A "Wasted Opportunity?" Unpacking Michael Bloomberg's Mega-Gift to Johns Hopkins

 Photo: John Bilous/shutterstock

Photo: John Bilous/shutterstock

By now, you’ve heard about Michael Bloomberg’s $1.8 billion gift to his alma mater, Johns Hopkins University, to help low-income and moderate-income students attend the university without having to worry about cost or debt.

By now you’ve probably also heard criticisms of the donation, which is the largest ever to a higher ed institution.

Bloomberg laid out his thinking in a piece in the New York Times. “When colleges review applications, all but a few consider a student’s ability to pay,” he wrote. “As a result, high-achieving applicants from low- and middle-income families are routinely denied seats that are saved for students whose families have deeper pockets. This hurts the son of a farmer in Nebraska as much as the daughter of a working mother in Detroit.”

The criticisms leveled against the gift have followed several paths: There are better ways to spend $1.8 billion. The gift won't make a huge difference at Hopkins. And even if it did, only a relatively few students will benefit. (Vox’s Dylan Matthews went so far as to call it a “tragedy.”)

Supporters and critics do share one thing in common, however. Few have asked the two questions that underpin the entire discussion of mobility, access, and the student loan crisis: Why is college so expensive in the first place, and what can donors—many of whom, through their support of capital projects, are complicit in contributing to rising costs—do to change it?

By asking alumni to follow his lead and to give more for financial aid, Bloomberg addresses these issues, albeit indirectly. This is a good start, but donors’ long-term impact will be limited if tuition continues to rise.

There’s a lot to unpack here, so let’s start with basics, namely the stark financial and demographic realities underpinning Bloomberg’s commitment.

The Data Behind the Gift

Citing a 2017 New York Times study looking at diversity and student outcomes at some of the nation’s most elite schools, Bloomberg pointed out that “at dozens of America’s elite colleges, more students came from the top 1 percent of the income scale than from the entire bottom 60 percent of that scale—even though many of those lower-income students have the qualifications to get in.”

Meanwhile, a closer look at the data pertaining to Johns Hopkins University students reveals two applicable data points. First, 72 percent of Johns Hopkins students hailed from the top 20 percent income bracket, defined as families who made about $110,000 or more per year. (The median family income of a student from John Hopkins was $177,300, placing it 29th out of 65 elite colleges.)

And second, only 2.9 percent of Johns Hopkins students came from families who made about $20,000 or less per year.

The cost of attending Johns Hopkins for the current academic year, including tuition, room and board, and books, is $72,566. Forty-four percent of students graduate with student loan debt, averaging more than $24,000.

As to why the data looks the way it does, Johns Hopkins, according to president Ronald Joel Daniels, has had trouble attracting low- to middle-income students because its dedicated financial aid endowment “was simply too small”—small, mind you, being relative: Hopkins’ “Rising to the Challenge” capital campaign wrapped up in October, having raised $6.015 billion, $610 million of which went to student financial aid. The university’s endowment stands at roughly $3.38 billion.

Compounding matters, a maximum federal Pell Grant provides $6,095 a year for students in need, less than one-tenth of what many elite private schools charge for tuition, fees, and room and board.

These factors helped to shape Hopkins’ top-heavy admissions approach—and as the Times’ study shows, it’s not alone. According to Robert Kelchen, a professor at Seton Hall University's Department of Education, elite schools “are all going after a fairly small pool of students who are high achieving and high income and able to pay much of their own way to college.”

The Ideal of Accessibility

Bloomberg has focused on directing low- to middle-income kids towards elite schools for quite some time. Two years ago, his foundation provided support for the American Talent Initiative, which seeks to expand the number of high-achieving, low- and moderate-income students in the nation’s most prestigious public and private colleges by 50,000 by the year 2025. 

And earlier this year, while laying out his education priorities, he called attention to his support for College Point, which has already matched 40,000 students with college counselors through texting, video chat, phone calls and emails. The plan here is to reach half of the country’s high-performing, low-income high school students by 2020.

If these initiatives come across as wonky, data-driven, and slightly, well, technocratic, that’s not a coincidence. That’s Bloomberg’s modus operandi. For all his billions in giving, some commentators have dinged Bloomberg for an approach that is replete with numbers, metrics, and benchmarks, but short on high-level ideals like empathy, equity, inclusion, or fairness.

Read his piece in the Times on his Hopkins gift, however, and you’ll note a change in tone and messaging. “America is at its best when we reward people based on the quality of their work, not the size of their pocketbook,” Bloomberg wrote. “Denying students entry to a college based on their ability to pay undermines equal opportunity. It perpetuates intergenerational poverty. And it strikes at the heart of the American dream: the idea that every person, from every community, has the chance to rise based on merit.”

While the issue of college accessibility remains a huge issue across the larger philanthropic landscape, it’s yet to catch on with equal ferocity across the higher ed donor community. Part of that has to do with framing. When Wake Forest University announced funding to reduce the debt burden of its Magnolia Scholars, the school positioned the move as a way to enable students to “weigh opportunities and make decisions they might once have considered out of their financial reach.”

This assessment is undoubtedly true, but it’s communicated in a narrow and almost provincial context. By dropping phrases that could have come from the pen of a presidential speechwriter—e.g., “it strikes at the heart of the American dream”—Bloomberg’s refreshingly elevated language rebrands need-blind admissions policies as a moral and social justice issue worthy of donors’ attention.

Various Lines of Criticism

Bloomberg’s plan has many detractors. The most recurrent line of criticism is also the most obvious one: That the money could be better spent elsewhere.

Writing in the Washington Post, Helaine Olen notes that the City University of New York ranks No. 1 in the Chronicle of Higher Education’s list of four-year colleges offering the highest chances of social mobility for low-income students. Yet tuition has increased, budget cuts are the norm, and a week before Bloomberg’s gift, students rallied to “beg for academic support programs” that helps low-income students pay their way.

“CUNY, of course, is hardly alone,” Olen writes. “For all the attention paid to private, elite universities, the vast majority of students enroll in public institutions. Yet state funding of these schools is lower than it was in 2001.”

Nor is the issue of accessibility limited to elite schools. According to Forbes, since 1990, two-thirds of selective public universities have reduced the share of enrolled students from the bottom of the 40 percent of the income scale while increasing the enrollment of students from the top 20 percent.

Calling the gift a “wasted opportunity,” Vox’s Dylan Matthews widens the lens further: “Boosting college completion in the U.S. is probably a worse use of money, from a humanitarian perspective, than some other causes Bloomberg could have chosen,” like fighting malaria, lead poisoning in Flint, Michigan, and suicide prevention.

What Matthews doesn’t mention, though, is that Bloomberg has already invested big in the kinds of causes that effective altruists champion. He’s given some $1 billion to reduce tobacco deaths worldwide, taking on an unsexy issue that few philanthropists have embraced, even though smoking kills some 6 million people annually—more than 10 times as many people as die from malaria. Bloomberg has also given over $250 million to reduce traffic deaths worldwide, tackling another major killer ignored by other donors; 1.3 million people die on roads annually. After Bill and Melinda Gates and Warren Buffett, it hard to think of a mega-giver who has saved more lives than Bloomberg with philanthropy. Matthews and other critics don’t seem to realize this.

Could Bloomberg invest even more money saving lives in developing countries? Yes, he could, and it’s almost certain he will. Bloomberg has pledged to give away the bulk of his $50 billion fortune and has barely scratched the surface of his giving potential. Right now, he has plenty of money to bankroll both his ambitious global agenda of effective altruism and to invest in other causes—like the goal of expanding access to elite U.S. colleges. Attacking Bloomberg’s Hopkins gifts in either/or terms doesn’t square with the reality of his giving record so far—or what likely lies ahead.

The other big line of criticism is more conceptual in nature. A recurring theme on Inside Philanthropy and in David Callahan’s book The Givers is that wealthy donors have an increasing footprint in the nonprofit world, contributing to the “hollowing out” of American civil society. Bloomberg’s gift does nothing to dispel this reality.

Bloomberg is “somebody everyone says finally gets the inequality in higher ed,” said Sara Goldrick-Rab, a professor who studies higher ed at Temple University, “but I think in many ways he just doubled down on it.” Gold-Rab said when she realized the money was earmarked for Johns Hopkins rather than an underfunded community college, she said she felt “sick to my stomach.”

“Twenty years from now, nobody is going to be able to see the effects of this investment,” she said. “Nobody.”

Meanwhile, Anand Giridharadas, author of Winners Take All: The Elite Charade of Changing, said, “Imagine donating $1.8 billion to the organizations and movements organizing around the country for free college for all” before conceding that the gift “is better than many gifts in that it will to some degree, redistribute power, not just money.”

Bloomberg, of course, isn’t the first billionaire to get grief for a mega-gift. After John Paulson gave Harvard $400 million, Malcolm Gladwell tweeted, “It came down to helping the poor or giving the world's richest university $400 mil (sic) it doesn't need. Wise choice, John!”

This is where gauging the relative impact of Bloomberg’s gift versus other higher ed mega-gifts gets tricky. Paulson’s gift went toward research and science education, namely to endow the School of Engineering and Applied Sciences. Harvard is an all-important engine of American progress in both science and ideas. Society, one could argue, stands to benefit from a gift like this.

Though time will be the ultimate arbiter, on the surface, it’s hard to make a similar case as far as Bloomberg’s Hopkins gift is concerned. Let’s explore why.

What Will Success Look Like?

The intended consequence will be a jump in the percentage of Hopkins students hailing from the under-$20,000 median income bracket. That figure, as you’ll recall, stands at 2.9 percent. But Hopkins already has a need-blind admissions process; Bloomberg’s gift simply makes it permanent. Also consider that according to a 2017 paper by leading economists, rich schools with huge endowments and need-blind admissions processes aren’t very good at admitting poor students or boosting economic mobility.

Cognizant of this fact, Hopkins will dramatically increase recruitment and programs for first-generation and lower-income students, including support for research experiences, internships, and study abroad. This year, about 15 percent of Hopkins freshmen qualify for Pell Grants. Hopkins plans to raise that share to at least 20 percent by 2023.

Back-of-the-envelope calculations underscore critics’ point about the idea of relative impact. Hopkins enrolled 1,319 new students this fall. Based on the data above, roughly 198 qualify for Pell Grants. If all goes well, that figure will rise to 264 for future incoming classes—a boost of 66 students over five years. Is reducing inequality at an elite institution good news for these students? Of course.

Could Bloomberg have helped exponentially more low- to middle-income students by giving $1.8 billion to a far less elite institution? Most certainly.

Moreover—and this could turn out to be the poison pill, here—it will take more than a bump in financial aid to even the playing field, according to Richard Kahlenberg, a senior fellow at the Century Foundation. “Unless Hopkins is also willing to provide a preference in admissions to disadvantaged students, it’s unlikely that they’ll be admitted in large numbers.” Goldrick-Rab echoes Kahlenberg’s point, noting that what Bloomberg calls “merit” in all his initiatives is “primarily about high test scores, which are first and foremost a reflection of family money.”

Hopkins said it would not set a specific income threshold for determining whether students are eligible for financial aid. Instead, officials said that eligibility would depend on an analysis of the family’s full financial circumstances, including income, assets, and the number of other children in college.

A Call for More Alumni Giving

In his Times' piece, Bloomberg proposes a three-pronged approach to attract low- to middle-income students to elite schools. First, improving college advising so that more students from more diverse backgrounds apply to select colleges. Second, persuading schools to increase their financial aid. And third, encouraging donors to step up in a big way.

“We need more graduates to direct their alumni giving to financial aid,” he wrote. “I’m increasing my personal commitment—the largest donation to a collegiate institution, I’m told. But it’s my hope that others will, too, whether the check is for $5, $50, $50,000 or more.”

While this recommendation is far from a panacea—“private donations,” Bloomberg noted, “cannot and should not make up for the lack of government support”—it nonetheless has the greatest potential to move the needle for both private and public schools looking to enroll low- to middle-income students.

Why? Because these universities continue to raise staggering amounts of money—$43.6 billion in 2017, according to the Council for Aid to Education (CEA).

Now, there’s a huge caveat here, namely the fact that just 20 top institutions raised $11.07 billion, or a quarter of the 2017 total, further underscoring the growing divide between the haves and have-nots across higher ed philanthropy. That said, “elite” schools are more than holding their own, reflecting the surge in regional wealth across the country.

Drilling deeper into the CEA’s data we find that 41 percent of this total—$17.8 billion—went to capital purposes. A mere fractional reallocation in giving toward financial aid would have a huge effect.

It sounds good on paper, but putting this recommendation into practice requires fundraisers and donors to reconsider their mutually entrenched infatuation with capital projects.

This infatuation is rooted in donors’ sincere belief that schools need the finest dorms, labs, and stadiums in the world. There is merit to this belief, especially when schools are vying for those coveted high-performance, high-income students. Capital projects can also generate much-needed economic ripple effects for surrounding neighborhood businesses.

Throw in a strong stock market, and it’s easy to see why gifts for capital purposes increased 12.3 percent over 2016, according to the CEA, and why fundraising budgets during capital campaigns increased by an average of 65 percent, according to the Council for the Advancement and Support of Education.

Donors have been conditioned to accept and work within this capital project framework since time immemorial—some would cynically call it a “herd mentality”—despite the problematic fact that capital projects can inflate tuition, exacerbate the student debt crisis, and subsequently limit accessibility for low- to middle-income students.

Best Case Scenarios

Of course, Bloomberg, just like Paulson, Phil Knight and many other higher ed mega-donors, can do whatever he wants with his own money. These massive gifts are like Rorschach tests—we project our desires upon them, and if they fail to meet our lofty standards, we complain and write long-winded posts about what could have been. At the very least, we can agree that it’s better for society when these donors give away their billions in an effort to remedy inequalities rather than hoarding it.

But as the influence of mega-donors expands across the philanthropic landscape, greater scrutiny comes with the territory. If Bloomberg wants to expand access, critics have a right to question why his focus is on primarily elite schools that don't need the money in the first place. 

So what are the best-case scenarios, here?

First, thanks to Bloomberg’s gift, Hopkins increases its number of low- to middle-income students. Second, Bloomberg and his mega-donor brethren take this criticism to heart and direct future giving toward universities without a $3.38 billion endowment. Mark Zuckerberg went to Harvard. Jeff Bezos went to Princeton. I suspect at some point, they’ll consider cutting a check to their alma maters. Maybe they’ll give less affluent schools a second look.

And third, by encouraging fellow alumni to give more for financial aid, his gift redefines “the conversation around giving in higher education,” according to Ted Mitchell, president of the American Council on Education.

Yet moving forward, it’s the substance of the conversation that counts. Missing in the debate about Bloomberg’s gift are questions like “Are private schools like John Hopkins University overpriced?” or “Why does tuition continue to outpace inflation?” or “Donors want to cure cancer and colonize Mars; is freezing or reducing tuition really that impossible?”

Again, the deeper problem is escalating tuition that creates barriers to access and feeds the $1.5 trillion student loan crisis, which, according to Bloomberg News, ironically enough, is about to get much worse. What’s more, everyone knows what’s feeding it: loans guaranteed by the federal government, predatory agents, donor-funded capital projects, lavish amenities to attract coveted “high income” students, and elite schools’ embrace of “prestige pricing.”

Bloomberg hasn’t explicitly asked alumni to dial back their support for extravagant capital projects, nor did he call upon universities to tackle escalating tuition. That’s unfortunate. But by framing accessibility as an irreducible moral issue and encouraging alumni to ramp up giving for student aid, Bloomberg is, at the very least, asking donors to rethink long-held perceptions of what it means to support a higher ed institution financially.

This is a vitally important first step.