Education- Billionaires have made headlines for cutting funding to Harvard and the University of Pennsylvania.
- The boycotts are in protest of the schools' responses to Hamas' terrorist attacks on Israel.
Billionaire megadonors are making headlines for cutting funding to elite Ivy League institutions and rebuking their responses to Hamas' terrorist attacks on Israel.
But the lost donations might not hurt the schools as much as you might think — at least when taken in isolation.
Billionaire Marc Rowan, the CEO of Apollo, was the first megadonor to publicly threaten to withhold college donations. He said he would donate $1 to Penn after the school, in his view, did not take a strong enough stance against antisemitism during a weeks-long series of events involving a Palestinian literary festival on campus. He also urged fellow alums to "close their checkbooks."
In the days following, more big donors followed suit. The Huntsman family, hedge fund veteran David Magerman, and billionaire Clifford Asness all said they halted donations to Penn. Billionaire Ronald Lauder threatened to do the same.
Harvard, too, has seen backlash from a major backer: The Wexner Foundation, founded by Victoria's Secret billionaire Les Wexner, severed ties with the university over its response to the terrorist attacks.
So far, the financial impact to the schools, however, is relatively minimal.
"The institutions that have seen donors withdraw their support are not going to be significantly affected in the short run," Michael Hemesath, a professor of economics at Carleton College and the former president of Saint John's University, told Insider over email. "Annual budgets are driven primarily by tuition revenue and endowment, so the withdrawal of a few million from these institutions is not a big deal."
Take Wexner, for example: His foundation donates at least $2 million — and often more — a year to Harvard, according to its filings. The Wexner Israel Fellowship at the Harvard Kennedy School of Government, which the foundation has funded for over three decades, costs at least $1.5 million annually, per filings.
That's a lot of money. But Harvard's endowment is much, much larger. As of 2022, it was $51 billion. That same year, Harvard received $505 million in gifts, per its financial report.
The donors blasting Penn also have given sums that, by any standard, are enormous. Rowan and his wife gave $50 million to Wharton in 2018, for example, which the business school lauded as the largest single gift it had ever received. But Penn has a huge endowment, too: It totalled $21 billion as of June. The school received $668 million in gifts in the 2022 fiscal year, according to its financial report.
Schools could battle a reputational blow
Unless the pile-on keeps coming, which it very well might, these schools' bottom lines could be just fine. It's the reputational damage that could be harder to overcome.
Critics are saying the schools have not done enough to condemn antisemitism. Now some CEOs and business executives have said they are wary to hire students who may have been involved in relevant campus activities.
"I now know that the conference has put a deep stain on Penn's reputation that will take a long time to repair," Lauder wrote in a letter to Penn's president, Elizabeth Magill, referring to the Palestinian literary festival.
The conflict could inspire smaller donors to pull funding, as well, according to Hemesath.
With universities becoming more "engaged in social and political issues, donors may be concerned that they have shifted their focus toward concerns outside of education," Hemesath said.
"As prominent donors withdraw support, other donors may take that as a signal of the loss of institutional focus on education, and these many smaller donors may decide that they too should withdraw support," he added.
At the same time, schools that shift their policies or statements in response to the backlash may be accused of pandering to donors.
Penn professor Max Cavitch told the university's student paper, for example, that the school president's more recent remarks on the conflict appeared to be making "transparent efforts at donor appeasement, rather than honest, compassionate remarks in support of non-violence and free speech."
"Penn risks becoming something less than that if the official rhetoric of its leaders and donors remains so inflammatory and misleading," he added.