Does Wealth Inequality among Universities Pose a Threat to the American Economy? (Part 5)

A New Course Heading for the Ship of State

For the past several weeks, we have been considering the ramifications of a Moody’s study done in April of this year that noted a widening gap in wealth between a handful of very rich colleges and universities, and all of the other institutions of higher education in America.

Even as I was writing the posts in this series, something occurred that dramatically underscored my concerns about the wealth gap in higher education. John Paulson, a hedge fund manager and multibillionaire, gave $400 million to the world’s richest university: Harvard.

Wow! That’s an enormous amount of money! A gift of that size would have instantly placed the beneficiary among the richest 200 institutions of higher education in the country – even if that institution’s endowment had been zero when the gift was received. But think about this: John Paulson’s gift of $400 million is, on the one hand, the largest gift in Harvard’s 379-year history; but, on the other hand, it increases Harvard’s endowment by a little more than one percent, and, after taxes, it represents less than two percent of Paulson’s net worth. Isn’t it extraordinary that a gift of $400 million can be made with so little sacrifice on the part of the donor, and have so little impact on its recipient? And since $400 million is equal to the total annual income of all of the people in a city with a population of 25,000 (median family income in America is just over $51,000; assume three people per family, on average), this gift to Harvard epitomizes the outrage of many that our economic rewards system is completely out of balance.

Our ‘Best’ Universities: Investment Companies That Do a Little Teaching on the Side?

Higher education has its 1 percent, too

When did money become the yardstick by which universities measure themselves?

What prompts this question is a Sept. 24 article in The Boston Globe, reporting an increase in Harvard’s endowment during the fiscal year ending June 30, 2013, of 11.3 percent, to $32.7 billion – a gain in one year of roughly $3 billion. In the same article, the Globe mentioned that Harvard has also just announced a new capital campaign with a goal of $6.5 billion, to be completed by 2018.