A New Playbook for College Donors: Power Politics

Major college donors used to expect their name on a building or the ability to call in a favor with the admissions office. They often gave money toward the end of their life, as a bookend to a successful career. And if they wanted to sway school policy, they typically worked behind the scenes to get their way.

The turmoil at the University of Pennsylvania and Harvard, however, illustrates a new playbook for how the wealthiest Americans are exerting influence in higher education.

There is a new class of donors who are often in the prime of their career, having amassed fortunes in finance or tech, who are more outspoken about politics and willing to wage war on social media to effect change.

Their pressure campaigns have resembled winner-take-all Wall Street investment strategies, threatening to pull their money from schools that have become increasingly beholden to their largest donors.

In the past, influential donors would certainly have threatened to withhold donations over issues like a losing football team or a controversial professor. But big donors increasingly are engaging with expectations of a wider role in university life, according to academics, former college presidents and people involved in philanthropy.

Last year, private donations to U.S. colleges and universities totaled $59.5 billion, up from about $14.8 billion during the 1980-81 school year, adjusting for inflation, according to the Council for Advancement and Support of Education, which tracks donations. And in 2022, more than 80 percent of the donations came from 1 percent of the donors.

“The most novel part about this is the public nature of pushback,” said Benjamin Soskis, senior research associate at the Urban Institute’s Center on Nonprofits and Philanthropy. “The donor class is modeling social media campaigns or even movement activism that we haven’t really seen a lot of in the past.”

At the University of Pennsylvania, Marc Rowan, chief executive of the giant investment firm Apollo Global Management and chair of the advisory board at Wharton, Penn’s business school, called publicly this fall for fellow alumni to give only $1 unless President M. Elizabeth Magill was ousted. Ms. Magill resigned as president on Saturday, but that was not enough for Mr. Rowan: On Tuesday, he emailed trustees with a call to change the school’s “culture” and improve its governance, complete with a list of 18 questions on the size of the board, faculty, admissions, affirmative action and “viewpoint diversity.”

It was the same day, incidentally, that The Philadelphia Inquirer published an opinion essay by Scott L. Bok, the former chair of Penn’s board of trustees, who resigned on the same day as Ms. Magill, which read as a rebuttal to Mr. Rowan’s hardball tactics: “Universities need to be very careful of the influence of money, especially one like Penn, which has a business school with a brand larger than that of the university itself,” Mr. Bok wrote, adding that “donors should not be able to decide campus policies or determine what is taught.”

An organization representing some Penn faculty members said Mr. Rowan was pursuing an attempted “hostile takeover of the core academic functions of the University of Pennsylvania.”

“Unelected billionaires without scholarly qualifications are now seeking to control academic decisions that must remain within the purview of faculty in order for research and teaching to have legitimacy and autonomy from private and partisan interests,’’ the American Association of University Professors Penn Executive Committee said in a statement.

The group declined to make any Penn faculty available for comment, saying professors who had spoken publicly on academic freedom and open expression had received death threats. Mr. Bok wrote that he also had received “violent threats” and “withstood an attempt to thwart an important business deal.”

Around the country, tension with big donors was brewing well before the Oct. 7 attack on Israel by Hamas and Israel’s bombardment of Gaza. Many older alumni tend to be out of step politically with many of the faculty and students at elite schools, which have moved to the left on issues of identity, economics and world affairs.

“Very large donors tend to be white, older and male,’’ said David Callahan, author of “The Givers: Wealth, Power and Philanthropy in a New Gilded Age.”

“These are the people in revolt.”

At Harvard, the critiques leveled by one notable graduate, William A. Ackman, the billionaire investor, against Claudine Gay, the university’s president, went beyond her handling of antisemitism on campus.

Using the social media platform X, where he has nearly one million followers, Mr. Ackman suggested Dr. Gay, who is Black, got her job because of Harvard’s efforts to promote diversity among its leadership. Mr. Ackman said he was told that Harvard would consider candidates only if they met its criteria for Diversity, Equity and Inclusion.

“It is also not good for those awarded the office of president who find themselves in a role that they would likely not have obtained were it not for a fat finger on the scale,’’ Mr. Ackman wrote.

On Tuesday, Harvard’s governing board said Dr. Gay had its backing to remain as president.

Adam F. Falk, a former president of Williams College, who is now president of the Alfred P. Sloan Foundation, said that there had been a cultural shift among major donors, especially those who made their fortunes in hedge funds or technology start-ups.

“Some of them might bring a much more transactional lens to what they might see as investing in an institution rather than the way you think of as giving,” said Dr. Falk, who oversaw an increase of $1 billion to Williams’s endowment during his tenure. “There can be a kind of mismatch between habits of mind that people in tech and finance have used to be successful, and the habits that make a university successful.”

For each of the past four years, there have been between seven and nine gifts of $100 million or more to U.S. colleges, according to the CASE group.

While such mega gifts made up less than 5 percent of the total support for schools annually, these big donors hold enormous sway not just inside the schools but among other alumni, as was shown by Mr. Rowan, who gave $50 million to Wharton in 2018.

Generous donors are also fueling an increase in the size of many elite university boards. (Penn’s board has 49 trustees.) “The desire to include more wealthy people who are major donors or potential major donors is an important contributing factor in the growth of the boards,” said Bruce Kimball, a co-author of “Wealth, Cost, & Price in American Higher Education.”

Dr. Falk said that large gifts are “overwhelmingly doing good things” for universities. But he warned that some donors can have “an inappropriately expansive notion of the influence they ought to have over other aspects of the university unrelated to their gift.”

Even as donations have risen, the number of donors has declined over a three-decade period — and particularly those who give smaller gifts, according to a 2020 study published by two professors at Indiana University with expertise in philanthropy and higher education.

The study found that “as the number of donors sinks and there are fewer smaller- and medium-sized gifts, nonprofits and commentators are troubled by the disengagement of regular, entry-level donors from philanthropy.”

All of this has made the job of being a college president even more difficult. With presidents functioning as the public face of their institutions, there are nonstop demands to raise funds and constant pressure to weigh in on contentious issues, and not just on campus.

“All kinds of people have new megaphones and audiences,” said Mariko Silver, a former president of Bennington College in Vermont, who is now president and chief executive of the Henry Luce Foundation. “Therefore presidents have to listen differently, and they have to pay attention to a wide range of public conversations.”

While Penn and Harvard are the most prominent examples of what has been described as “the dangers of donor revolt,” there is no shortage of examples of tensions with donors.

In the mid-1990s, a member of the Bass family, Texas oil billionaires, gave Yale $20 million to expand its Western civilization curriculum, as long as he was able to approve faculty hires. But Yale struggled to meet his demands, and the money was returned.

At the University of California at Santa Barbara, Charles T. Munger, the billionaire business partner of Warren E. Buffett, offered $200 million for a new dormitory, as long as he designed it. But after fierce criticism that the design, dubbed “Dormzilla,” deprived students of natural light, the university abandoned the plan this year, and Mr. Munger, who died last month, withdrew the pledge.

To be sure, schools like Harvard (with a $50 billion endowment), M.I.T. ($23.5 billion) and Penn ($21 billion) are not affected appreciably by any individual donation, even one that may total hundreds of millions of dollars. But while splashy donations can help finance new buildings or academic programs or theaters, they also can create an arms race mentality, reminiscent of baseball teams signing free agents to ever-more-exorbitant contracts.

Donors have also increasingly earmarked their contributions for specific operational purposes, such as research or faculty, according to the 2020 Indiana University study.

More of that money is also being given with politics and ideology in mind, as donor intent, said Lawson R. Bader, president and chief executive of DonorsTrust, which advises conservative and libertarian donors on charitable giving. Sometimes, it is specific campus programming or scholarships; sometimes, it is a new school, like the School of Civic Life and Leadership, proposed as a center of conservative study at the University of North Carolina.

“I think conservatives and universities have been on a collision course for a while,” Mr. Bader said. “But what has begun to change, I think, is you now have liberal Jewish donors.”

Mr. Bader said he worried about smaller colleges with modest endowments, which are more susceptible to the whims of unhappy donors.

“I think we’re going to lose some lower-tier colleges,” he predicted.

One college facing that predicament in 2015 was Paul Smith’s College in New York’s Adirondack Park.

Sanford I. Weill, a Wall Street billionaire, and his wife, Joan, had offered $20 million, as long as the college changed its name to Joan Weill-Paul Smith’s College. College officials were willing, saying the money was vital to the institution’s survival. But alumni objected, and a judge ruled that a name change would violate the will of the school’s founder.

So the Weills withdrew.

The college’s endowment has slowly grown to $35 million, and the school just launched a culinary program in New York City.

“They were not dying,” said Mark Schneider, a lawyer who represented the alumni opposed to the change. “They’re still in business.”