95% of college donations over $5k now come from 5% of donors. What could go wrong?
Earlier this year, billionaire hedge funder Ken Griffin told a conference audience in Miami what he thought of university students today. “Whiny snowflakes,” he said.
Griffin, who’d just given $300m to his alma mater Harvard University, said he was pausing his support.
“I’m not interested in supporting the institution,” he said, until it resumed “its role educating young American men and women to be leaders and problem solvers.”
Today, 95% of college donations over $5k are made by just 5% of donors.
As state and federal funding shrinks and schools depend more heavily on private donations, colleges are navigating an erupting tension between upholding principles of academia and making their billionaire donors happy.
And like any investment, those donors expect to see results.
A precarious tightrope
Israel’s invasion of Gaza last October brought to the surface a tension that had been roiling behind closed doors for years.
Across the country, students on elite campuses protested, urging their administrations to condemn what they called a genocide against the Palestinian people in Gaza.
Donors like billionaire hedge funder Bill Ackman and private equity billionaire Marc Rowan protested, too — with their wallets. They declared they’d be pulling their support unless the schools condemned what they saw as antisemitism playing out among students.
“The people who give money tend to work in finance, real estate, tech, business,” says David Callahan, author of The Givers: Wealth, Power and Philanthropy in a New Gilded Age. “Donors are very different than the academics and students on campus. The donor class is overwhelmingly white men in their 50s, 60s, and 70s, especially the higher up the food chain you go.”
The presidents of Harvard, MIT, and University of Pennsylvania were dragged before Congress to face barbed questions on how they planned to combat antisemitism, protect free speech, and keep students safe.
Ackman called for Harvard president Claudine Gay to step down, and Rowan called for UPenn president Liz Magill to resign. After their Congress testimony was widely criticized, they both did.
Presidents today walk an increasingly precarious tightrope: defending the ideals of academia while answering to boards filled with well-connected businessmen — who have the power to fire them.
“If you’re dependent upon thousands and thousands of small donors, you don’t really have to worry about any of them calling you up and saying, I gave $300 last year! What are you guys doing?” says Callahan. “If someone gave $300m, you’re more likely to take that call.”
The donations, paid out in lump sums or installments, often go toward prestigious research programs or glassy new buildings on campus. And while it might be nice to imagine saying no — and some schools have — public funding is shrinking as donations are rising, pushing presidents further into the pockets of donors to help keep their schools competitive.
While donations still lag behind federal and state revenue, the gap is closing. Take 2001, for example. State and federal funding came in at $67B and $77.4B respectively, while donations trailed at $24.2B. By 2017, donations had nearly doubled, to $43.6B, while state funding was up by about the same (to $87.1B) and federal funding had actually decreased to $74.8B, according to the Pew Research Center.
This year, thanks to increases in 41 states, state support hit a record high of $126B — welcome news for smaller schools that don’t have endowments large enough to weather political storms and often have to kowtow to their donors even more.
Take Paul Smith’s College, a small, financially struggling school in the Hudson Valley. When wealthy donors presented the school with $20m, contingent on changing its name to Joan Weill-Paul Smith’s College (yes, you read that right), the school’s administration went to court in an effort to push the name change through and collect on the money. (The school lost.)
Purchasing power
College administrators have always had to keep donors happy, but today’s mega-donor class is larger and less subtle. (Ackman, for example, opines vigorously and often about the missteps of his alma mater over on X.)
The trend toward “living giving” — or the country’s richest giving away their fortunes while they’re alive rather than after they’re dead — also means they’re still around to have something to say about it.
According to Isaac Kamola, the foundation for such a class was laid decades ago by the Charles Koch Foundation. The foundation, bringing together a network of nonprofits and 600+ wealthy donors, has been quietly giving away hundreds of millions with an eye to remaking public education.
“What they’ve done over decades is normalized this argument that donors should play an active role in governing higher education institutions,” says Kamola, associate professor of political science at Trinity College who researches the political economy of U.S. higher education.
Founded in 1980 by billionaire Charles Koch, the organization popularized giving targeted donations, or donations contingent on specific uses: hires, departments, ideologies.
Case in point: George Mason University, where millions in donations have bought the Koch Foundation and other key donors spots on professorship hiring committees for more than 25 years, and funded departments that advanced specific libertarian and behavioral economics ideas.
“What we’re seeing now is this market fundamentalist donor class that are super-elite narcissists who think that they’re the smartest people in the room, that they should govern society, that they’re the best. I mean, they’re the richest,” Kamola says.
“They really want to remake the world in their image. And that project of remaking the world in their image, for decades, has been about education and remaking education.”
Mega-litigation
The strings those donations come with aren’t invisible — they’re outlined in contracts that give donors the right to oversee how their money is being spent, to request progress reports, and in some cases to withdraw future donation installments if they don’t like what they see.
And those contracts are enforceable. Lawsuits against universities are up in recent years, and mega-donors have filed some mega-litigation:
- In 2008, the Robertsons — heirs to the A&P grocery fortune — sued Princeton University for misusing a donation their parents had left to the school in 1961. The initial $35m investment had grown in value to $930m by 2007. The children won a $100m settlement.
- The Pearson family sued the University of Chicago in 2018 for taking $22.9m of a $100m donation and not following the 60-page gift agreement contract to set up an institute for the study and resolution of global conflicts. The university is fighting the suit.
- Last fall, Cornelius B. Prior Jr. filed suit against the College of the Holy Cross, his alma mater, to recoup a $21m donation he alleged didn’t go toward building a performing arts center as planned.
The gravy train
College is huge business: a hundreds-of-billions machine with donations of $58B last year alone.
“Until Gaza came along, higher ed was doing just fine navigating this ideological tension — and still pulling in tremendous amounts of money,” Callahan says. “I don’t see this holding up the gravy train.”
Still, a release last week shows last year’s donor backlash wasn’t just bluster. Harvard University’s latest financial report indicated a ~15% drop in donations, year over year, between 2023 and 2024. That’s a decline of ~$200m.
With an endowment of nearly $50B, Harvard, at least, doesn’t have much to worry about. It’s the colleges without staggering endowments or staggering donations that will pay the price.
With the exception of donations like the ones from billionaire philanthropist MacKenzie Scott, who has given millions in unrestricted gifts to community colleges across the country, most megadonation windfalls go to the charismatic megafauna (i.e. Ivy League) of the academic world.
And, of course, the more money a school has to fund its programs, the more likely it is to churn out the next billionaire to replenish its coffers.
“We’ve gotten so far away from the idea of just funding education for education’s sake. And donors now say, no, no, these are business transactions. How does this fuel my own moral ideology or my vision for society?” Kamola says.
“The alarm bells should be going off for everybody for what it means for democracy.”
