Our most recent installment of big-time higher ed regional philanthropy comes to us from South Bend, Indiana, where John Baumer and his wife, Mollie, gave $20 million to the University of Notre Dame for the construction of a new residence hall to be named Baumer Hall.
The gift checks off all of the boxes for a quintessential regional donor. Baumer grew up in South Bend. He earned a Bachelor of Business Administration, summa cum laude, from Notre Dame in 1990 and an MBA from the Wharton School at the University of Pennsylvania, before making his way (and his fortune) out west. He is currently a senior partner at Leonard Green & Partners of Los Angeles, a private equity firm. The couple’s mega-gift was preceded by a smaller gift—$3 million to endow Notre Dame’s men’s head lacrosse coaching position in 2015. Baumer is also a member of Notre Dame’s Campaign Cabinet and Wall Street Committee.
Baumer has served on numerous corporate and nonprofit boards, including Rite Aid Corp., Petco Animal Supplies, FTD Group and Equinox Fitness. Mollie Baumer is a graduate of Saint Mary’s College, where she was a varsity soccer player. She serves on Notre Dame’s Advisory Council for the Student-Athlete. The Baumers live in Manhattan Beach, California.
Commenting on his gift, Baumer said, “This University has been part of our family story for three generations. The residence hall experience I had at Notre Dame was the backdrop for the best and most lasting friendships and memories I have made. Sharing every aspect of life with your residence hall community creates a foundation of friendship and support you will build on for the rest of your life. I am deeply grateful for my time in Zahm Hall, and we as a family are delighted that we have the opportunity, through Baumer Hall, to ensure this tradition remains strong and meaningful for future generations.”
An Enduring Appeal
Baumer’s sentiments speak to donors’ timeless affinity for the residential college experience.
Last year, Vanderbilt University Board of Trust Chairman Bruce R. Evans and his wife Bridgitt committed $20 million to a $600 million capital project that calls for replacing aging residence halls with “innovative residential colleges.” Marieke Rothschild, who, along with her husband and alumnus Jeffrey, gave Vanderbilt $20 million for the development of the school’s College Halls, laid out their thinking accordingly: “The College Halls program enables dialogue among a diverse mix of students—along with faculty involvement, which is important. You need to have that cross-pollination among students.”
Then there’s University of Southern California trustee David C. Bohnett, who upon making a $15 million pledge to endow and name the David C. Bohnett Residential College, said, “It’s my hope and aspiration that the Bohnett Residential College will afford USC students with a richly immersive college experience and help prepare them to be actively engaged members of the community throughout their lives.”
These donors clearly believe that students thrive in a more immersive educational environment. Others, like billionaire businessman, investor and philanthropist Ron Perelman and his daughter Debra, chief executive officer and president of Revlon Inc., have gone a step further, allocating $65 million to fund a new residential college at Princeton University in an effort to “create a more diverse and inclusive campus.”
These capital gifts come at a time of rising tuition and a metastasizing student loan crisis. And at the expense of sounding like a scold—and let’s face it, nobody likes scolds—brick-and-mortar projects drive up tuition, and with it, student debt load. Nonetheless, these gifts keep coming. Let’s take a closer look into the reasons why.
Capital Spending on the Rise
A 2017 New York Times piece titled “Does God Want You to Spend $300,000 for College?” looked at the sticker price for an education at, ironically enough, the University of Notre Dame. Father Jenkins, the Notre Dame president, said it was “humbling” for him to see the financial sacrifices people make to afford an education at the school. For the record, roughly 68 percent of Notre Dame students receive some form of financial aid. Mary Nucciarone, an assistant director of financial aid, reminds parents that shelling out over a quarter-million dollars for their child's education is a “choice.”
Proponents of a Notre Dame education will point out that the estimated cost for students who receive aid is $28,700 year, that the average salary earned by graduates within three years is an impressive $62,500, and that two years ago, the estate of alumnus Allan J. Riley and his wife, Radwan, made the largest gift directed toward financial aid in Notre Dame’s history.
Nonetheless, Nucciarone is correct. Students, in theory, aren’t being forced against their will to attend a high-priced college, despite a ruinously opaque student loan system and conventional wisdom suggesting that the best path to success is via affluent universities beholden to a “prestige pricing” model—a variant on what the Washington Post’s Christina Emma calls “Ivy League mania.” The obvious conclusion is that most donors, based on their giving habits, seem to agree.
That’s because despite the occasional high-profile gift to reduce student loan debt, like Michael Bloomberg’s $1.8 billion gift to Johns Hopkins, donor infatuation with tuition-boosting capital projects has shown no signs of abating.
According to a recent study by the Council for Aid to Education, 41 percent of the $43.6 billion raised by universities in 2017—$17.8 billion—funded capital expenses, representing a 12.3 percent increase over 2016. And fundraising budgets during capital campaigns increased by an average of 65 percent, according to the Council for the Advancement and Support of Education.
These charitable tax deductions drive up tuition, with the U.S. Treasury ultimately footing the bill, so what is their relative utility in the grand scheme of things? For example, upon announcing a $600 million residential college campaign, Vanderbilt Chancellor Nicholas Zeppos joked that its previous towers “are so ugly. There are many jokes that they were built by the Soviet Union.”
While architectural excellence is ultimately in the eye of the beholder, I nonetheless concede Zeppos’ larger point. Sooner or later, a dilapidated residential hall should be replaced. But I also suspect some Vanderbilt students would happily soldier through class in a drab, concrete Khrushchev-era building in exchange for a manageable debt load. (I know I did!)
Then again, the higher ed landscape has changed dramatically since the late 1990s. More students are vying for limited spots on university campuses. When demand outstrips supply, schools like Vanderbilt and Notre Dame, where the acceptance rate is 11.7 and 19.8 percent respectively, roll out glimmering new residence halls to attract scarce high-achieving and high-income candidates.
Not all universities adhere to this model. Last year, St. John’s College, which has campuses in Santa Fe and Annapolis, launched a $300 million campaign that called for no new buildings or lavish student amenities. Rather, its primary goal is to reduce annual tuition costs for students by as much as 50 percent.
Few schools, however, have adopted St. John’s approach, nor should we expect them to. With billions of dollars there for the taking, why would they?
Higher Ed Building Boom
New residential dorm construction represents a mere fraction of the larger building boom sweeping American campuses. Engineering colleges are erecting futuristic facilities to attract in-demand students. Funders are digging deep to support new on-campus medical and research buildings to drive innovation and boost local economies. And nostalgic donors who admit they “get the arguments” against giving to their alma mater’s athletic program nonetheless shell out tens of millions of dollars for indoor football practice arenas.
Regarding building new dorms, donors uniformly believe that college, by definition, should be integrative, collaborative and communal, especially given the growing body of research suggesting that the liberal arts can complement fields of study like STEM. More affordable e-learning modules simply cannot replicate this kind of cross-disciplinary learning environment. (Nor, presumably, can historically underfunded community colleges.)
Upon announcing his gift to John Hopkins last November, Michael Bloomberg encouraged his fellow donors to prioritize financial aid over capital gifts. “We need more graduates to direct their alumni giving to financial aid,” he wrote in a piece in the New York Times. “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.”
Roughly four months later, anecdotally speaking, the needle hasn’t moved all that much. That may change, but we shouldn’t hold our breath. Whether it’s a new engineering building, medical facility, indoor football arena, or residence hall, donors will keep the capital gifts flowing, as they have been doing for decades. And if all goes according to plan, cutting-edge research will be conducted, football players will practice, and students will sleep soundly without feeling like they’re trapped in East Berlin, circa 1962.
Then the laws of mathematics kick in. Tuition will creep up further, debt loads will swell even more, and Mary Nucciarone’s reminder will ring truer than ever: Attending a four-year college with a $300,000 price tag is a choice.
In related news, click here for our take on alumnus Kenneth Ricci’s $100 million unrestricted gift to Notre Dame.