Earlier this month Harvard University announced a $400 million donation to its engineering college, as part of a $6.5 billion fundraising goal for its comprehensive campaign. Harvard's endowment stands at $36 billion, with its total wealth estimated at $43 billion. Its endowment earned a 15 percent return on investment last year.
Taken together with the ten "richest" universities, Inside Higher Education reported that this august group of university fundraising machines has amassed more than one-third of the wealth in higher education.
John Paulson, a 1980 graduate of the Harvard Business School and a hedge fund investor, gave the donation after making $15 billion by betting against the subprime mortgage market in 2007. The engineering college, which has grown by 150 percent since its founding in 2007, is the University's newest college.
Inside Higher Education further notes that Paulson's donation will go toward growing the engineering college's endowment, now standing at $1 billion. Specifically, Harvard will be "adding more course offerings and majors, and expanding the college's physical footprint through new buildings, among other endeavors."
Reaction was swift and caustic. Author Malcolm Gladwell observed: "It came down to helping the poor or giving the world's richest university $400 million it doesn't need. Wise choice John!" He further opined: "If billionaires don't step up, Harvard will be down to its last $30 billion." Others followed suit, attacking Paulson personally, principally for how he made his money. Some argued about the quality of Paulson's philanthropic priorities and the wisdom of choosing not to spread his wealth more widely to other institutions and causes.
Let's take a step back from the nasty rhetoric and whether or not wealthy institutions should raise money. It certainly seems reasonable to assume that Harvard will fundraise like any non-profit and just as likely that they will be successful at it.
Further, it may be that building an engineering college with extraordinary teaching and cutting edge research provides lasting benefit to society, depending upon what programs develop.
To Mr. Gladwell's point, it may even be that Harvard's engineers, working in an inter-disciplinary collaborative with others at the University, may someday do a better job figuring out how to feed the poor. And in moments of great national crisis, its good to have extraordinary engineering colleges around.
The University accepted Mr. Paulson's money. Whether Harvard serves a more noble purpose in how it uses this wealth is up to the University in the end. Mr. Paulson offered his money for philanthropic purposes, based upon priorities identified by the University.
Mr. Paulson acted on his passion. We may quibble about how he made his money. But Harvard judged Paulson's gift to be an acceptable use. If we look at the full range of gifts that historically have gone into endowments that we now consider "blue chip," it is likely that we can trace back some to riches made off the backs of slaves and immigrants, including many of our own ancestors.
There is a good point made by some critics since the Harvard announcement that is worthy of thoughtful consideration.
Philanthropy mirrors what is happening in American society. In the post recession gilded age of new billionaires enjoying vast wealth on a global scale, there is a deeply troubling problem of income inequality. American society is at its most robust when we mitigate the extremes. It does no good to have a decentralized higher education system that breaks apart into categories of "super-rich" and "other."
In my tenure as a college and university president, the philanthropist I most respected was one who pointedly did not contribute heavily to his Ivy League alma mater because "they didn't need me as much." The philanthropist was a brilliant trustee who understood the power of philanthropy, spreading his wealth where his passion and common sense told him that it was needed. He asked for nothing in return but his actions helped assure that a range of institutions might prosper.
Harvard may well be a machine that runs by itself in philanthropy. But we need the Harvards of the world as much as we need a diverse higher education system.
Perhaps looking first at who gives to colleges can solve the problem. For those who complain about another individual's passions, there should be at least grudging admiration that the giver identified a passion and put money up front to support it. At whatever income level, are you really in a position to cast the first stone based on your own giving patterns?
There are bad philanthropists. Some are bullies who use their money to meet their whims, extend their influence, or support their political views. Others see it purely as a business transaction. A few are tied to legacy "edifice complex" building.
We can judge Mr. Paulson better by his next gifts. And we can judge Harvard by how well and for what purpose it uses them.