How America’s billionaire alumni weaponise elite university donations

While several vocal American billionaires were threatening to stop their donations to some of the country’s elite universities following student clashes last year over the Israel-Gaza conflict, Roy Vagelos was taking a different tack.

The billionaire former chief executive of US pharmaceutical group Merck, and ex-chair of biotech Regeneron, chose to deepen engagement with the prestigious educational establishments where he and his wife had studied, by making new gifts.

These donations stood in stark contrast to the approach adopted by Marc Rowan, co-founder of the private equity group Apollo Global Management, and by Bill Ackman, founder of the hedge fund Pershing Square.

Rowan, a former student of, and donor to, the University of Pennsylvania (Penn), had been calling for the resignation of its president, Elizabeth Magill, over concerns about allegedly antisemitic student protests and criticisms of academic ideology and governance. Ackman, meanwhile, had focused his criticisms on Claudine Gay, the president of his former college, Harvard, and the leaderships of MIT and Columbia.

These very differing relationships between rich donors and the universities they support is sparking a wider reflection about the institutions’ reliance on big gifts, the influence that wealthy philanthropists should be allowed to wield, and the tensions over academic freedom.

Both Rowan and Ackman declined to comment.

Amir Pasic, dean of the Lilly Family School of Philanthropy at Indiana University, says: “Post October 7 [when Hamas launched an attack on Israel], there is an intensification of people exercising their voice. We don’t really have policies to think about what a philanthropic donation entitles you to do. Formally, it should not give you any larger governance voice.”

Vagelos takes a nuanced view on university governance. In January this year, he and his wife, Diane, unveiled an $84mn gift for science initiatives across the School of Arts & Sciences at Penn. Since then, he has donated $400mn to Columbia for an Institute for Basic Biomedical Science, on top of prior gifts including $250mn he gave in 2017 to provide free tuition at the medical school for students in need.

“Marc Rowan wrote to me as a retired trustee and urged me to stop my contributions to Penn,” Vagelos told the Financial Times. “Universities are presumably training people to do good things, to be involved, to try to keep us out of wars. The idea of stopping the functioning of a university because there’s a dispute among some people sounds like a ridiculous response. I was very happy to continue our donations and would urge others to do the same.”

However, Lynn Pasquerella, president of the American Association of Colleges and Universities and former president of Mount Holyoke College, says she is concerned more broadly by “a new permission structure for the weaponisation of donations” — partly fuelled by the more polarised politics of the US ahead of November’s presidential elections.

By the time the latest Vagelos gift was announced, the critics were gaining ground. Fundraisers at Penn and Harvard are already bracing for a drop in donor support for 2023-24. Among those turning away is Ken Griffin, founder of the hedge fund Citadel. In April last year, he gave $300mn to Harvard’s faculty of arts and sciences but, at the start of this year, he said he was suspending new donations because of its “DEI [diversity, equity and inclusion] agenda”.

Following Congressional hearings last December, the female presidents of both Penn and Harvard swiftly resigned. Minouche Shafik, the president of Columbia, followed in August.

Martha Pollack, the president of Cornell — who was also criticised by some for insufficient actions against antisemitism — retired early. She stressed the decision was “mine and mine alone” but added: “We must develop more capacity to seek out different perspectives and be willing to listen to those with whom we differ.”

Minouche Shafik, who resigned as president of Columbia

Freedom of speech? Pro-Palestine and pro-Israel demonstrations at Columbia university earlier this year resulted in the resignation of its president last month

Claudine Gay, who resigned as president of Harvard

Bill Ackman has called for more corporate-style boards and decision-making at universities

Elizabeth Magill, who resigned as president of Penn

Marc Rowan, who has criticised teaching methods at Penn, his alma mater

Their interim replacements (except at Columbia) are all more conservative choices of older white males, as are the new heads of Berkeley and Stanford.

But, in spite of the changes that have been made, universities are set to come under fresh pressures this autumn linked to the conflict in Gaza and their students’ response to it. They are also bracing for renewed attacks from Republican Party leaders and supporters seeking to exploit populist divides between graduates and non-graduates, even though many of those leaders studied at elite institutions.

Presidential candidate Donald Trump attended Penn’s Wharton business school, for example, but has threatened to cut federal funding and remove the tax-exempt status of university endowments. His running mate, JD Vance, went to Yale law school, while Elise Stefanik, who has led Congressional attacks on the elite universities, herself studied at Harvard.

This scrutiny of universities has placed a particular spotlight on governance and donor relations. A first concern is the sheer size and unwieldiness of many university boards, and the homogeneity of their members.

The trustees on these private university boards are frequently “successful” individuals by virtue of wealth they created or inherited, with a history of past giving and an expectation they will donate more.

Ackman and Rowan have both called for more corporate-style boards and decision-making at universities. Yet most trustees are already drawn from business — not least Rowan himself, who sat on Penn’s main board and chairs the influential advisory board of its Wharton business school.

That raises concerns that some trustees have connections that are too closely intertwined and fail to represent a broader range of interests and networks.

Scott Bok, head of the investment bank Greenhill and the former head of Penn’s trustees who stepped down alongside Magill, says: “Our board was heavily weighted to large donors, particularly from New York and Wall Street. Greater diversity, from areas like biotech, large corporations, academic institutions and non-profits, would be beneficial.”

Nicholas Dirks, former chancellor of Berkeley and a dean of faculty at Columbia, likens the vocal donors who emerged last year to activist shareholders, and thinks they have too much power. “That clearly goes over the guardrail,” he says. “Is there not a problem with academic freedom when people who give large donations try to influence faculty appointments, and make determinations of how free speech is defined?”

Ryan Enos, a professor of government at Harvard, raises a wider philosophical question about seeking donations: with the Harvard endowment valued at $50bn, Penn’s at $21bn, Columbia’s at $14bn, and Cornell’s at $10bn, is the focus on raising additional funds the wrong priority?

“The mission of the university is not increasing wealth, but making society a better place and providing public knowledge,” he says. Refocusing on that would give a different perspective to the skills required on university boards.

Harvard university’s mission is not increasing wealth, but making society a better place

The trustees at Cornell can at least be grateful for donors such as David Einhorn, an alumnus and hedge fund owner, who endowed a Center for Community Engagement at the university in 2021. He wrote to members of his college late last year to say: “Struggle and turmoil demand even deeper engagement. Crisis creates opportunity for change and improvement. I want to be part of this transformation and help repair and strengthen the Cornell family.”

With engaged donors such as Einhorn funding initiatives to encourage tolerance of opposing views on polarising topics such as the Middle East, and others like Vagelos supporting universities’ broader societal mission, there is some hope for administrators trying to draw lessons and see beyond the recent turmoil.

Even the controversial tactics of donors such as Ackman, Rowan and Griffin have triggered useful fresh reflection on governance — but their attempts to create more corporate style boards accountable to external philanthropists is set to encounter considerable resistance from within. 

This article has been amended since first publication to replace an incorrect caption.

This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs and family offices, as well as alternative and impact investment