Is higher education philanthropy finding a new purpose?

In 2020, private gifts to American colleges and universities reached almost $50 billion, close to an all-time high. Signs point to 2021 being a banner year that will top that amount. As the economy bounces back from setbacks of the pandemic, private wealth has accumulated significantly. Donations of $100 million or more have become the new standard for so-called “mega gifts”.

The rate of mega-gift donations seems to be picking up, with a noticeable difference in the types of institutions receiving gifts in the past few years. The trend may signal an important shift in the aims of major philanthropists and their support for higher education.

Historic inequities in higher education philanthropy

Large private gifts have historically contributed to the wealth and status divide in higher education. Most gift of $100 million or more over recent years went to prestigious universities and colleges. These schools already enjoy elite reputations, have large endowments, and apply highly selective admission standards.

Charitable contributions in higher education have tended to be a case of the rich getting richer.

As admirable as philanthropic gifts are, they’ve traditionally not benefitted institutions that serve the most diverse and financially strapped students – community colleges, regional universities, and minority-serving institutions.

Charitable contributions in higher education have tended to be a case of the rich getting richer. Additionally, America’s wealthiest universities – the ones receiving the majority of mega gifts – educate only a small proportion of all college students. They serve an even smaller share of lower-income, first-generation-to college, and underserved minority students.

A reordering of donor priorities

A substantial number of mega gifts over the past few years have been given to community colleges, non-flagship public universities, and minority-serving colleges. Other large higher education gifts have been earmarked to address issues of economic mobility, social justice, and racial equality.

Is this trend simply a temporary readjustment motivated by concerns about the impact of the pandemic? Or, does it signal something more important? Are big-time donors looking to invest in institutions that serve higher percentages of low-income and minority students, and programs that address social concerns? Several examples point to a reordering of donor priorities.

Jay Pritzker Foundation gift to California Community Colleges

In October 2020, the California Community Colleges chancellor announced a $100 million commitment from the Jay Pritzker Foundation for students with significant financial need. The gift – the largest ever to a community college system – will be used to close educational attainment gaps in the state over the next 20 years.

“This historic gift changes the landscape for community college philanthropy. It is not only an act of incredible generosity, but also a clear statement that our community colleges are worthy of this level of investment. It will serve as a signal to donors across the country that community colleges are perhaps the best tools we have for increasing social and economic mobility, addressing economic barriers to higher education, and tackling equity issues in our communities,” said Geoff Green, President of the Network for California Community Colleges Foundations.

MacKenzie Scott gifts

In July 2020, MacKenzie Scott, ex-spouse of Amazon co-founder Jeff Bezos, revealed that she had donated almost $1.7 billion to more than 100 nonprofit entities. Included were 6 historically Black colleges and universities (HBCUs) – Hampton, Howard, Morehouse, Spelman, Tuskegee, and Xavier – along with several educational advocacy groups and scholarships funds.

“I asked a team of non-profit advisors with key representation from historically marginalized race, gender, and sexual identity groups to help me find and assess organizations having major impact on a variety of causes,” writes Scott in her personal blog.

In addition to HBCUs, Scott donated to several education advocacy groups and college scholarship funds. The American Indian Graduate Center received a $20 million unrestricted gift to fund its scholarships. Scott donated another $4.1 billion to 384 organizations across all 50 states, Puerto Rico, and Washington D.C., 4 months after her initial donations. Again, she focused on the most vulnerable and underserved communities.

In 2021, Scott announced yet another round of gifts, totaling $2.73 billion to 286 organizations. The gifts featured several colleges, community colleges, and nonprofit organizations focused on helping underserved and low-income students attend college.

Reed Hastings and Patty Quillin scholarship gift

Netflix cofounder, Reed Hastings and his wife, Patty Quillin, announced in June 2020 that they were donating $120 million total to the United Negro College Fund, Spelman College, and Morehouse College. It’s believed to be the largest-ever individual gift to support scholarships at HBCUs.

“I think white people in our nation need to accept that it’s a collective responsibility,” Hastings said. The killing of George Floyd and the emotional outpouring that followed were “the straw that broke the camel’s back, I think, for the size of the donation,” he added.

Michael and Susan Dell Foundation gift to the University of Texas

The Michael and Susan Dell Foundation gave the University of Texas a $100 million gift that will fund a new partnership aimed at closing the income gap in college graduation rates. The partnership builds on the national model of the Dell Scholars Program. The program’s well-established approach has achieved graduation rates for low-income students that are about 4 times higher than the national average. This partnership will bring those efforts to scale at UT-Austin, which has made the success of low- and middle-income students an institutional priority.

IBM investment in HBCUs

IBM has announced the establishment of the IBM-HBCU Quantum Center, a multi-year investment with a focus on physics, engineering, mathematics, computer science, and other STEM fields at 13 HBCUs:

• Albany State University
• Clark Atlanta University
• Coppin State University
• Hampton University
• Howard University
• Morehouse College
• Morgan State University
• Southern University
• Texas Southern University
• University of the Virgin Islands
• Virginia Union University
• Xavier University of Louisiana
• North Carolina Agricultural and Technical State University

In addition, IBM is investing $100 million in technology, assets, resources, and skills development via partnerships with several other HBCUs through the IBM Skills Academy.

Bloomberg gift to HBCU medical schools

Michael R. Bloomberg’s foundation has announced a $100 million donation to 4 historically Black medical schools, in an attempt to improve the health and wealth of Black communities. The gift will benefit about 800 medical students, who will each receive grants of up to $100,000 to support their studies.

A new social consciousness

The past 2 years have also been very good for brand-name institutions. In 2021 alone, several major universities and colleges, including Notre Dame, Northwestern, Boston College, University of Massachusetts, Carnegie Mellon, Rice, Western Michigan, and the University of Utah recorded the largest private gifts in their histories.

For many of the other record-setting gifts, a portion of the donation is set aside to provide financial aid in order to increase enrollment and retention of underrepresented populations.

Those gifts came on the heels of record gifts in 2020 to the likes of University of California, Berkeley, Bard College, and Northeastern University. Yet even these major gifts reflect a new social consciousness by donors. For example, the $50 million gift to Notre Dame will be used exclusively for undergraduate financial aid, based largely on students’ financial need.

For many of the other record-setting gifts, a portion of the donation is set aside to provide financial aid in order to increase enrollment and retention of underrepresented populations. There are other examples, including a $40 million gift to the University of Michigan that will be used to provide scholarships to first-generation college students.

Will it last?

It’s yet to be determined how permanent the recent shift in emphasis might be. Will donors revert to a preference for giving their money to well-established, prosperous universities? Or, will they increase their commitments to institutions serving socioeconomically diverse students? Will they return to name-plate buildings, new athletic facilities, and endowed faculty chairs? Or will they instead pledge their gifts to initiatives that promote economic equality and social causes?

Issues of access and affordability have caught major donors’ eyes. We have yet to see whether university leaders continue to carry that important message forward as they cultivate the mega-gifts of the future.