Too Much Power? A Closer Look at a Controversy Around Donor Influence on Campus
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As universities increasingly turn to private dollars to secure transformative and headline-grabbing mega-gifts, we’ve seen rising concerns about “strings attached” philanthropy whereby a donor demands a say in an institution’s hiring, administrative or funding decisions. Proponents of such agreements argue that such stipulations are but a small price to pay for critical funding. Opponents consider it a Faustian bargain that threatens the independence of academic institutions.
Recent controversies include George Mason University’s opaque agreements with the Charles Koch Foundation, Henry and Susan Samueli’s $200 million gift to UC Irvine earmarked for integrative medicine, the Engelstad Family Foundation’s revocation of a $14 million pledge after the University of Nevada Las Vegas’ Board of Regents pushed out then-president Len Jessup, and the Pearson Family Members Foundation’s decision to sue the University of Chicago to recoup its donation, alleging the university kept the Pearson brothers in the dark about key hiring and planning decisions.
We’ve also been keeping an eye on the controversy involving a $50 million gift from Rex and Jeanne Sinquefield to St. Louis University (SLU). The gift originally stipulated that Rex would have a role in selecting the director of the new Sinquefield Center for Applied Economic Research, prompting an outcry from faculty members who argued that donors shouldn’t be involved in hiring and funding decisions, and that the arrangement would inflict irreparable harm to the university’s reputation.
Five months after the Sinquefields cut the check, the issue is far from settled.
“Special Demand” vs. Privilege
Here’s a quick recap of the situation at SLU.
In September of 2017, the school pledged to double its research budget to $100 million over the next five years in an effort to become a premier national research center. Donations quickly poured in. In August of 2018, the school announced a record-breaking fundraising haul of $98.7 million in the fiscal year that ended June 30th. The windfall included a $15 million gift from businessman Richard Chaifetz and his wife Jill, which spurred the university to rename its business school in his honor.
But it was the Sinquefields’ gift and its attached strings that caught the attention of David Rapach, professor of economics, and Bonnie Wilson, associate professor of economics. In late August of last year, the pair sent a memo to SLU President Fred Pestello, acting Provost Michael Lewis, and the Sinquefields, writing, “Because Mr. Sinquefield is a financial donor, his role in selecting the center’s director violates academic norms of independence from financial supporters and is not acceptable.”
Rapach and Wilson also expressed concern that the hiring arrangements for the center violated the provisions of the SLU Faculty Manual, which stipulates that a hiring committee—not donors—hires faculty. In addition, more than 50 professors signed a letter saying the university needed to clarify that donors would have no say in employment matters.
On September 4th, Rapach and Wilson published another memo with an update. The director of the Sinquefield Center, they reported, will no longer have the title Professor of Economics, after the administration recognized that it violated the faculty manual. Rather, the new title would be “consultant.”
“The title was wrong, I’ll take responsibility for that,” said Mark Higgins, dean of SLU’s School of Business. Rapach and Wilson were unimpressed. The school’s decision merely represented a change in title; it didn’t address the question of donor involvement in the hiring process.
Also consider the man hired by SLU as a “consultant.” That would be Michael Podgursky, a professor of economics at the University of Missouri and a director of Sinquefield’s libertarian-leaning think tank, the Show-Me Institute.
The fact that Podgursky had a different title than originally planned “does not solve the moral concern of maintaining without question the integrity of the institution,” Wilson told SLU’s newspaper, the University News. In the same article, SLU’s Vice President for Development Shelia Manion defended the arrangement. “I would never enter into a relationship that had any kind of unethical, immoral or illegal implications for the university,” she said.
A few weeks later, Rapach and Wilson published a piece in ProMarket titled “Pursuers of Truth or Peddlers of Influence?” Drawing on their experience at SLU, they asked, “at what point does a special demand become inappropriate? At what point does a special demand become a privilege—a privilege with the potential to distort decision-making, to diminish control of management and mission, and to compromise the integrity and value of research?”
“If institutions of higher education are to seek truth and advance common goods,” the pair wrote, “they cannot also be peddlers of influence, trading donations for special privileges, such as a say in employment decisions, curriculum development, or the directing of funding to individual research projects.”
Concerns Over Hiring
Rapach and Wilson’s ProMarket piece was published last September. Now, let’s fast-forward four months.
On January 11, Rapach and Wilson published an updated memo, which is available here. Regarding the issue of donor influence in hiring, they argued that not much has changed since last fall. “Although the title has changed from ‘Sinquefield Professor of Economics’ to ‘Executive Director’ to ‘Consultant,’” the memo reads, “it remains the case that SLU is hiring a specific individual at the request of financial donors. This raises serious ethical concerns, as it is a clear violation of academic norms and gives the appearance of a quid pro quo.”
In a February 19th email to Inside Philanthropy, Rapach wrote that he had recently learned that faculty will also be hired as Research Institute (RI) Fellows with funds from the Sinquefield Center for Research, Inc. (SCRI), the organization that houses the Sinquefield funds. As a result, “because the four-member committee needs to provide final approval for the disbursement of all SCRI funds,” Rapach wrote, “the financial donors (and a person hand-picked by the donors) have veto power in the hiring of individual faculty at SLU (as RI Fellows).”
Concerns Over Funding Decisions
Then there’s the issue of donor influence over funding decisions. Last September, SLU’s vice president for research reported that a four-member committee would ultimately determine which research projects are funded by the SCRI. The committee consists of the Sinquefields, Michael Podgursky, and SLU vice president for research Ken Olliff.
The school elaborated on this arrangement in a statement responding to Rapach and Wilson’s ProMarket article. “To provide support to the new Saint Louis University Research Institute,” it read, “the donors are establishing a nonprofit organization that will release funds annually. SLU’s vice president for research will serve on the organization’s board, in addition to the donors. Funding will be awarded through a competitive RFP process involving reviews and evaluations by existing university research councils and committees that include representation from faculty, academic department chairs and deans.”
Professor of law Yvette Liebesman told the St. Louis Dispatch that the presence of the Sinquefields and Podgursky on the committee would mean faculty would either not apply for research funding, or try to make their requests “fit within the agenda” that they know will be approved. “That is not a gift, that is them (the Sinquefields) dictating, that is them using SLU as an intermediary to fund research that they want,” she said.
The Saint Louis Dispatch’s editorial board echoed Liebesman’s concerns about the Sinquefields’ “agenda” coloring the center’s funding decisions. “Sinquefield already has a think tank, the Show-Me Institute, to promote his libertarian philosophies. The conditions on this donation must not serve as a Trojan horse to lend academic credibility to some of the institute’s less-than-practical libertarian theories.”
Olliff sought to allay concerns at the time by noting that research proposals that don’t get funding from the Sinquefield gift could still be funded by SLU. He also was “hopeful” that the Sinquefields would not object to any research proposal.
“To our knowledge,” Rapach and Wilson wrote in their most recent memo, “there have been no substantive changes to this arrangement. Financial donors (as well as a person hand-picked by the donors) will thus influence whether individual research projects receive funding. This is an obvious violation of academic norms and imperils academic independence and integrity.”
In mid-January, the Sinquefield-funded SLU Research Institute awarded its inaugural round of funding—$1.8 million to 15 academic proposals, selected from 114 submissions from SLU faculty.
Reputational Risks
Which now brings me to this issue of reputational risks to the school. The question here seems pretty self-evident. Namely: Can a university expect to be taken seriously for its scholarship when 75 percent of a committee that allocates research funding is controlled by a former financial executive with strong libertarian leanings, his wife, and his handpicked associate?
It sounds like a brazen proposition, but as the other examples of strings-attached giving laid out in this piece’s opening paragraph suggest, the Sinquefield/SJU arrangement isn’t an isolated one. Each of these case studies finds donors feeling sufficiently empowered to make bold requests from university administrators in exchange for cutting a massive check. It can’t hurt to ask, right? But as big philanthropy continues to reshape American society, this unabashed approach may have its limits in the court of public opinion.
Earlier this month, protesters showed up at the Guggenheim in New York demanding the museum remove the Sackler name from buildings after recent reporting that family members had a far more extensive role in promoting OxyContin than previously known. “This is part of a larger picture of impunity for the very rich in this moment,” said grassroots organizer and author of Direct Action L.A. Kauffman. “We see museums and cultural institutions glorifying the very rich and we also see them giving them positions of power,” she said, echoing similar lines of criticism concerning philanthropists like the Mercer family, the Koch brothers and Stephen Schwarzman, among many others.
This glorification and granting of power, as we’ve seen, isn’t limited to museums and cultural institutions. The idea that an index fund pioneer like Rex Sinquefield would have a direct say in how a private Jesuit institution allocates research dollars would have seemed Kafkaesque as recently as 10 years ago. Yet here we are.
This isn’t to say that Rapach and Wilson aren’t sympathetic to the challenges facing SLU, which faced a $16 million deficit and precipitous decline in enrollment as recently as March 2017. “We understand that administrators face pressure to raise funds,” they wrote. “Nevertheless, to protect the perceived integrity of scholarship and public trust that are vital to the pursuit of truth, it is paramount for SLU’s leadership to raise money without inappropriate strings attached.”
SLU’s Manion also alluded, albeit indirectly, to the profound “pressure” facing regional universities trying to get within striking distance of top research institutions. “We haven’t ever been through this kind of fundraising campaign,” she told the University News back in September. “It will be a learning experience, and there will be bumps along the way, but the best thing about this campaign is that it’s not going to bricks and mortar, it’s going to programmatic things.”
But to what extent can this arrangement or the school’s public comments about it be chalked up to a mere “learning experience?” For example, in a September 13 email, Acting Provost Lewis said, “The donors will provide final approval for requests to the Sinquefield fund.” Yet in a September 19th article in the St. Louis Dispatch, administrators explicitly told concerned faculty that Sinquefield would have no say in hiring or firing faculty at the school.
So which is it?
Five months later, the Sinquefields’ presence on the four-person funding committee, coupled with the fact that SLU hired a director of Sinquefield’s own think tank, “belies the administration's claim that the Sinquefields have no say in hiring faculty or directing research,” Rapach said.
Creating a “Two-Tiered” System
“Bringing the Sinquefield donation in line with well-accepted academic norms would require that SLU not hire Podgursky and that the Sinquefields and Podgursky be removed from the committee that approves requests to the Sinquefield fund,” Rapach said. This seems simple enough in theory, but it hasn’t happened yet, suggesting that SLU stakeholders may simply ride out the controversy, especially now that the funding spigot is open.
As noted, in late January, the Sinquefields-funded SLU Research Institute approved 15 faculty-submitted proposals without much of a fuss. Nor is opposition to the agreement universal. “There are a lot of people who want this and see the need for this,” said Scott Martin, chair of the chemistry department, last September. If the center ultimately rubber-stamps proposals that investigate the link between cancer and obesity, digitize Vatican manuscripts, and explore underground infrastructure and urbanism in Bucharest, Romania—just to name three of the 15 winning proposals—is that really such a bad thing?
Indeed it is, say Rapach and Wilson, who argue that SLU is helping to construct a “two-tier system” across higher education. They describe this system in their ProMarket piece accordingly:
To the extent that some colleges and universities are unwilling or unable to maintain their independence from benefactors, higher education may be moving towards a two-tier system. In one tier may stand those institutions supported by donors with true charitable intent, who see value in academic independence and freedom, and who give while remaining at arm’s length from an institution’s work. In another tier may stand the rest—nonprofit colleges and universities that have begun the process of evolving into think tanks that offer degrees, as well as for-profit schools.
SLU, they argue, runs the risk of falling into the latter tier.
“We are dismayed that SLU, as a Jesuit institution, is willing to countenance such conspicuous violations of academic norms in any donation. SLU has already received considerable negative publicity concerning the Sinquefield donation. In its current form, the donation risks transforming SLU in a manner that does lasting damage to its reputation.”
