Last month, John Paulson paid $400 million to rename the Harvard Engineering School. The gift represents a disappointing reality: rather than build the next generation of universities, today’s billionaires are content to bolster a university system that isn’t keeping pace with the demands of our economy or fulfilling its democratic promise.
The wealth created during the early part of the 21st century now rivals or exceeds that amassed during America’s Gilded Age, when industrialists accumulated fortunes in emerging industries, including railroads, oil and steel. Their wealth quickly transformed into something revolutionary: philanthropic investment in disruptive educational institutions designed to foster large-scale social and economic mobility. The millionaires (the concept of a billionaire was far in the future) also built a system of public libraries and a network of museums like the Metropolitan Museum of Art that were open to all citizens, and solidified America’s reputation as a land of opportunity.
Perhaps the greatest gift the Robber Barons made was the modern research university. In 1867, Johns Hopkins donated $7 million to an institution that later bore his name—the largest philanthropic bequest in U.S. history. Hopkins disrupted higher education by combining teaching and research in one institution, something truly radical at the time. Others soon joined the fray, as Andrew Carnegie (Carnegie Mellon University), Leland Stanford (Stanford University), and John Rockefeller (University of Chicago) donated their fortunes to the modern university concept.
One hundred years ago, the Robber Barons were not content to simply donate their money to Harvard and Yale. They saw room to stimulate competition and innovation. As a result, old line universities like Harvard were forced to keep up with upstarts like MIT.
Though innovative in their day, these hundred-year-old universities are now receiving well-deserved criticism. To many, our incumbent universities are locked in an ivory tower—divorced from their students, workforce demands and slow to adopt technology or approaches that might risk their US News and World Report rankings. Yet despite their challenges, our wealthiest donors are investing more than ever in old line educational institutions, rather than the creation of new universities. Stephen Schwarzman gave $150 million to build a new dormitory at Yale. In 2014, alone, $10 billion went to the 20 top fund college and university fundraisers, nearly a quarter of total giving.
Why have America’s wealthiest shied away from investments that might compete with our education establishment? Perhaps the regulatory complexity of higher education frustrates billionaires that might otherwise seed the creation of new models. Perhaps the perception that America’s universities are the best in the world. Perhaps the association with elite brands creates a powerful incentive for legacy-driven donations.
The Paulson gift, which funds the construction of a new engineering building, is remarkably unimportant to Harvard, representing less than one percent of the asset value of the Harvard Corporation. But imagine what $400 million could do to re-make engineering education.
There is an interesting precedent: The Olin Foundation was one of the largest of its day and donated hundreds of millions building new engineering buildings on existing university campuses. In the late 1990s, Olin trustees threw out the playbook. They endowed Olin College with a $450 million gift that enabled the college to take risks. No tenure, few lectures, and a revolutionary concept that taught future engineers how to learn by doing. Within a generation, Olin has become a top 10 engineering college that serves as a model for other engineering programs.
So what might the future of the university look like? Consider recent higher education developments in the education venture capital and startup scene. Minerva is building an elite, high-tech university that claims to already be more competitive than Harvard with over 10,000 applicants for under 200 slots. Students flock to Galvanize’s San Francisco campus to learn computer coding, alongside startups backed by in-house venture firms, including Google Ventures. We are moving toward an interlocking system of online and ground based operations that redefine the separation of innovative work and school that is global in nature.
Perhaps the more important questions is what path our generation of philanthropists will take. Will donations to Harvard soar, or will philanthropists support disruptive models that redefine the future of the university? The question is not whether our philanthropists will out-innovate their Rockefeller, Carnegie, and Stanford forebearers, but whether they will fund the innovation sufficient for U.S. higher education to remain competitive in the 21st century.
Daniel Pianko is a founding Managing Director of University Ventures, a unique investment firm focused on helping universities innovative from within.
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