“A Critical Driver.” How Higher Ed Giving is Fueling Chicago’s Surging Tech Industry

The illinois institute of technology. Joe Ravi/shutterstock

Chicago’s tech scene is on a roll. Tech is the city’s fastest-growing industry sector, with over 4,000 digital companies now calling the Windy City home. Last year, the Chicago area added nearly 6,000 tech-related jobs, and openings for emerging technologies like artificial intelligence increased by 73 percent. And earlier this year, UBI Global named 1871, the city’s tech incubator, the #1 Private Business Incubator in the world.

“Success has many fathers,” to paraphrase an old adage, and in the case of Chicago’s success, its fathers include a forward-looking local government, a deep pool of skilled workers, the Bay Area’s inability to provide affordable housing and office space, and, quite naturally, philanthropy, with a long list of local tech funders investing in STEM education, including initiatives like 1871, which work to boost gender equity in the tech field.

Now comes word of a huge tech gift from the higher ed space. Chicago’s Illinois Institute of Technology (IIT) announced a $150 million combined gift from prominent local business leaders and alumni to fund scholarships and new campus facilities “to help talented young people from across the Chicago area and throughout Illinois propel the city’s tremendous tech growth.”

Donors behind the gift, which represents the largest cumulative gift announcement in the university’s history, include Craig J. and Janet Duchossois, board of trustees chairman Michael P. Galvin and his wife Elizabeth, and John W. and Jeanne Rowe. The trio gave a combined $80 million; the remaining donors wished to remain anonymous.

The funding will allow the private, technology-focused research university to train all students to better use data to make decisions, and understand computer science and artificial intelligence, Galvin said. “There is no field anymore that doesn’t require an understanding and a capacity… for data analytics, data creativity and data decision-making.” The gift, Galvin said, will “help make Illinois Tech a critical driver of Chicago’s economic future by unleashing the power of difference to advance technology for all.”

A Focus on Economic Mobility

Galvin is president of the financial services company Galvin Enterprises, Inc., co-founder of the Galvin Projects and Gore Creek Asset Management LLC, and served under President George H. W. Bush as the assistant secretary of the United States Department of Commerce for Export Administration. He is the son of Motorola executive Robert W. Galvin and grandson of Paul Galvin, a founder of Motorola. In 1996, Robert Galvin teamed up with Robert Pritzker and Jay Pritzker to give a then-record $120 million gift to IIT.

John Rowe is chairman emeritus of the Illinois Tech Board of Trustees and the former chairman, president and CEO of the Chicago-based Exelon Corporation. The company’s giving arm, the Exelon Foundation, is a big funder of STEM initiatives, including the STEM Innovation Leadership Academy.

Commenting on the gift, Rowe noted that “Illinois Tech was founded to provide all students, particularly first-generation college students, with unparalleled opportunity for upward economic mobility.” His inclusion of the term “economic mobility” is timely and savvy. There’s been growing criticism across the philanthrosphere that donors exacerbate inequality by funneling billions to wealthy universities with a poor track record of boosting upward mobility. IIT, on the other hand, was ranked No. 1 in Illinois and No. 32 in the U.S. for lifting students from families in the bottom 20 percent of income to the top 20 percent by the Equality of Opportunity Project and the New York Times.

Duchossois serves as the chief executive officer of the Duchossois Group, Inc. and treasurer of the Duchossois Family Foundation. Last year, Craig and Janet—one of Inside Philanthropy’s “Three Philanthropic Couples with Chicago Connections to Watch in 2018”—made a rare unrestricted gift to the tune of $50 million to the Art Institute of Chicago. Meanwhile, the new $150 million IIT commitment “will help attract many more talented people to come to Chicago and eventually stay and join STEM professions for many years to come,” said Duchossois, a university regent.

IIT also plans to renovate a residential hall that will be named after one of the donors involved in the gift, the late alumnus George Kacek. Looking ahead, the school is seeking to raise additional funds for a new athletic building to replace its current recreational facility. The new building would include a basketball court, swimming pool and additional space for group workouts, such as yoga or pilates classes.

The Promise of Tech’s “Leverage Effect”

Few major gifts occur in a vacuum and the same can be said about the IIT windfall, which came four years after the school received a $7.6 million donation from Chicago tech entrepreneur and trustee Chris Gladwin after he sold his data storage company Cleversafe to IBM for $1.3 billion. That gift, which was earmarked to attract top computer science faculty, expand facilities, and develop an endowment fund, laid the groundwork for IIT’s larger plan to become a top-tier research institution.

“The reality is, it takes resources,” Gladwin said at the time. The school had “doubled its computer science department and wants to double it again, and that means you need professors and classrooms and stuff like that.”

What’s more, IIT’s ascendance aligns with the mission of P33, a nonprofit founded by Gladwin, former U.S. commerce secretary Penny Pritzker, and Kelly Welsh, president of the Civic Committee and Commercial Club of Chicago, aimed at boosting Chicago’s standing among the world’s tech cities. “To get there, it’s a big project, and it’s going to take a long time, and that’s part of where the P33 name comes from—we are looking at a 15-year timeframe to really realize something like this,” Gladwin said.

Last October, Gladwin spoke with local station WTTU about P33’s goals. Channeling the sentiments of a growing crop of regional donors who’ve provided huge gifts for engineering, data science and artificial intelligence initiatives at universities not located in coastal hubs, Gladwin underscored tech’s potential to have a “huge impact” on the region’s economy. “Most of the economic growth in the United States in the last couple of decades has been driven by information technology and technology in general. Not only that, the typical tech jobs are the type of jobs that create other jobs—for something like every new tech job, it creates three other jobs. It’s got a leverage effect, so I think it would be a profoundly positive impact.”

Of course, not all impacts will be positive. Realizing that technologies like robotics and automation may transform or even wipe out entire industries, P33 is exploring the idea of “continuous learning,” which stipulates that tomorrow’s workers will need to be trained and upskilled in real time. P33 is working with the Aspen Institute with the help of a $1.25 million grant from the Cognizant U.S. Foundation toward a roadmap for equitable continuous learning in Chicago.

“Realize This Opportunity”

As for Chicago’s designs on catching up with or surpassing Boston, San Francisco, or Seattle, obstacles remain. The city’s venture capitalists, writes Crain’s John Pletz, have a far lower risk tolerance than their gun-slinging Silicon Valley counterparts. The city’s stakeholders, including the brains behind P33, have yet to agree on Chicago’s “tech brand.” And in October of 2018, Thomas Day, also writing in Crain’s, pointed to research showing that the city’s “innovation market” remains, at best, “second-tier.”

“Chicago’s emergence as a competitive innovation economy cannot come through a false insistence that this is, in fact, already happening,” wrote Day, a partner at Invent2026, a Chicago-based technology nonprofit. Referring to how the U.S. funneled billions to Stanford to develop technologies to stop Soviet advances after World War II, Day writes that “Chicago’s status as a technology hub will need to come the hard way, through collaborative research across universities,” among other strategies.

Roughly a year after Day’s piece, P33 rolled out its five-pronged strategic plan. Priority No. 1: Working with Illinois universities to “turn research surrounding deep tech into startups with monetizable solutions… Chicago must build a more robust pipeline among researchers, venture capitalists and industry players to ensure any quantum breakthroughs turn into local startups and local jobs.”

But again, in order for this priority to become a reality, the city’s VC firms will have to shed their deeply ingrained “conservative Midwestern business ethics” and make abnormally risky bets on promising local tech firms. A (highly improbable) federal R&D spending spree would also be useful. In the meantime, where else can Illinois universities turn for an influx of massive amounts of capital to build the pipelines that Day and P33 advocate?

The answer, of course, came two weeks before P33 published its plan, when IIT announced its $150 million commitment. Every major tech city should have a top-tier, technology-oriented university, Gladwin argued, and IIT now “has to step forward in order to realize this opportunity of being part of transforming Chicago into being a leading tech hub.” The $150 million gift, he said, “is a big part of that step.”

In related news, check out our take on the Grainger Foundation’s $100 million gift for the University of Illinois at Urbana-Champaign’s College of Engineering, located 130 miles south of Chicago.