Meet Effective Altruism, Your New Worst Nightmare." I argued that in an era of rising inequality, soaring tuition and a metastasizing student loan crisis, a donor will have a hard time justifying, say, a massive gift to fund a football program's indoor practice facility.
In related news, billionaire David Booth gave $50 million gift to kickstart a $350 million plan to, among other things, overhaul the University of Kansas' football stadium. Specifically, Booth's gift will allow the school to begin construction of a much-needed indoor practice facility.
The gift, which has been received enthusiastically by the university and alumni community, is intriguing for many reasons. First, it underscores the inherent relatively of modern higher ed fundraising. (A "much-needed" indoor practice facility? Compared to what?)
Second, Booth's defense of his gift—which we'll get to in a second—suggests donors are increasingly hip to the logic of effective altruism. Booth may have sensed that his gift could be taken the wrong way, and wisely tried to get ahead of the story.
Let's start with the basics, shall we?
A "Money-Losing Drug"
The University of Kansas recently launched the "Raise the Chant" fundraising campaign with the primary goal of bolstering the school's football program. "A competitive football program benefits the entire university and is important for KU to continue being a strong member of the Big 12 Conference," said Kansas chancellor Douglas Girod.
To which my inner effective altruist can't help but ask, "Wait...really?"
An ever-growing body of research contends that athletic programs can have the opposite effect. Consider a recent piece by Eben Novy-Williams in the Chicago Tribune that calls big-time college football a "money-losing drug" that schools can't quit.
Novy-Williams cited the case study of the University of Massachusetts Amherst, which made a bold push to join the upper echelon of college football programs. Five years later, "I see nothing changing in terms of the financial viability, the attendance or the conference opportunity," said Max Page, a UMass architecture professor who co-chaired the faculty senate's Ad Hoc Committee on FBS Football in 2014.
"It's going to continue to drain money from the core mission of the university. And there's no end in sight," Page said. "How many years do we do this?"
This summer, the school increased tuition for the third year in a row.
Here's another example.
As previously noted, Rutgers University, which recently joined the Big Ten conference, cut its library budget by $500,000. In early 2017, the athletic department took out what amounts to a $10 million loan from the university to compensate for a shortfall of about $39 million in expenditures during the 2016 fiscal year.
Soon after, an incensed faculty group unanimously voted to pass a resolution deploring the deficit and called for an independent review of spending. Meanwhile, the school raised tuition and room and board for incoming freshmen this fall.
With all the pressing financial challenges facing public universities, why would a donor concerned with return on investment throw tens of millions of dollars into the potential sinkhole that is a mid-tier college football program? Why even risk it?
David Booth is glad you asked.
"I Get the Arguments"
With a net worth a bit south of $2 billion, Booth is the chairman and CEO of Dimensional Fund Advisors. He received his B.A. and M.S. from the University of Kansas, and is best known for his $300 million gift to the University of Chicago Graduate School of Business in 2008. Booth received his MBA from the school in 1971, which was renamed in honor of his gift.
He and his wife Suzanne Deal Booth are drawn to education and arts and culture. The couple has given generously to Texas-based arts organizations and universities, as well. Recipients include the University of Houston, the University of Texas at Austin, and Rice University, which recently received around $3.4 million.
As for Booth's affinity for the University of Kansas? It can be summed up in a familiar phrase: There's no place like home.
Booth's first exposure to Kansas football came when, as a Boy Scout, he served as an usher at games. "I quit the Boy Scouts, and then I was over at the fieldhouse selling popcorn," he said. "I was one of those kids who was very irritating to people, walking around with a bunch of popcorn—'Sit down, kid!'"
So why did he shell out $50 million for Kansas' athletic program roughly six months after tuition jumped by 2.5 percent? Simple. He believes the school's program is worth the money. "I'm familiar with the argument as to why you might not want to have a serious athletic program," Booth said. "I get the arguments. I don’t agree with them. I’m on the other side."
Specifically, Booth said he sees an intangible value in college athletics that extends beyond Saturdays at the stadium. "It’s a way for the alums to stay connected to the university," Booth said. "You don’t stay connected through the biology department. You stay connected through athletic programs. So I’ve tried to be helpful."
And therein lies a great deal of irony.
Much like Kenneth Griffin, who recently gave $125 million to the University of Chicago's economics department, one would think that Booth, the seasoned investment banker, would point to the measurable financial returns of a $50 million gift. But instead, he points to how athletic programs help alumni "stay connected."
Similarly, Griffin hailed the University of Chicago for standing up to activist demands and remaining "committed to free expression."
Bottom line, here? Billionaire donors made their fortunes in the finance industry by keeping an eye on hard numbers, ROI, and finely tuned balance sheets. But when it comes to their philanthropy? Not so much.
This isn't to say Booth doesn't view his gift as an investment. "This is a long-term thing," he said. "It's like the stock market... You play for the long haul. You try to do the right thing, and that's all you can do." (Although I'd caution that the "stock market" doesn't have to compete with other stock markets like the established athletic powerhouses that are Texas, Oklahoma and West Virginia.)
Nonetheless, one thing is for certain: Booth is very much "buying low." Over the past nine seasons, the University of Kansas football team is 20-79 with zero bowl appearances.
Donors on the Defensive
But let's say Booth's gift is akin to investing in the stock market. By definition, it would generate a measurable return on investment.
So will the gift propel the school's football program to the upper reaches of college athletics? Will the athletic program defy the odds and end up in the black financially? And will the athletic program actually generate revenue to help the school fund capital projects or freeze tuition?
Time will tell, but the evidence isn't entirely encouraging. As Eben Novy-Williams notes, this time in Bloomberg, even the most rarified college football programs are bleeding cash. And with state appropriators tightening the purse strings, few schools will be freezing tuition anytime soon, regardless of their athletic prowess.
Booth, as noted, gets the arguments; his comments, however sanguine, suggest that he understands the optics at play.
With the rise of the effective altruism mindset, donors—much like CEOs reporting to investors—must increasingly defend their gifts in the public square. This may explain why we're seeing a subtle but noticeable surge in gifts earmarked for eliminating tuition or forgiving student loans, and why angry University of Oregon students disrupted the announcement of a new mega-gift.
Will other donors step forward and make relatively less impactful gifts to college football programs, marching bands and stadium scoreboards? Of course. But they may want to hire a publicist beforehand and line up some effective talking points.
In other words—and don't say you weren't warned—we're not in Kansas anymore.