In the Wake of Varsity Blues, Here’s What Higher Ed Megadonors Should Do Next

What can the scandal involving 33 parents charged with bribing, cheating, and lying to get their kids into elite universities tell us about higher education mega-philanthropy? According to the Massachusetts U.S. attorney who announced the indictments, Andrew Lelling, not much. He sought to differentiate the accusations from the high-stakes quid pro quo that many assume characterizes a subset of large-scale gifts to colleges and universities. “We’re not talking about donating a building so that a school is more likely to take your son or daughter,” he said at a news conference. “We’re talking about deception and fraud.”

But most people didn’t buy the distinction.

“Yesterday’s headlines about the wealthiest Americans buying access to our elite colleges and universities is just a new version of an old story,” Sen. Ron Wyden declared, announcing his intent to introduce legislation that would prohibit donors from receiving tax breaks for gifts to higher education institutions before or during the enrollment of a child. “While the prosecutor attempted to distinguish these crimes from payoffs in the form of buildings or stadiums to secure access for the undeserving, it is all part of the same corrupt system.”

Wyden isn’t wrong to highlight that parallel; in fact, it can be pushed even further: The admissions scandal highlights some unhealthy dynamics that define higher-education philanthropy more generally, implicating even donors who have little interest in buying access to top schools for their failsons. It can remind us of how the allure of exclusivity and status can warp donor — much like parental — decision making.

As Paul Waldman argues in the Washington Post, the admissions scandal is ultimately a story “about the perverse consequences of a winner-take-all society, where rich people believe that the spoils of American life are so unfairly divided that if little Cameron or Madison has to go to, say, San Diego State instead of Stanford, their lives will be miserable failures.”

Rich Get Richer

These days, mega-philanthropy suffers from its own winner-take-all syndrome.

As Marc Gunther, a frequent Chronicle contributor, has shown, in the charity world more generally, the rich (and best-endowed) institutions tend to get richer. Higher education is no exception; in fact, because such a high proportion of large-scale giving goes to colleges and universities — according to data from a soon-to-be published report from Una Osili, professor of economics at Indiana University’s Lilly School of Philanthropy, in 2017, nearly half of all donations from the 50 top donors in the United States went to colleges and universities, as did, over the last decade, more than a third of the total of all million-dollar-plus gifts — higher education is a domain in which these dynamics can be detected with particular clarity.

According to the Council for Aid to Education, the top 20 fundraising institutions brought in 28 percent of all gifts last year, the same as 2017. These are largely the highly selective institutions that already have the largest endowments, the “winners” in the higher-ed space. (The lowest-ranked endowment on the list of the institutions that received the most private funding in 2017 was the University of California at San Francisco—but it’s a university that has reeled in several eight- and nine-digit donations in recent years and won’t be that low for long.)

There are a lot of reasons behind this clustering. Obviously, these are the universities that produce many of the wealthiest alumni and that have the most fearsome development offices. And their medical and scientific centers are often the most advanced, producing research that benefits all of us.

But we can’t dismiss the warm glow that donors get from an association with an elite, renowned institution. And that’s a key connection to the college admissions scandal.

It’s probably not safe to venture too deep into the psyches of the parents who seemed to be willing to commit all sorts of bad acts to secure admissions for their kids to Yale or Stanford. They were no doubt motivated by a desperate belief that they needed to give their children a leg up in a hypercompetitive world and that a diploma from an elite educational institution was a particularly reliable golden ticket. (Though the research on how much economic benefit an Ivy League school really does confer to graduates is inconclusive. It might not do much for most students, although it likely gives a significant boost to poor students.) But it’s also likely that some part of the parents’ scheming was ego driven, based on the need to advertise their own worth through their children’s college admission letters.

It’s also likely that some higher ed mega-donations to elite institutions are fueled by similar promptings — donors want their names linked to high-status colleges and universities. The winner-take-all funding dynamic that this encourages is a problem for a bunch of reasons. First, it threatens one of the prime justifications for our voluntary charitable system: that it fosters pluralism and a diversity of institutional development. It is true that since the early 20th century, when Rockefeller-funded foundation leaders sought to consolidate educational institutions and prune what they considered to be an unruly and unsustainable tangle of denominational colleges, the idea of centralizing higher education has been a key theme in college philanthropy.

Yet if a similar process is encouraged by philanthropy these days, it has less to do with any sort of systematic planning and more with winner-take-all feedback loops. If the progeny of the wealthy and privileged tend to congregate in certain educational institutions, and if those institutions reap exceptional crops of philanthropy because of the generosity of their alumni, we run the risk of exacerbating institutional stratification within higher education, with a handful of prosperous institutions and then a lot of struggling have-nots.

Diversified Gifts

Paradoxically, this system ends up placing disproportionate financial burdens on the often less economically secure students who attend those underendowed schools (for more on this dynamic, check out Barret Taylor and Brendan Cantwell’s new book, Unequal Education). We can see this, for instance, in the struggles of historically black colleges and universities to attract large-scale funding.

This inequity undermines one of the stated ambitions of many of these mega-gifts: expanding opportunity. Donors should be wary of this sort of disparity. That’s why, although I do agree with Phil Buchanan, head of the Center for Effective Philanthropy and a Chronicle columnist, that there is much to praise in Michael Bloomberg’s recent $1.8 billion gift to John Hopkins University for student financial aid, I also think some of the ambivalence toward the gift was warranted. The donation will allow the university to extend its benefits to a wider array of students, but Johns Hopkins was already an elite, selective institution. It was already one of the “haves.”

I appreciate the importance of gratitude and institutional bonds in motivating philanthropic gifts to the alma mater. Those are basic human attitudes, and to the extent that giving expresses our humanity, I don’t think there’s much sense of discounting them (which is one reason why I can never fully commit to effective altruism). But I don’t think it makes sense for mega-donors to base their philanthropic choices entirely on those feelings, either. And I think these donors need to be vigilant and honest about another feeling that can shape giving, one with ties to the motives of those parents Photoshopping their kids into water-polo clubs to get into an Ivy League school: the status-enhancing impulse to be associated with elite institutions.

Donors who feel strong ties to certain elite institutions should hedge against this impulse by diversifying their donations: Along with the million-dollar gift to the university with the overstuffed endowment, give to a school whose galas rarely make the society pages, such as a historically black institution, a community college, or some other two- or four-year public institution that admits a high percentage of low-income students and that does an especially good job promoting social mobility (here’s a place to learn which ones do best). Instead of giving just to gild the funnel, widen the aperture.

Benjamin Soskis is co-editor of HistPhil and a research associate at the Center on Nonprofits and Philanthropy at the Urban Institute.