Story by Nicole LaPorte | May 21, 2024 | Town and Country
The donor revolt that began last fall at elite universities over the Israel-Hamas conflict—when major philanthropists such as Ronald Lauder, Marc Rowan, and Jon Huntsman (University of Pennsylvania); and Bill Ackman and Leslie and Abigail Wexner (Harvard) announced they were ending their financial support of those schools— has only grown more heightened as the conflict itself has escalated.
As the tumult in the Middle East has incited Pro-Palestinian protests and encampments on campuses; graduation ceremony cancellations; and in some cases even violence, more donors are slamming their pocketbooks shut.
Many donors who support Jewish causes are angry over what they feel is the universities’ tepid handling of the protests and their lack of support of Jewish students, as well as schools’ stances on issues such as divesting from Israel. In early May, billionaire real-estate mogul Barry Sternlicht said he was pausing donations to his alma mater, Brown University, after the school said it would hold a board vote this fall as to whether its $6.6 billion endowment should divest from any Israel-related funding. A few weeks earlier, the Berrie Foundation, which was set to transfer $613,000 to Columbia University, ceased the payment. New England Patriots owner Robert K. Kraft, another vocal supporter of Israel, also put his giving to Columbia on hold.
Meanwhile, fundraising efforts are also being affected by donors who support Palestinian causes. Last week, over 1,400 Columbia alumni pledged to withhold financial support to the school unless their demands were met, including dropping charges against students who had been suspended in relation to protesting; divesting from Israel; and removing university president Minouche Safik. The group representing the discontented alums said their donations were worth $41 million.
Beyond splashy headlines, though, what does it mean when wealthy and/or influential donors storm off? Columbia, after all, has an endowment of $13.6 billion. Harvard’s is a whopping $50 billion. And even with all of the negative press, which has already resulted in some drops in early application numbers (Harvard and Brown both saw declines, though Penn’s numbers were up), are students really not going to apply to Ivies next year?
Michael Poliakoff, president and CEO of the American Council of Trustees and Alumni; Emily Koons Jae, ACTA’s vice president of development and philanthropy; and Don Hasseltine, senior vice president and senior search consultant for the Aspen Leadership Group as well as the former VP for development at Brown University weighed on on the issue for Town & Country. The interviews were conducted separately but covered the same questions.
T&C: The number of angry donors who are speaking with their wallets across an array of top universities feels unprecedented. Is it?
Emily Koons Jae: I know the word unprecedented gets thrown around a lot, but this does feel like this is a new mode of thinking. There are few times that donors have been so vocal about their discontent and have walked away on a question of values. In the past, we’ve seen donors with individual disputes, but they’ve tended to be about respective donor intent. So for example, there was the Robertson case at Princeton [in 2002, descendants of donors Marie and Charles Robertson sued Princeton to redirect a $35 million gift the couple had given in 1961]. Yale had to return $20 million to Lee Bass over a gift for Western Civ. So there have been those kind of individual cases, but this feels like something much different.
Michael Poliakoff: This time I think we’re finally seeing a moment when major donors and and alumni are saying that these schools have lost their way. We love them but our wallets are shut until certain core reforms are made… We’ve been seeing some shifting in the past but nothing that I can recall at this scale. This time it looks like they mean it.
Don Hasseltine: Universities have had controversies throughout history, and there have been donors who have decided that their alignment was not with the university. If you go back to the Vietnam War protests at Columbia, it took a while for them to recover because there were a number of donors who withdrew their support. So I don’t think this is unprecedented.
I think what is more visible in the public face is the sound and noise around higher education and the political environment where we are divided on a number of different things. Those are being played out more publicly than I’ve seen before. However, donors saying that I’m not going to support X, Y, Z—that’s been happening during my whole career that now spans 35 years. It’s not unusual for donors to withdraw their support through a period of time because of something the university had done or acted on. Right now, it’s a very public conversation that’s happening and you’re seeing it in the media.
T&C: What are the repercussions, beyond less giving, for universities where donors are walking away?
Emily Koons Jae: I think the biggest dent is to their reputations. I think financially these are institutions that have massive endowments. It’s hard to imagine that any single donor could have any real financial impact. But I think it speaks volumes to the reputation question, which is hugely important to these elite institutions.
Michael Poliakoff: Harvard saw a 17% drop in its applications for early admission, which is really quite stunning. Of course, Harvard can smugly say, ‘Well, we’ve got 20 applicants for every spot, or whatever the ratio is, so we’re not worried about that.’ But they’ve got good reason to worry because students will vote with their feet. Donors are voting with their wallets, and even the big endowments are largely restricted funds. So even a very well-heeled school could be pretty hampered in what it might want to do and whatever its soaring ambitions are.
T&C: Plenty of ink has been spilled on major donors, but what about the younger generation? How will this moment of unrest and turmoil affect giving within that group?
Don Hasseltine: It certainly will have an impact. If you’re a person who’s protesting, you are already probably not terribly inclined toward the university. If you’re a Jewish student who has been either threatened or feel threatened, that is not going to give you warm, fuzzy feelings. And then there are all the students who are not connected with any of the protests… That’s probably a significant portion of the class, whose graduations are being cancelled and who just wanted to finish off their college career and graduate and celebrate. And that is not happening. It’ll just depend on where they lay the blame for why all of that was disrupted.
This is also a class that experienced Covid. So they came in with a really kind of less than ideal set of circumstances and they’re going out with less than ideal circumstances. So in the four years that they were (in college), the sense of good feelings and the quality education and the great relationships with faculty are mitigated by some of these events that will now probably taint their experience and their feelings toward the university.
Emily Koons Jae: I think it’s going to be really interesting to see what happens 20, 30 years from now. I think this will of course have an impact. But I also think the soaring cost of college is going to have an impact in how philanthropic younger generations are. I graduated in 2009. I’m a millennial. My generation graduated with so much college debt at a time when the economy was tanking. I’m not sure that 30 years from now when we’re thinking about philanthropy, whether our alma mater is going to be the kind of default place as it was for previous generations.
So I think some of the sands have been shifting for a while, but I think something like this could be massively disruptive. It’s hard to imagine the class of 2024 looking back starry-eyed on their college experience. They started in the pandemic, they graduated with the encampments. They started class on Zoom and then they had no graduation. So I can’t imagine massive donations coming from this class.
T&C: Is there any good that can come from this drama?
Emily Koons Jae: It’s the top 20 to 30 schools that get the lion’s share of philanthropic gifts every year. I’m wondering if this will shake things up, which would be good—to see donors think beyond the usual suspects, think beyond their alma mater. Because there are still institutions doing great work, providing a good education. If we saw the money getting spread around beyond the Ivies, that could be a really good thing long term.
Don Hasseltine: It’s difficult to discern what will come from this current situation. The story is still playing out in real time. Right now, some prominent philanthropists are withholding their support and others are collectively coming together and doing the same. In my experience, the good comes over time when the university is able to re-engage with their supporters around the importance of what it provides to society.