Can Philanthropy and Fundraising Fix our Inequality?: Exploring Philanthropy’s

Impact on U.S. Higher Education

Roy Y. ChanPh.D. candidate (Education Policy Studies), School of Education, Indiana University, Bloomington

Ph.D. minor (Philanthropic Studies), Lilly Family School of Philanthropy, Indiana University-Purdue University Indianapolis (IUPUI)

rychan@indiana.edu

Association for the Study of Higher Education (ASHE) 40th Annual ConferenceNovember 6, 2015

Chan, R. Y. (2015). Can Philanthropy and Fundraising Fix Our Inequality?: Exploring Philanthropy’s Impact on U.S. Higher Education. Scholarly paper presented at the Association for the Study of Higher Education (ASHE) 40th Annual Conference, Denver, CO.

Overview• Overview of Philanthropy and Fundraising in

American Higher Education

• Statement of Research Interests

• Literature Review–Defining Higher Education Philanthropy

– Inequality and Higher Education Philanthropy

– Issues with Philanthropy in Higher Education

• Preliminary Findings

• Next Steps

• Open-Ended Discussion Questions

• Q&A

POLLIn 2014, where do you think private donors gave the most to?

• A) Education (primary, secondary, and higher education)

• B) Foundations (e.g., Andrew Carnegie Corporation, Bill & Melinda Gates Foundation, Lumina Foundation, Rockefeller Foundation)

• C) Health (e.g., hospitals, healthcare)

• D) Religion (e.g., church, religiously-affiliated organizations)

• E) Human Services/NGO’s (e.g., American Red Cross, Save the Children, Amnesty International)

Overview of Philanthropy and FundraisingWhere do most people give to? = RELIGION

Religion

$114 Billion

Education

$54 Billion

Human Services

$42 Billion

Foundations

$41 Billion

Health

$30 Billion

TOTAL = $358 Billion

Source: Giving USA, 2015

Overview of Philanthropy and FundraisingWho mostly gives to non-profit? = INDIVIDUALS

Individuals

$258 Billion

Foundations

$53 Billion

Bequests

$28 Billion

Corporations

$17 Billion

Source: Giving USA, 2015

Overview of Philanthropy and FundraisingIndividual contribution is second highest since 2007

Source: Giving USA, 2015

Landscape of Advancement in Higher EducationWho gives to colleges and universities? =

FOUNDATIONS and ALUMNI (56%)

Source: VSE/CAE, 2015

Landscape of Advancement in Higher EducationWhere are wealthy donors giving to the most? =

EDUCATION

Landscape of Advancement in Higher Education

Why do people give to higher education?

Source: Eduventures, 2014

Landscape of Philanthropy in Higher Education

What is the average age of giving = Age 45-65

Source: Giving USA 2014

Statement of Research Interests

• 1) How have philanthropy and fundraising shape U.S. higher education?

• 2) What is the relationship between inequality and higher education philanthropy?

• 3) In what ways do “mega-size” gifts seek to reinforce or exacerbate inequality in American higher education?

How did this project get started?

Literature ReviewDefining Philanthropy

• Philanthropy – “the love of humanity” (Curti, 1958); giving money/time to help make life better for the public good (Payton, 1988)

• Traditional Higher Education Philanthropy – giving money to universities (Drezner, 2011)

– Institutional Advancement – advancement services, communication and public relations, alumni and parent relations, and development (Proper & Caboni, 2014)

• New Philanthropy (or Philanthrocapitalism /Mega Philanthropy) –using extraordinary amounts of private money to fund efforts such as research centers, professorships, endowed chairs, research projects, etc.

– Ex: The Giving Pledge (2015) – 137 billionaires have pledged to give half of their fortunes to charity

Philanthrocapitalism to Fix Inequality

Literature ReviewInequality and Higher Education Philanthropy

• “A major critique of philanthropy is that it can perpetuate social inequality” (Drezner, 2011, p. 81).

– Philanthropic scholars have debated whether this outcome is either purposeful or accidental (Anderson, 1988; Curti & Nash, 1965; Lewis, 1994; Watkins, 2001)

• “There remain significant inequalities in terms of which institutions receive support” (Bernstein, 2013, p. 80)

• Arnove (1980) warned that philanthropy may reproduce class structures because wealthy donors/organizations have the corporate power to effect what merits society’s attention.

Example of Inequality in Higher Education Philanthropy

Literature ReviewInequality and Higher Education Philanthropy

• 40 richest holds almost 2/3 of the total wealth ($6.3 billion)

• 10 richest universities in America hold nearly 1/3 of the total out of top 500 public and private institutions (Moody Investors Service, 2015)

Inequality and Higher Education Philanthropy

“We are spending the most money as a society educating the wealthiest people. The people who need help the most are the most disadvantaged. They end up going to the universities that spend the smallest amount per student.”– Dr. Ronald Ehrenberg, director of the Cornell University Higher Education Research Institute

Literature ReviewIssues with Philanthropy in Higher Education

• “Donations directed at providing services to our fellow citizens are morally problematic” (Levy, 2006, p. 163)

– Resources from government vs. individual/foundation

• Philanthropy can lead to cultural imperialism (i.e., elite individuals/groups have the right to determine policies in societies) (Arnove, 1980).– For example, Bill and Melinda Gates Foundation use gifts to set education

policy at all levels (Ravitch, 2010)

• Foundations use their philanthropy to push their mission and their opinions (Karoff, 2004).

Issues with Higher Education Philanthropy

Issues with Higher Education Philanthropy

http://www.hamiltonproject.org/papers/increasing_education_what_it_will_and_will_not_do_for_earnings_inequal/

Issues with Education Philanthropy and Inequality

So the question arises: how do “mega-gifts” reduce or

reinforce inequality in higher education?

Number of “Mega-Size” gifts has Increased

Source: Eduventures, 2014

“Mega-Size” Gifts to U.S. Higher Education ($50+ million): Elite vs. Non-Elite Universities, 2014-2015

*Total “mega-size” gift combined at elite universities is THREE times larger

than non-elite universities during the 2014-2015 year

Endowment Level of “Mega-Size” Gifts between Private and Public Universities, 2014-2015

• There has been 39 mega-size $50+ million gifts from high-profile donors during 2014-2015.

• 16 private and 12 public universities obtained $50+ million, 2014-2015

• 6 of 21 are public institutions are ABOVE $1.0 billion endowment

• 6 of the 7 are public institutions are BELOW $1.0 billion endowment

**More billionaire donors are giving to elite private institutions who

hold $1.0+ billion endowment than non-elite institutions with less than $1.0 billion endowment in the

United States**

Issue #1: Inequality in Endowment Levels

• Private colleges and universities hold two/three times more endowment value than public colleges and universities (NACUBO, 2014)

Higher Education Philanthropy and Inequality

Where do most private donors give to? = Mostly top 100 universities

Source: Eduventures, 2014

Issue #1: Inequality in Endowment LevelsTop 10 Richest Universities, 2014-2015

Private

• Harvard University (42.8 billion)

• Stanford ($31.6 billion)

• Princeton University ($21.3 billion)

• MIT ($15.2 billion)

• University of Pennsylvania ($11.9 billion)

• Duke University ($11.4 billion

• Northwestern University ($10.4 billion)

• Columbia University ($9.9 billion)

• University of Notre Dame ($9.5 billion)

TOTAL = $164 billion

Public• University of Texas system ($36.7

billion)

• University of California ($28.6 billion)

• University of Michigan ($11.5 billion)

• State University System of Florida ($9.7 billion)

• University of Virginia ($8.1 billion)

• Pennsylvania State University ($6.7 billion)

• California State University ($5.7 billion)

• Texas A&M University system ($5.0 billion)

• University of Washington $4.9 billion)

• Ohio State University ($4.8 billion)

TOTAL = $121 billion

Source: Moody Investors Service, 2015

Issue #2: Inequality in College Attendance

• Top 50 universities who hold 2/3 of the wealth enroll smaller number of low-income and minority students than bottom 50 universities

Issue #3: Inequality in College Graduation Rates

• The top 50 most selective universities graduate higher percentage of low-income minority students than the bottom 50 least selective universities.

Preliminary FindingsCan philanthropy and fundraising reduce our inequality in

higher education? = DEPENDS ON WHO YOU ASK!

YES• Encourages colleges and

universities to reduce tuition costs and fees as well as student debt

• Reduces wealth, race, ethnicity, gender, and income inequality groups in higher education

• Expands access to technology and the performing/visual arts

• Creates new opportunity through knowledge creation and knowledge transfer

• Fosters social mobility for more students to attend and complete higher education (scholarships)

• Promotes “systemic change”(reforming higher education laws and policies)

NO• Widens the number of “mega-size”

gifts donated between elite and non-elite institutions

• Widens wealth gap between rich and poor colleges (endowment gains, land holdings, endowment per student)

• Widens college attendance and graduation rates between wealthy and poor students

• Widens college resources (better facilities, student services) received between public and private universities

• Widens alumni giving participation (wealthy graduates from elite institutions are more likely to give back to their alma mater)

Open-Ended Discussion Questions

• 1) Do you think philanthropy and fundraising seek to reinforce or exacerbate inequality in American higher education?

• 2) Should private donors continue to spend the most money educating the wealthiest people?

• 3) What are your views on John Paulson’s $400 million gift to Harvard University’s School of Engineering and Applied Sciences?

Questions? Comments?

Roy Y. Chan

School of Education

Lilly Family School of Philanthropy

Indiana University

rychan@indiana.edu

scholar.harvard.edu/roychan