Last November, when Michael Bloomberg gave Johns Hopkins University $1.8 billion earmarked for student aid, he said, “We need more graduates to direct their alumni giving to financial aid.”
His comment implied that alumni donors may want to reconsider their infatuation with glitzy capital projects. Unfortunately, old habits die hard. The Council for Advancement and Support Education found that American universities raised over $19 billion for capital purposes in 2018, an 8.6 percent increase over the previous year. “Much of the growth in alumni giving,” the report concluded, “has been in the form of capital-purpose gifts.”
Moreover, while universities raised $27.4 billion for “current operations,” alumni donors preferred gifts earmarked for “academic divisions” (25.3 percent) and “athletics” (24 percent) over “student financial aid” (16.7 percent).
In other words, donors continue to ramp up support for projects that often drive up tuition while failing to provide financial aid to help students pay for rising tuition. The good news for low- and middle-income students is that Bloomberg’s exhortation hasn’t entirely fallen on deaf ears.
In mid-September, trustee Jeff Ubben and his wife Laurie gave Northwestern University $50 million for student scholarships. The gift, the largest made to financial aid in the university’s history, will count toward Northwestern’s $4 billion-and-counting “We Will. The Campaign for Northwestern.”
“Laurie and I can think of nothing more worthy than to make a Northwestern degree accessible to as many outstanding students as possible,” said Jeff, whose net worth stands at approximately $400 million.
A month later, real estate developer David Walentas and his wife Jane gave David’s alma mater, the University of Virginia (UVA), $100 million—$75 million of which is earmarked for scholarships and fellowships for first-generation students. “Growing up, I didn’t know anyone who had been to college, but I knew that it was a way out of poverty and a path to opportunity,” Walentas said. “Thanks to a scholarship, I was the first in my family to attend college, and my time at UVA completely changed my life...I can’t wait to see how these first-generation college students change the world.”
Bending the Mobility Curve
While donors have always shown an interest in supporting low-income students, I’d argue that two contextual factors have compelled them to tackle this challenge with increasing urgency: elite universities’ historically tepid financial support for financial aid and the growing perception that elite schools are exacerbating inequality.
In announcing his Johns Hopkins gift, Bloomberg alluded to a 2017 New York Times study reporting that elite universities do a poor job at boosting economic mobility for lower-income students. This failure is partly rooted in the fact that many elite universities, unlike community colleges and historically black universities, don’t enroll a sufficient number of low-income students to bend the mobility curve.
The Times study found that only 2.9 percent of Johns Hopkins students came from families who made $20,000 or less per year. President Ronald Joel Daniels attributed this figure to the fact that the school’s dedicated financial aid endowment “was simply too small.” I suspect Johns Hopkins wasn’t alone in this regard. Nonetheless, Daniels’ argument isn’t entirely convincing. After all, Hopkins raised over $6 billion in its “Rising to the Challenge” capital campaign—but only 11 percent of the money raised funded financial aid. Equipped with Bloomberg’s billions, Hopkins hopes to raise its share of Pell Grant students from 15 percent to 20 percent by 2023.
The Times ranked Northwestern 43rd in its list of elite colleges that enroll the highest percentage of low- and middle-income students. Eight percent of Northwest students hailed from the bottom 40 percent income bracket. The University of Virginia was ranked 52nd at 6.9 percent. (The University of California Los Angeles came in first at 19.2 percent.)
The Ubbens’ and Walentas’ scholarship gifts hope to change these figures. The former’s bequest will support the “We Will” campaign’s “Thrive at Northwestern” initiative, which aims to enhance financial aid resources for low- and middle-income families and first-generation college students. Northwestern has eliminated loans from the financial aid packages of qualifying undergraduate students, a policy that is being fully implemented this fall, and the university’s incoming class consists of 21 percent Pell Grant-eligible students. UVA’s entering class includes more than 500 first-generation students, up 20 percent from the prior year.
Agents of Inequality?
While elite universities have made progress since the New York Times’ 2017 analysis and Bloomberg’s gift, commentators have intensified their criticism that these schools fail low-income students and exacerbate inequality. Paul Tough, in his new book, The Years That Matter Most: How College Makes Or Breaks Us, lays out an argument that will sound very familiar to Inside Philanthropy readers.
It goes like this: Since 2008, state legislatures have cut approximately $14 billion in funding from public universities. To make up the difference, universities raised tuition and ramped up capital projects to attract wealthy out-of-state students who can pay more. Meanwhile, wealthy private institutions, blessed with wealthy alumni, keep getting richer, and keep the big gifts flowing. Alumni giving to elite universities, writes Educated: A Memoir author Tara Westover, is the “final cog in the inequality machine, an intense cycle of wealth concentration that Tough calls ‘unsustainable—and yet, at the same time, unstoppable.’”
In fairness, fundraisers at public universities have done a tremendous job in emulating their private counterparts. Schools like UCLA, the University of Michigan, UC San Diego and the University of Houston have successfully raised tens of billions of dollars to plug gaps in public funding. Coincidentally enough, UVA announced Walentas’ gift as it launched the public phase of its $5 billion “Honor the Future” capital campaign. If previous public university campaigns are any indication, UVA will easily blow past its goal ahead of schedule.
I’d argue that the real issue here isn’t public schools’ inability to raise mountains of cash, but instead, their inability or unwillingness to rein in tuition to make college more affordable to low- and middle-income kids.
Nonetheless, if you can ascribe relative utilitarian value to a philanthropic gift, there is some truth to Tough’s line of criticism, which argues that alumni donors are making elite schools richer while less affluent universities with a far more successful track record of boosting economic mobility continue to struggle.
For example, as I noted in my analysis of Bloomberg’s mega-gift to Johns Hopkins, his $1.8 billion gift will add roughly a dozen Pell Grant-eligible students to the school’s rolls per year over five years. Could Bloomberg’s billions be put to better use elsewhere? Sara Goldrick-Rab, a professor who studies higher ed at Temple University, thought so. “This is somebody everyone says finally gets the inequality in higher ed,” Goldrick-Rab said of Bloomberg, “but I think in many ways he just doubled down on it.”
If accessibility was Bloomberg’s aim, Goldrick-Rab said, why not donate to, say, a public system like the City University of New York (CUNY)? The same, of course, can be said for any donor funneling millions to any other university sitting on a multi-billion-dollar endowment.
Goldrick-Rab’s reference to a community college wasn’t merely a rhetorical flourish. The New York Times’ analysis also looked at the colleges with the highest mobility rate in which students from the bottom 40 percent income bracket rose to the top 40 percent. CUNY was ranked No. 2. Meanwhile, Northwestern University clocked in at 2,027; UVA at 2,096.
Writing about Walentas’ gift to UVA, the Washington Post’s Susan Svrluga alluded to “increasing public skepticism about the value of higher education and criticism that many institutions are elitist.” The point wasn’t lost on UVA president James E. Ryan, who said, “it’s incredibly important that we do all we can to make sure that talented students from every walk of life have a real shot of attending.”
Meet the Ubbens
Jeff Ubben is CEO, chief investment officer and founder of ValueAct Capital, a San Francisco-based private money management firm. He is also a member of the board of directors for AES Corporation and Nikola Motor Company. A 1987 graduate of the Kellogg School of Management at Northwestern University, Ubben is a charter trustee serving on the Northwestern Board of Trustees’ finance and student life committees, a member of the steering committees for the “We Will” Campaign and Kellogg’s campaign, and a co-chair of the university's San Francisco Regional Campaign Committee.
Laurie Ubben is co-founder of San Francisco’s Bird School of Music and was executive producer of the film “Loving Vincent.” She also serves on the board and national advisory committee of Youth Speaks, one of the world's leading presenters of spoken-word performance, education and youth development programs.
In 2017, the Ubbens made a $5.5 million gift to the Institute for Sustainability and Energy at Northwestern to establish the Ubben Program for Climate and Carbon Science. That same year, Northwestern announced that the Ubbens, along with Tim Sullivan and his wife, Sue, committed a total of $3 million to Northwestern Athletics and Recreation to establish the Sullivan-Ubben Head Men’s Basketball Coaching position. The Ubbens are members of NU Loyal, a giving society recognizing consistent annual giving to Northwestern, and the Henry and Emma Rogers Society, which honors Northwestern supporters who have included the University in their estate plans.
In 2017, Ubben completed a 10-year tenure as chair of the Posse Foundation’s national board of directors, where he helped to identify high school students with academic and leadership potential for admission into a partner college or university.
Last year, the Ubbens gave $20 million toward the World Wildlife Fund’s (WWF) conservation work and $5 million to Duke University, Jeff Ubben’s alma mater, earmarked for a partnership between WWF and the school’s Nicholas School of the Environment.
A First-Generation College Graduate
David Walentas is a New York real estate developer, a 1961 alumnus of UVA, and 1964 graduate of its Darden School of Business. He founded Two Trees Management, which is best known for transforming the Brooklyn neighborhoods Dumbo and Williamsburg. Forbes has pegged David’s net worth at $2.5 billion.
David was the first in his family to attend college. Attending UVA was “transformational for me,” he told the Washington Post’s Susan Svrluga. “Education is a great equalizer.”
The Walentas Scholars will be funded with $50 million from Walentas, plus an additional $20 million in matching funds from the university’s Bicentennial Scholars Fund. It will initially seek to identify and attract first-generation undergraduate students from Virginia, from Rochester, New York, where Walentas grew up, and from New York City. Another $25 million will create fellowships at UVA’s Darden School of Business for first-generation college grads looking to get an MBA. The remaining $25 million will fund other professorships and fellowships.
Walentas, who received a 2 (out of 5) for his Forbes 400 philanthropy score, has focused much of his giving on education. Between 2013 and 2017, he moved $8.1 million into his foundation, which has made grants to New York City’s Fund for Public Schools and Success Academy Charter Schools. The foundation also donated at least $128,000 to the University of Pennsylvania, which David’s son Jed attended. In 2013, David’s Walentas Foundation donated $5,000 to its Darden School of Business. He told Forbes that he and his wife have also given “a few million” to the Jefferson Scholars Foundation, which provides merit scholarships to UVA students.
Walentas’ UVA gift comes about a month after he and his wife, Jane Walentas, gave $5 million to Philadelphia’s Moore College of Art & Design to create the Walentas Visionary Women Scholarships program.