The Dangers of Donor Revolt

Ever since the horrific events of October 7 in Israel, colleges in the U.S. have emerged as another front in the Israel-Hamas conflict. Presidents have issued carefully crafted statements, only to reissue them for insufficiently acknowledging Palestinian or Israeli suffering. Student groups have made their own pronouncements, some sparking furious reactions from other students, faculty, and alumni. Campus rallies have clashed with counterrallies. Posters have been affixed to walls; posters have been ripped down.

Among the most vocal, and visible, combatants have been donors, and specifically, major donors — those individuals willing to dole out eight- and nine-figure gifts. At several universities, such donors have pushed administrations to denounce the Hamas attacks more zealously, as well as anti-Zionism and antisemitism on campus. Much of this has occurred behind closed doors. The hedge-fund manager Kenneth C. Griffin, for instance — who gave $300 million (along with his name) to Harvard’s Graduate School of Arts and Sciences this past spring — called the head of the Harvard Corporation shortly after the attacks and urged the university to issue a statement more “forcefully in defense of Israel,” as The New York Times reported.

But what may seem distinctive about the present moment is how much of the pressure has been applied out in the open, with a growing number of major donors announcing they would no longer support institutions that had become accustomed to their handsome donations, and urging their wealthy peers to do the same. At the University of Pennsylvania, Marc Rowan, a hedge-fund executive and chair of the Wharton’s School Board of Advisors, sent a letter to the student newspaper on October 10 accusing the university’s leadership of “selective tolerance of hate” and lambasting the president and chairman of the board for failing to condemn Hamas. He concluded his letter, which did not appear in the newspaper but received a flurry of national press attention, with a call for his fellow alumni to donate “$1 in place of your normal, discretionary contributions so that no one misses this point.” Many have done just that. For Rowan, the new price point for his donation is about $50 million less than what he gave in 2018.

These more aggressive philanthropic interventions have been termed a “donor revolt.” And though they no doubt have caused all sorts of headaches in university presidents’ offices, they do not come as a surprise to those of us who have studied the history of philanthropy in the United States. That’s because they represent the culmination of several trends in large-scale giving and higher education over the last several decades.

Over the course of the 20th century, American law and policy created the phenomenon of the megadonor. In the early 20th century, Congress sought to rein in industrialists from using their charitable foundations as quasi-governmental bodies or instruments of tax avoidance. Reprised in the middle of the 20th century, philanthropic reforms focused largely on curbing the power of institutional legacy foundations, whose donors no longer directed their operation. But tax-reform legislation in 1969, combined with deregulatory financial policies set Big Philanthropy on a course of growth, and gradually legacy foundations yielded to living megadonors, individuals who made their money relatively early in their lives and could give it away with a focused intensity — and a tangle of conditions.

Colleges were among the greatest beneficiaries of these changes. Thanks to gifts from megadonors, endowments spiked, named chairs proliferated, and gleaming new buildings sprouted. In 2022, the Council for Advancement and Support of Education calculated that institutions of higher education took in $59.5 billion in charitable gifts and found that the top 1 percent of givers accounted for at least 80 percent of all donations. Dependent on these top givers, colleges allowed them to earmark funds through “restricted” gifts dictated by donor-determined limits and priorities. According to one recent study, a full 68 percent of money in the largest private universities is “restricted” in this way.

Yet the more that megadonors felt needed and courted, the more some started to express discontent that the institutions they were supporting did not fully mirror their values. The very wealthiest Americans, whose politics tend to skew centrist and conservative on many issues, perceived institutions of higher education as careening leftward ideologically. Even before this recent “donor revolt,” conservatives had been raising alarms that donors’ tropism toward higher-education endowments was a habit that needed to be kicked. In this light, it’s not surprising that Griffin’s megagift to Harvard not only received a chilly reception from the left, which rebuked him for bestowing more funds to an already bloated endowment, but also from many on the right. Writing in City Journal, for instance, Heather Mac Donald urged “conservative donors” like Griffin to “wake up” and stop “plowing treasure into an institution whose values are, at best, in tension with American traditions and, at worst, antithetical to them.”

The critique of major donors, too, long predates this latest episode. For well over a decade, intrepid student journalists and activists, followed by mainstream media, have been shining a light on the oversize influence those donors have on colleges. A student movement called UnKoch My Campus, for instance, was founded in 2012 to demand greater transparency about the donors whose dollars, the group alleged, were driving universities’ institutional priorities.

Since October 7, megadonors have used the press, public pressure, and crowdsourcing campaigns to gain unprecedented support from a wide network of other wealthy Americans and university alumni by threatening a sort of donor strike. Indeed, following the example set by megadonors, more than 1,600 Jewish alumni of Harvard have threatened to withhold donations because of concerns that the school has not adequately addressed antisemitism. Donors, of course, exit causes all the time, and often make a public and replicable case for doing so.

It is possible to conclude that these donors are doing exactly what philanthropy is intended to do: hold power to account by exercising a check on it. A pluralistic defense of philanthropy’s civic importance can extend to the act of refusing to give. In this case, on many campuses, students have expressed concerns about mounting antisemitism arriving under the cloak of anti-Zionism. Megadonors might be playing an important role if they are speaking for others who cannot command the same attention.

Yet even as charitable law explicitly favors nonprofit organizations that draw from a broad pool of donors with favorable tax status based on the presumption of accountability, these laws also seek to regulate the power that a small, concentrated cohort of donors can wield. In these moments of public grandstanding, philanthropists might be showing the public that, far from balancing power, they are arrogating too much for themselves by elevating their concerns over others’ interests.

The donor revolt has pulled back the curtain, giving the public a view of how philanthropic power can be wielded, beyond the stated terms of the gift. And while the theatrical nature of the protest is one source of its power, the outsize political platform it represents may also draw public ire. We are already witnessing changing tactics from donor-led campaigns for public statements from universities to donors’ efforts to target individual students who signed statements for reprisal. Most recently, some Jewish organizations are demanding universities discipline student groups, calls that are likely to be augmented by donor pressure. In these cases, the power imbalance grows even more distressing. If colleges are cowed into compromising their missions, constricting the space for public debate, this too will happen before a watchful public.

Alternatively, institutions may attempt to wean themselves from megadonors, effectively changing the rules upon which the donor revolt has depended. Fund raisers have expressed growing consternation about overreliance on the major gift — megadonors, after all, are often as fickle as the economic climate, and they are the most likely to attach restrictions to their gifts. A donor revolt could hasten calls to tend to the rest of the donor pyramid, which many critics from within the profession believe has been left to atrophy.

If universities attempt to put some distance between themselves and megadonors, we should also expect megadonors to do the same. Indeed, already some centrist and conservative megadonors have suggested that higher-education philanthropy is not a “safe space” for their largess, at least not without even more exacting restrictions on their gifts and clear concessions from colleges. Such donations might flow elsewhere — to independent research centers outside academic institutions, for instance.

Finally, this donor revolt threatens to place a special burden on its Jewish participants and American Jews more generally. Throughout most of the 20th century, American Jews largely disbursed their philanthropic gifts to Jewish organizations, a pattern that began to shift only in the final decades of the millennium, when roughly 60 percent of philanthropic disbursements from large Jewish family foundations were directed to non-Jewish organizations. Alongside substantial gifts to these nonsectarian institutions came seats at the table and appointments to boards.

With Jewish donors, including Marc Rowan, Les Wexner, Ronald Lauder, Leon Cooperman, and several other well-known names on the front lines of this recent donor revolt, it is safe to assume that some critics will draw on a deep well of antisemitic tropes linking Jews to perfidious uses of power. The situational reality, that Jewish donors are among a class of megadonors to higher education and that the war in Israel and Gaza has struck a chord of fear among many American Jews, should not be overdetermined into an abstract rule that connects Jews to abuses of power. And yet if history is any indication, we should be vigilant of just that.

The donor revolt has brought to the surface long-simmering debates about philanthropic power, much as the conflict itself has exposed deep fault lines about American power, antisemitism, and Islamophobia. At the very least, we should take it as an opportunity to ask whether the philanthropic system as it exists is worth defending, or whether a public revolt against the philanthropic status quo is in order.