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.

So Harvard, with an endowment almost $12 billion larger than its nearest competitor (Yale, at $20.8 billion), has decided adding $3 billion a year from its investments is not enough. It needs gift revenue as well – and, by odd coincidence, the target of $6.5 billion just happens to be $300 million larger than Stanford’s capital campaign that ended in December 2011 – and Stanford’s was $2.3 billion larger than Yale’s campaign that ended in June 2011.

But wait! In the meantime, Columbia, with a $4 billion campaign target, had reached $5 billion 18 months before its scheduled completion in December 2013. Perhaps Columbia will claim the record. Or maybe it will be the University of Southern California, now in a $6 billion capital campaign of its own. MIT is also rumored to be on the verge of announcing a $6 billion campaign.

When did the measure of academic excellence become monetized? And why aren’t more people outraged by it?

Consider this little factoid: In 2012, the richest 10 universities raised $5.3 billion, or 17 percent, of the $31 billion raised collectively by all 2,300 nonprofit four-year colleges and universities in America.

Is it really in our national interest to have such a disproportionate share of the philanthropic pie going to a handful of already very rich universities?

It was not always this way. In the 1960s, Stanford launched the first $100 million capital campaign, a figure that now looks decidedly modest. However, by 1986, 40 colleges and universities were undertaking $100 million+ campaigns.

In 1986, Stanford announced the first $1 billion campaign. In 2002, 16 colleges and universities were seeking to raise $1 billion or more, and by 2010, 36 colleges and universities were involved in $1 billion+ campaigns.

In 2012, Stanford was the first university ever to raise more than $1 billion in a single year.

In 1997, 25 colleges and universities had endowments in excess of $1 billion, and only three had endowments of more than $5 billion. Fifteen years later, in 2012, 69 colleges and universities had endowments of $1 billion or more, and 17 had endowments exceeding $5 billion.

There is no question that, taken as a whole, institutions of higher education in America have become considerably richer over the past 25 years. Unfortunately, it is the rich institutions that have become much, much richer, while most of the rest of the non-$1 billion endowment institutions are struggling to balance quality education with the price they must charge students and their families.

The 69 institutions with $1 billion+ endowments represent approximately 0.3 percent of all of the nonprofit four-year colleges and universities in our country. For good or ill, higher education has its 1 percent, just like the rest of society.

Has Gordon Gekko’s philosophy (“greed is good”) replaced veritas (“truth”: Harvard), or lux et veritas (“light and truth”: Yale), or Die Luft der Freiheit weht (“the wind of freedom blows”: Stanford) as the de facto motto of these elite universities?