Yesterday, we talked here about some of the big-name, deep-pocketed businessmen who were, to say the least, disappointed with their alma maters' responses to what they considered antisemitic behavior at Harvard and UPenn.
The donors' backlash has become a serious PR headache for the schools. Which is exactly the point.
Donors understand as well as anyone that pulling their funds won't inflict significant financial damage on Ivy League institutions, which boast huge endowments, my colleague Nathaniel Meyersohn reports. The point of donating — apart from showing support for your school out of the goodness of your heart — is to wield soft power within influential institutions that are shaping the minds of future generations. And to get a tax write-off, of course.
The impact of the angry donors' pullback is less likely to be immediate, according to Lee Gardner, a writer at the Chronicle of Higher Education who covers higher education finance. But it could, he said, take a bite out of gifts or donations that might have been in the works down the road.
"Ivy League universities have the relative luxury of being enormously wealthy," Gardner said. "They have a lot more financial insulation from the impact of some donors getting upset."
The donor backlash reflects the way colleges have to run themselves much like a corporation.
Like any big business, a university is beholden to donors (who act like shareholders, wielding their money as a cudgel) and to students (their primary consumers, who could eventually become donors themselves). Not to mention all manner of other stakeholders, such as professors, parents, and staff.
While losing one or two donors isn't a fatal blow for elite colleges, they still need donors to help keep the lights on. Even well-funded schools like UPenn or Harvard would have a big hole to fill if all donors suddenly cut ties.
"Philanthropic funding of US colleges and universities is at a high point," researchers at Indiana University's Lilly Family School of Philanthropy found in a 2020 study. "Public and private fundraising powerhouses are fielding campaigns with billion-dollar goals at once-impossible levels — and they are achieving their goals."
Philanthropy is the single largest contributor to revenue at Harvard, accounting for 45% of the university's $5.8 billion in income last year.
In fact, the revenue generated each year from Harvard's education and research endeavors is "not sufficient to fund operations," according to the school. It relies on philanthropy to fill in the gap.
At UPenn, philanthropic gifts accounted for 1.5% of the university's $14 billion in revenue last year. The majority of UPenn's income came from its hospital network.
Lawrence Summers, the former president of Harvard and US Treasury Secretary, has criticized the "morally unconscionable" student statement about Israel that prompted the donor revolt.
But he said that financial threats from donors were not the right solution to influencing universities' positions on these issues.
"I believe the adjustments from universities should come from their conscience and conversations within their communities, not in response to financial pressure," Summers told CNN Tuesday.
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