Universities need philanthropy but must resist hidden agendas

Universities are amongst the world’s most enduring institutions. Clark Kerr, the first chancellor of the University of California, Berkeley, once observed that of all the institutions that were established in the western world five centuries ago, only 85 persist today. This tiny group includes the Catholic church, the Parliaments of the Isle of Man, Iceland and Great Britain, several Swiss cantons and, most strikingly, 70 universities.

Philanthropy has supported the longevity of universities and if they are to continue their role at the forefront of social, technological and economic transformations, as epitomized by the Fourth Industrial Revolution, philanthropy will become more significant than ever. The ambitions of universities – to create new knowledge and skills for a better future – exceed the ability of governments to pay for them. Complementary and alternative funding is needed and philanthropy is making an increasingly important contribution. The challenge lies in ensuring that this crucial source of funding does not distort universities’ missions and practices.

There is a long history of universities receiving donations from wealthy individuals. Medieval European universities, such as Oxford, Cambridge and Bologna, relied on the patronage of powerful people. Harvard University began its first fundraising campaign in 1643. The list of great American universities is populated with the names of their eponymous founding benefactors, including Stanford, Carnegie and Mellon, Duke, Drexel, Rensselaer, and Rockefeller (who founded the University of Chicago as well as Rockefeller University). Major German universities relied on private donations in the 19th century, and foundations such as the Wellcome Trust, founded in 1936, have had a profound impact on research in higher education in the life sciences. Meanwhile, American foundations have influenced the development of the university sector in China and Africa.

The amount of giving has increased substantially in recent years. By some measures, Harvard receives an average of $3 million a day. Oxford and Cambridge have conducted successful £1 billion campaigns. Stanford has an endowment of more than $20 billion and received four gifts of at least $100 million in 2015 alone. Universities in the USA and UK are the main recipients of million dollar/pound gifts from philanthropists. David Callinan states that in the 10 years from 2005 more than 14,000 gifts of $1 million or more were made to USA colleges and universities, and at least 100 of these were worth more than $100 million.

A study in 2012 for the National Bureau of Economic Research shows philanthropy in the USA contributed more than $4 billion annually to operations, endowment and buildings devoted to scientific, engineering and medical research. When combined with endowment income, university research funding from science philanthropy was $7 billion a year. This provided almost 30% of the annual research funds of those in leading universities.

This adds to and reflects profound new challenges for the administration and leadership of universities. They are complicated organizations to lead and manage because they serve multiple communities with different interests and demands. In parts of the world – such as the UK and Australia – complexity is increasing as governments reduce levels of core funding while introducing more stringent performance measurement and accountability. Universities can no longer rely upon the state for their funding. Competition is increasing as more institutions vie for resources. This creates uncertainty for the financial sustainability needed to pay professors’ salaries and pensions or to deliver new capital investment programmes.

Only some universities are prepared for these challenges. Those responding most effectively are investing significantly in fundraising capabilities, including the ability to identify and steward donors and launch and run campaigns. They are becoming much more professional and successful at attracting benefactions, carrying out due diligence and managing large gifts. Such philanthropic giving has boosted their research, improved their students’ experiences and underpinned new buildings and facilities. This is to be welcomed, but universities need to ensure that private giving does not come with strings attached that redirect their purpose and objectives. Long-term horizons, integrity, independence and serving the public good must always supersede the intent of any individual donor, no matter how generous.

If professional, independent processes are not observed the consequences can be severe, resulting in scandals that can bring the most prestigious of institutions into disrepute. This was the case in 2010 when the London School of Economics (LSE) accepted a donation from the Gaddafi Foundation at a time when the Libyan leader’s son was alleged to have been awarded a PhD that was ghostwritten and contained plagiarism. In 2011, the LSE came under increased public scrutiny during the Libyan uprising, leading to the resignation of its director.

There is worrying evidence of substantial and sustained campaigns by some philanthropists in the United States, including billionaire political activists, to further their ideological positions through donations to universities.

Philanthropists want to - and do - shape universities. The economist Zoltan Acs writes about the symbiotic relationships between American universities and entrepreneurship. Successful entrepreneurs are attracted to fund ambitious institutions that can deliver impact. Philanthropists are typically entrepreneurs and, as such, they tend to value organizations that promote and facilitate entrepreneurial activity. University research and education underpins America’s most successful entrepreneurial companies and, through their philanthropy, those entrepreneurs aim to maintain the system that produced their wealth. They sometimes do this through giving and locating their headquarters and research facilities nearby leading universities.

Great benefit can be derived from engaging with visionary philanthropists, where partnerships based on shared values can stimulate new ideas and directions. Mohammed Abdul Latif Jameel’s gift to his alma mater MIT not only provided the financial means for the Abdul Latif Jameel World Water and Food Security Lab, but built upon Jameel’s expertise and vision in energy, technology and big data to help crack global challenges in food and water distribution.

Philanthropic funding matters to universities for its qualities as much as its quantum. A common refrain in the world of science and research refers to the lack of funding for speculative, high-risk research. Government funding agencies can be conservative, shying away from adventurous methodologies and preferring to support those with proven track records (generally older researchers). Philanthropically supported research can overcome some of these shortcomings.

The Leverhulme Trust (founded in 1925), for example, has a distinctive approach to leaving it to the academic community to decide the ideas to be funded. It does not set strategic priorities or themes. The majority of its awards are in response to proposals chosen for their quality and originality in advancing knowledge.

Philanthropy is more likely to fund buildings, machines and the ideas of younger, less well-established researchers. It can also provide the stimulation for major transformation programmes, which would not have occurred in its absence. The University of Queensland in Australia hugely increased its scientific profile through a donation from Atlantic Philanthropies that co-funded a number of major new research institutes, for example.

Whether philanthropic donations come from foundations, corporations or wealthy individuals, crucially universities have to maintain their freedom to decide priorities and publish the results of their work, appoint and promote staff, and allocate intellectual property. This requires courting the right kind of philanthropist. When the Chan family donated $350 million to Harvard it was unrestricted; the money was to be spent in the way the university thought best. To reduce their dependence on particular institutions or individuals, a balance has to be maintained to ensure that funds are derived from a larger population, usually alumni. Care needs to be taken, however, in avoiding the misuse of alumni wealth screening services, and especially infringements of privacy.

Decisions about philanthropic donations can be made quickly and their objectives can be adventurous and risky. They can have far more impact than the actual amounts involved might imply. Strong partnerships with ambitious philanthropists can be transformative for universities. But universities have to proceed with discernment, prudence and vigilance. Philanthropists can be driven by very particular agendas that may not accord with the goals and objectives of the university and its communities. There has to be complete transparency and employee engagement in determining the need for and source of benefactions. The attraction of donations in financially-strained circumstances should not replace the need for careful selection of appropriate donors with whom a university can build a mutual respect, one that emerges when shared values and high trust produce great outcomes.

Not every university will handle these challenges with the nuance and care they deserve. Some leaders will be too slow to respond to the transformed landscape. But the institutions that get this right have the best chance of lasting – and having a lasting impact – for centuries to come.