More Than Shareholder Value: A Look at the New Frontiers of Business Education Philanthropy

Despite President Trump's promises to reign in what we'll broadly call "globalization," most of us can agree that the genie is out of the bottle. There's no turning back the clock. We're stuck with globalization whether we like it or not.

As a result, quite a few alumni donors across the higher education space are concerning themselves with how to develop globally minded business leaders. We've written a number of posts on this theme, looking at everything from Stephen Schwarzman's massive gift to send U.S. grad students to China to smaller campus donations to expose students to foreign cultures.

In the latest news along these lines, we turn to a recent $25 million gift to Texas A&M from the foundation established by Lowry and Peggy Mays of San Antonio. According to Eli Jones, the dean of the business school, the gift is a reflection of the family's support of the business school’s new strategic plan, which, in part, gives students "global experiences to prepare them to work for multinational companies."

Lowry Mays speaks from experience. He is a co-founder of Clear Channel Communications (now known as iHeartCommunications). As noted in our funder profile, Mays grew up in Dallas and attended Texas A&M University. He started out working as a petroleum engineer but ended up serving in the Air Force. After a time in Asia, Lowry got his MBA from Harvard Business School and moved back to San Antonio where he worked at an investment banking company and later formed his own.

Needless to say, he understands the importance of seeing the world.

To that end, the gift fits into a larger pattern whereby alumni donors, most of whom made their millions on the global business stage, seek to transfer their experiences and vision to their alma maters. Each gift, in essence, says, "My experience tells me that this is the best way for students to get ahead in an increasingly competitive global business world."

Not all gifts are the same in terms of mechanics. Some rely on what we'll broadly call "career readiness" or "entrepreneurship," topics we've covered rather extensively here on Inside Philanthropy. In fact, given the scope of this coverage, I'd instead like to focus on three emerging areas that donors feel can develop what Mays calls "transformational" leaders: ethics, study abroad, and deferred admission programs.

What's more, I'll argue that these areas speak to a fundamental reordering of what constitutes "business education" in a post-Great Recession world.

Let's start by taking a closer look at the Mays gift, which represents the largest single commitment in the school’s history, and brings the overall lifetime giving by the Mays family to $47 million. That includes the $15 million given in 1996 that resulted in renaming the business school where Lowry Mays graduated in 1957.

The contribution beefs up the foundation’s “Lead By Example” campaign, bringing the total to more than $2.5 billion toward the goal of $4 billion. (Indeed, Inside Philanthropy coverage suggests that the school has been on quite a roll as of late.)

The gift will create new Lowry Mays Entrepreneurial Leadership Academy program with the Center for New Ventures and Entrepreneurship, and will support the Mays Business School, including the proposed expansion of the school’s headquarters and the school’s study abroad programs.

The hoped-for net result? A growing cadre of "transformation leaders," described by Texas A&M's Jones as “responsible, ethical leaders with entrepreneurial mindsets and vision, who have strong business competencies and personify selfless service." 

While Texas A&M's approach encompasses various business education strategies under one umbrella, I'd like to call your attention to a single word in Jones' definition. His usage of the word "ethical" may seem like a minor inclusion, but I'd argue it's pretty important. The last year or so has seen a slight uptick in ethics-related gifts at the higher education level. Call it another manifestation of the Trump Effect or just a happy coincidence, but funders are increasingly dipping their toes into an area that was generally confined to areas like artificial intelligence research.

What's more, we're not talking about sitting through a class on the teachings of Aristotle. Rather, these kinds of ethics gifts are framed within the larger global business context. For example, earlier this year, the Cary M. Maguire Center for Ethics and Public Responsibility at Southern Methodist University (SMU) received a $2 million donation from trustee emeritus and founder Cary M. Maguire.

Maguire's gift, unsurprisingly, can be traced to resume: His interest in ethics stems from his work in the financial services industry. 

Then there's the idea of how ethics interfaces with what Jones calls "transformational" leadership. His definition calls to mind news that the College of Saint Benedict, a women's college in St. Joseph, Minnesota, received a $10 million commitment from an anonymous donor to create a Center for Ethical Leadership in Action. (The gift, ironically enough, also represented the largest single gift in the college's history.)

The gift was illuminating because it framed ethics as a springboard for experiential learning. Internships and other opportunities will be "carefully designed to support the formation of ethical women leaders in a variety of fields from business to medicine to education and beyond." 

Which brings me to the broad terrain that is "experiential learning."

Talk to 10 donors, and you'll get 10 examples of how a singular "experience" shaped his or her professional career. But from a philanthropic standpoint, we're intrigued by recent gifts across two specific program areas—studies abroad and deferred admissions. Let's start with the former.

Today's college students were raised on the internet and social media. Relatively speaking, they're more globally savvy than, say, their Generation X predecessors. But the experiential nature of social media, quite obviously, has its limits. It doesn't hold a candle to wandering through the streets of Dublin at dusk or taking in a painting at the Louvre, much less spending six months on the floor of the London stock exchange. 

Then consider the fact that many donors are worried about where the world is heading and want to make sure that the next generation has leaders—business and otherwise—who can cope with a changing geopolitical landscape. Real world interaction eclipses social media's limited ability to build constructive dialogue between students of different races and ethnicities.

The impressive CVs of the following set of donors who've made major gifts over the past few years further underscores this point.

As mentioned, the private equity billionaire Stephen Schwarzman created a major scholarship fund to bring U.S. and other students to China for a year of graduate study. The goal, he said, was "to build a culture of greater trust and understanding between China, America, and the rest of the world."

Meanwhile, last year, Phil Knight pledged $400 million to Stanford for a program—the largest of its kind—to bring civically minded students to campus from around the world "to pursue a wide-ranging graduate education at Stanford, with the goal of developing a new generation of global leaders."

And earlier this year, Frank Guarini committed $10 million to support Dartmouth’s off-campus and foreign study programs. Guarini, like May, Schwarzman, and Knight, can directly speak to the importance of broadening one's international horizons. A former Democratic House member from New Jersey, he met with Chinese leader Deng Xiaoping as a member of the first trade mission in 1979, and served as a delegate to the North Atlantic Treaty Organization in London.

"There is no better way to promote peace in our world than for young people to immerse themselves in different cultures, getting to know new people and expanding their worldview firsthand," Guarini said.

And while Guarini's quote doesn't explicitly point to the impact of studying abroad from a business development perspective, one can't deny the contextual economic factors at play. A 2014 survey by William and Mary found that 40 percent of companies surveyed said they had missed global business opportunities because of a "lack of internationally competent personnel."

Add it all up, and it's not surprising that Mays' gift to Texas A&M funded the expansion of the school's study abroad program.

Which brings me to another donor-approved strategy for broadening students' international exposure.

The idea of the gap year is fairly common throughout Europe. Students put off college for 12 months to travel, see the world, and gain valuable real life experiences. The idea is slowly catching on here in the states. That said, not many funders have been actively promoting it, perhaps due to its "soft" benefits or the simple fact that there are more pressing issues out there. (One exception is the Charleston-based Speedwell Foundation, which offers Speedwell AFS Study Abroad Scholarships to high school and gap year students in central Pennsylvania and coastal South Carolina.)

This dynamic may soon be changing. For proof, look to Philadelphia, where the Wharton School of the University of Pennsylvania announced that alumni Ken Moelis, Chairman and CEO of the global independent investment bank Moelis & Company, and Julie Taffet Moelis made a $10 million gift to establish the Ken Moelis and Julie Taffet Moelis Advance Access Program.

Under the new program, undergraduates may apply to the MBA Program during their senior year and, for those admitted, enter the workforce for two to four years before returning to Wharton for graduate school. During this time, students will be "empowered to pursue job opportunities in a range of fields, including those that capture their greatest interest and extend beyond the conventional definitions of business."

It's worth noting that the program doesn't explicitly encourage students to backpack around New Zealand with an acoustic guitar and a Bob Marley songbook. Its goals are practical and employment-based. That said, Wharton openly boasts of the program's ability to "expand traditional notions of business education," and they have a point. In this globalized, technology-saturated age, there's no "right" way to do business education.

Moelis drives home the point, noting, "In my personal experience as a submatric student, and now as CEO of a firm that recruits top MBAs from across the country, it is clear that ambitious students with unique aspirations do not always benefit from the one-size-fits-all track for MBAs."

This would be an interesting gift regardless of the recipient. But Wharton's MBA program is ranked No. 1 in the world according to Business Insider and is tied with Harvard Business School for the No. 1 rank in the United States according to U.S. News & World Report. No doubt other business schools and alumni donors are paying attention.

Speaking of Harvard Business School, I'd like to transition to some parting thoughts.

I recently learned that the number of Fortune 500 chief executives who earned their business degrees at Harvard Business School is three times the total from the next most popular business school, the Wharton School. Given Wharton's reputation, I found this rather surprising.

According to business journalist Duff McDonald, not only is this fact surprising, it's also extremely lamentable.

In his new book, The Golden Passport, McDonald, a business journalist by trade, indicts the Harvard Business School as a leading reason that corporate America is disdained by much of the country. McDonald explains that "when students enter business school, they believe that the purpose of a corporation is to produce goods and services for the benefit of society."

"When they graduate,” he continues, “they believe that it is to maximize shareholder value."

I mention this to suggest that by supporting each of the funding areas I've discussed—business ethics, study abroad, and deferred admission programs—donors are subtly disputing this premise. If it sounds like an enlightened, naïve, and paternalistic view toward business education, so be it. Again, these donors speak from experience.

And although it's not explicitly evident in any of these profiled gifts, there may also be an element of self-interest at play, as well. Businesspeople are on the front lines of a tumultuous economic landscape characterized by rising inequality, an evolving job market, and pervasive middle class angst. For those who dare to look beyond quarterly reporting figures, a population of less affluent citizens means less purchasing power, and less purchasing power means less profit.

In other words, for funders intimately familiar with "the system," a more experiential, immersive, and—dare I say it—ethical approach to business education could, quite possibly, contribute to a less harsh and destabilized economic order.

So are we on the cusp of some moral Great Awakening in business education philanthropy? I wouldn't go that far. But many deep-pocketed and influential donors, including Wall Street billionaires, politicians, and graduates of one of the greatest business schools in the world seem to be arguing a point that many of us already knew: There's more to a business career than maximizing shareholder value.