Universities Are Facing Criticism for Taking Dirty Money. Do Their Donor Policies Protect Them?

Chronicle illustration by Ron Coddington

Is it time for new rules for donations to colleges and universities?

Brown University apparently thought so. On Sunday, Brown published an updated gift-acceptance policy that states, among other things, that it won’t take money that “compromises the academic freedom of the university community” or “could inflict damage to the university’s reputation, standing, or integrity, or be contrary to university values.”

The update was issued after student groups protested donations from an alumnus, Warren Kanders, whose company sold tear gas used on migrants at the United States-Mexico border, The Brown Daily Herald reported.

The new policy also seems to seek to insulate Brown from future blowback. “The acceptance of a gift does not imply nor mean that the university endorses or approves of the donor’s views, opinions, businesses, or activities,” it reads.

On other campuses, students, faculty, and community members have opposed donations that they see as dirty and tarnishing their institutions’ ideals. They’ve protested money from the Sackler family, the makers of the opioid OxyContin; Jeffrey Epstein, who was indicted for sexually abusing young girls; and Charles Koch, who has sought to popularize his libertarian views by funding research centers at universities, as the journalist Jane Mayer reported in her book Dark Money. Past Koch grants to universities have been criticized for imposing unusual control and hampering academic freedom.

What do universities’ gift-acceptance policies say about conflicts like those? Are they prepared for increased public scrutiny of their sources of funding? To understand the typical practice, at least among one major type of institution, The Chronicle sought and received a half-dozen large public universities’ policies through public-records requests and online searches, as many public institutions post their policies online.

It’s best practice for nonprofit organizations to have a written gift-acceptance policy that addresses tainted money, conflicts of interest, and other ethical dilemmas, said Robbe Healey, chair of the ethics committee for the Association of Fundraising Professionals. Every mature fund-raising operation should have one, she said.

Every institution The Chronicle examined did have a gift-acceptance policy, but the policies vary widely in how well they describe the universities’ ethical and reputational stances.

Less-explicit policies might leave institutions more vulnerable to future controversies. “It is advantageous to the nonprofit to clearly state where the lines are, so you give your development team a structure for knowing when a gift may not be one you want to accept,” Healey said. “That protects the donor and the institution and the individual staff people.”

Policies at the University of Virginia seemingly have few specific clauses about insulating academic freedom from donor demands. The Chronicle called and emailed a spokeswoman to find out if the university had any relevant policies that didn’t come up in a records request and domain search, but she didn’t immediately respond.

In contrast, the University of North Carolina at Chapel Hill’s guidelines encourage faculty members to be involved as soon as possible when the university is considering gifts that may affect the curriculum. “Any effects that the proposed donation may have on academic freedom,” the guidelines say, “shall be considered” when deciding whether to accept a gift.

And the policy for the University of Florida Foundation, the university’s fund-raising arm, sets out unusually specific terms to prevent donor meddling. “Gifts from any donor made on the condition or with the understanding that a particular faculty member will be hired or retained will not be accepted,” its Policy #2.04 reads. “Gifts that restrict or impede the work or scholarly activity of a faculty member, fellowship holder, or student will not be accepted.”

Protecting Universities’ Reputations

The policies The Chronicle examined are mostly quiet about gifts that might be seen as deriving from ill-gotten profits, an issue that’s at the heart of many protests now and is highlighted in Brown’s new policy.

Some gesture at the morality of donations’ origins in a broad way. The University of California at Irvine, for example, states it requires gifts to “support the university’s teaching, research, and service mission.” The University of North Carolina at Chapel Hill’s guidelines add that it considers “whether the university’s acceptance of a proposed donation would reflect poorly on the university’s reputation or would conflict with the mission and values of the university and the affected units.” Beyond that, the policies The Chronicle saw were no more specific.

It can be hard to write detailed policies on the moral aspects of money, said Kevin R. McClure, an assistant professor at the University of North Carolina at Wilmington who studies higher-education finance. “I would like to see institutions start to be a little more critical about where money is coming from. The reality is that it’s difficult to figure out where the line is drawn,” he said. “Most money is generated in a way that somebody downstream, or some aspect of the environment, has been harmed.”

Randa S. Safady, vice chancellor for external relations for the University of Texas system, had an unambiguous statement ready when asked about moral considerations in taking gifts. “You always have to look at: legal, ethical, and moral,” she said. “I think those three words have to guide decisions.”

But things quickly became complicated when she was presented with a real-life example. Some students and professors have pushed their universities not to take money from fossil-fuel companies, seeing those profits as immoral because they contribute to climate change. Would the University of Texas, in one of the nation’s top oil-producing states, consider fossil-fuel money to be immoral, too?

Safady didn’t answer directly but said: “The moral issue is always an interesting issue because what is morally appropriate for some may not be for others. You raised one good example. You have to look at: What is the benefit to the institution? What’s in the best interest of the institution?”

To safeguard its interests, the University of California at Irvine’s policy asks questions that seem intended to reduce the risk of its being saddled with an embarrassing big donor. In a document titled “UA Prospect Development Donor Vetting Process,” vetters at UC-Irvine are told to check “Does the prospect have evidence of capacity (i.e., net wealth of at least $20M+, gift capacity of at least $1M, or previous giving of $1M+)” and “Is there any history of criminal activity or open investigations”?

Old and New Problems

The issue of controversial donations is not new. Healey, the ethics chair, pointed to the tens of millions of dollars that the University of California at Los Angeles and George Washington University accepted from the Milken brothers in the early 2010s. “That was controversial enough in its day,” she said. The Milkens were indicted for federal racketeering in 1989; the collapse of their Wall Street firm led to a larger financial crisis whose cost was ultimately borne by taxpayers. By the time they donated to UCLA and George Washington, the government had long since dropped charges against one brother, Lowell, and the other brother, Michael, had served his time in prison.

One aspect of controversial money that Healey did think was new was the issue of anonymous donors. Historically, if a donor wanted to be anonymous to the outside world, institutions would always honor that request, she said. Recently, however, The New Yorker revealed that the director of the MIT Media Lab had hid donations from Jeffrey Epstein after the university had already placed him on a “disqualified” list — a use of anonymized donations that the field of fund raising had not widely considered before.

Healey said she’s against it: “If you’re not willing to let the public know that you’re supported by an individual or a business, I think that should give you pause.”

The Chronicle asked all the institutions it contacted whether they had a blacklist similar to the one The New Yorker described MIT as having. All that answered said they didn’t.

Whether Brown’s policy will spur other institutions to follow suit remains to be seen. After all, Healey said, the issues that universities are now dealing with have plenty of precedent. Then again, she said, past controversies, like those over the Milken money, didn’t carry as far as the ones today have: A culture of spreading information and applying pressure to institutions through social media did not exist then as it does now.

Correction (10/31/2019, 12:04 p.m.): This article originally misstated the day Brown issued its updated gift-acceptance policy. It was Sunday, not Monday. The article has been corrected accordingly.

Francie Diep is a staff reporter covering money in higher ed. Follow her on Twitter @franciediep, or email her at francie.diep@chronicle.com.