The University Donor Dilemma

By: Racheli Jian  |  July 31, 2024
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By Racheli Jian, Senior Arts and Culture Editor

Almost all colleges operate as financial institutions. Like any business, universities offer a valued service in exchange for a set price. Especially at private universities, students send in thousands of dollars every year, hoping for a substantive education in return. A simple enough transaction. 

However, universities are not solely reliant on students’ tuition for funding. Universities also receive revenue in the form of government grants, endowments, and most importantly, donations from select individuals. Relative to each donation, an individual’s tuition comprises a minute amount of the school’s money. Therefore, it might follow that a higher institution should prioritize donors’ investments over a student’s tuition. Losing funding from a single donor would be a more significant financial loss than losing tuition from one, or even a few, students. 

So what happens when the interests of these two groups are at odds?

Many universities are classified as non-profits and as such are required to publish their financial statements. Based on data from a collection of university financial statements, on average, a college’s main source of revenue is tuition. However, a significant portion of revenue comes from select donors. Looking at the financial statements of Columbia, the University of Pennsylvania (UPenn), and the University of Southern California (USC), it is clear that they get $300-500 million in donations every year. Therefore, when something disrupts that relationship it can affect universities greatly.

Following October 7, universities across the country were filled with protests. Most of these protests were anything but calm. Universities had to clean up graffiti as well as filthy outside spaces from the encampments and repair buildings. On top of all these expenses, many universities lost big donors. For example, Columbia lost their relationship with three main donors amid the pro-Palestine protests on its campus: Robert Kraft, Lev Blavatnik, and Leon Cooperman. All three of these men are billionaires and have donated millions of dollars to Columbia over the years. Yet, the university’s inability to reprimand students forced its donors to rethink their financial commitments.

Universities that lose donors may not feel the effects immediately. Large sum donations are usually given over time. However, the loss might have a domino effect. In a recent article, Sara Haberson, former Associate Dean of Admissions at UPenn, explained that “Big donors cutting ties could also convince smaller donors to end their contributions, hurt alumni relations, impact college admissions and put pressure on the president or members of the board of trustees.” By harming their relationship with one critical donor, universities could actually be losing more than just that donor. Rather, this could lead to a chain reaction with other smaller donors ending their contributions to these universities as well and lead to negative impacts with alumni and other supporters of the university. 

Some universities try to maintain neutrality in the face of protests. However, what they don’t realize is that by not taking action amidst the chaos of organized protests, they make an active choice to sever valuable relationships with key supporters. While universities may not feel the repercussions of their decisions immediately, losing major donors will eventually catch up with their finances. These individuals will find other places to donate their money to, which for universities, will make the broken relationship hard to recover from. 

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