When Donations to Universities Reinforce Inequality

By Rachael Drew-Kinuthia

With a son on his way out of our home and off to college, I am thinking about the pledges and contributions to colleges and universities. Ivy League endowments look to be in great shape for the long term— they do not need your money. The National Center for Education Statistics and The College Mobility Report Card from Opportunity Insights reveals total endowment value of Ivy League colleges was more than $190 billion dollars during the past fiscal year. Despite their growing financial cushion, pledges and contributions to Ivy League schools last year were approximately $2 billion. Talk about bad philanthropy.

It perpetuates wealth inequality and class divides. Investment returns on these endowments ranged from 34 percent to 50 percent, the result of a strong stock market and investment strategies focused on private equity and venture capital. These astonishing returns are far above the norm and unlikely to be repeated. The double-digit growth is more than enough to cover the typical annual spending, or payout rate, for these schools. So, why do donors continue to give money to these multibillion-dollar institutions— especially when those donors include so many successful businesspeople and financiers? For the high rollers, the answer is obvious: Donations bring big rewards.

For example, Harvard keeps a “Dean’s Interest List” that identifies applicants who have connections to substantial donors or individuals the university believes may become substantial donors. These applicants receive special consideration. The most flagrant gifts have sparked outrage. This recently came under fire from writer Malcolm Gladwell and other critics. Observers rightly pointed to Harvard having an enormous amount of wealth and there are many alternatives big donors could choose if they want to help those with the most need. Unfortunately, pointing out better opportunities to give is unlikely to change the behavior of prestige chasers.

Most donors to Ivy League institutions, however, give sums that are unlikely to buy admission for their children or get their name on a building. For donors with a genuine interest in supporting higher education, there are better options. The opportunity for supporters to be part of a university community, and feel invested in its work and goals, is attractive to most and I understand the sentiment. Philanthropic support can be integrated into the social lives of donors if they decide to attend dinners, graduation events and concerts. These events can help to build and cement the relationship between both parties.

Wealthy universities themselves should be the ones to curb the ineffective and extravagant giving. The Ivy League should do away with quid pro quos that encourage donors to continue shoving money into overstuffed coffers and eliminate preferential admissions practices that favor legacy students or students with links to donors. Think of what could happen if they stopped selling naming rights to the highest bidders. Universities are large, enduring institutions that have the capacity to utilize large sums. They all are capable of handling seven-figure donations—unlike the vast majority of charities. The range of activities undertaken by universities creates opportunities that accommodate the personal interests of almost every donor.

This can include funding cutting-edge scientific research, providing scholarships for deprived students, or supporting arts, cultural and sporting activities on campuses. Buildings on Ivy League campuses do not need to be monuments to wealthy with unfulfilled egos. If named for anyone, how about the people who best embody the institutional mission? Surely donors can think of something better to do with their money. Just this week Vice President Kamala Harris announced new initiatives that will help historically Black colleges and universities that received those anonymous bomb threats we heard about. HBCUs that have recently experienced a bomb threat resulting in a disruption to the campus learning environment will be eligible for grant funds. The grants could range from $50,000-$150,000 per school to be used to support emergency planning, campus security, and mental health services.

Jackson State University President Thomas Hudson said the threats should be seen as a threat toward the nation as a whole. But he added that there are other obstacles that HBCUs continue to face. “Decades of underfunding have hurt learning experiences,” Hudson said. It is more important than ever to invest and equalize opportunities, especially in education. HBCUs are just one example of essential pillars at the center of sparking innovation, creating opportunities for first generation students, and charting a new path forward to greater equity and access through education. Not only are their contributions in critical fields like science, technology, engineering, and mathematics (STEM) important, but they also contribute to a more diverse workforce. That $2 billion in annual contributions to Ivy League schools, mentioned earlier, is a staggering sum from wealthy donors. Imagine wealthy donors spreading the donations around to include other colleges and universities instead of reinforcing inequality.