Director: Daniel C. Levy

Elite Private Universities' Fundraising Leaves Others Behind

(Entry by Kevin Kinser)

PROPHE Summary:

Twenty-two elite universities in the United States are conducting fundraising campaigns of more than a billion dollars each. Public universities account for half of these campaigns. This is having the effect of further concentrating wealth among a handful of institutions at the expense of colleges and universities that do not have the ability to raise such sums of money. At the same time, it has increased the competition for the best faculty, with wealthy institutions willing to pay a premium rate to hire senior researchers. Private universities are engaging in fundraising to provide extra resources for new initiatives, leading the public universities to follow suit just to remain competitive. While this trend has maintained the global leadership of top U.S. universities, some express concern that it is making education more expensive for the average student, and leaves less affluent institutions behind.

For the full story see Business Week MSNBC.com, December 15, 2004, "Rich College, Poor College: Fever-pitch fund-raising at top-tier universities leaves the others way behind," by William C. Symonds.
http://msnbc.msn.com/id/6717549/

PROPHE Observation:

Private institutions in the U.S. have long taken advantage of philanthropy to build their endowments, but it is a more recent phenomenon in the public sector. Similar to privatization trends seen globally, the new urge for private money from state institutions is driven by the inability of government to fully fund public sector universities. In the U.S., this is exacerbated by the huge endowments of the top private schools and the competitive pressures felt by flagship public campuses that are trying to stay on the same level. Even though only a few institutions are able to realize such substantial endowments, the effects of the emphasis on fundraising and private money at the top ripples through the system. Ironically, the institutions with the largest endowments frequently have high tuition. In part this is because the extra money supports research, new facilities, and instructional enhancements, but also because tuition is seen as another form of private investment and potential source of revenue. Even though most wealthy institutions provide a significant amount aid to students to offset the high tuition, this does lead to a concern about access to the elite institutions, whether they are public or private.