Influential donors to Harvard University and the University of Pennsylvania say they will cut their ties to the schools in protest of college administrators' response to alleged anti-Israel speech and antisemitism on campuses in the wake of Hamas' terror attacks.
Major donors pulling out won't inflict significant financial damage on wealthy Ivy League institutions with huge endowments like Harvard and UPenn in the short term, but it could hurt these schools over the long run.
"The impact is less likely to be immediate as potentially longer term on gifts or donations that may not have been in the works or would come to fruition for years," said Lee Gardner, a writer at the Chronicle of Higher Education who covers higher education finance.
Big donors cutting ties could also convince smaller donors to end their contributions, hurt alumni relations, impact college admissions and put pressure on the president or members of the board of trustees, said Sara Harberson the founder of Application Nation, a private college counseling group, and former associate dean of admissions at UPenn.
"The impact will be felt in other areas," she said.
Smaller private and state flagship schools could be more exposed to financial repercussions if donor backlash spreads from Ivy League universities to smaller schools.
"Ivy League universities have the relative luxury of being enormously wealthy," Gardner said. "They have a lot more financial insulation from the impact of some donors getting upset.
Philanthropy becoming more important
Philanthropy is a key part of college funding in the United States. And it has grown in recent years.
"Philanthropic funding of US colleges and universities is at a high point," researchers at Indiana University's Lilly Family School of Philanthropy found in a 2020 study. "Public and private fundraising powerhouses are fielding campaigns with billion-dollar goals at once-impossible levels — and they are achieving their goals."
Educational institutions are second only to religious institutions as the largest recipient of donations in the United States, the researchers found. More gifts of $1 million or greater went to higher education than any other purpose between 2000 and 2012.
When universities pursue major fundraising campaigns, a large share of the money comes from bigger donors.
Donors often give for specific purposes — facilities, faculty research, technology on campus, athletics, scholarships and financial aid for low-income students.
"There is a premium placed on developing and cultivating donor relationships," Gardner said. "Donor relationships are very, very important for colleges of all types."
Philanthropy is the single largest contributor to revenue at Harvard, accounting for 45% of the university's $5.8 billion in income last year. Philanthropic gifts account for 9% of the university's operating budget last year and 36% of its $51 billion endowment amassed over decades.
"Revenue generated each year from our education program and research endeavors is not sufficient to fund operations," Harvard said in its 2022 fiscal year report. Harvard "relies on philanthropy to fill in the gap."
At UPenn, philanthropic gifts accounted for 1.5% of the university's $14.4 billion in revenue last year. The majority of UPenn's income came from its hospital network.
Long-simmering tensions
Several mega-donors supportive of Israel and Jewish causes have cut ties to Harvard, UPenn and other universities in protest of administrators' responses to the attacks in Israel and anti-Israel statements by student groups and professors.
The donor backlash so far has included a nonprofit founded by former Victoria's Secret billionaire Leslie Wexner and his wife Abigail. The Wexner Foundation said it's breaking off ties with Harvard University, alleging the school has been "tiptoeing" over Hamas' attacks.
"We are stunned and sickened by the dismal failure of Harvard's leadership to take a clear and unequivocal stand against the barbaric murders of innocent Israeli civilians," the Wexner Foundation's leaders said.
At Harvard, a coalition of student groups released an anti-Israel statement after the attacks on October 7. That letter blamed solely Israel for the deadly attacks by Hamas, although a spokesperson for the group later wrote in a statement that the group "staunchly opposes violence against civilians — Palestinian, Israeli, or other."
The letter set off a firestorm of criticism, doxxing of students, and prompted some student groups to withdraw their endorsements of the letter. (Some students said they had not seen the statement until after it was released.)
It was not until three days after the student group's letter was first posted that Harvard addressed the matter directly. Harvard President Claudine Gay condemned "the terrorist atrocities perpetrated by Hamas" as "abhorrent" and said that the student groups didn't speak for the institution.
Some of these donor revolts are a boiling over of long-simmering frustrations some right-wing donors have had toward colleges' handling of antisemitism and anti-Israel protests from left-wing students stretching back years.
For example, beyond Harvard's response to the terror attacks and anti-Israel letter, the Wexner Foundation in its own letter cited a broader problem where "tolerance for diverse perspectives has slowly but perceptibly narrowed over the years."
That feeling was amplified by recent events, the letter said, including the events impact on visiting fellows from Israel. "Many of our Israel Fellows no longer feel marginalized at [Harvard]. They feel abandoned," the Wexner Foundation said.
Boycott, Divestment, Sanctions (BDS), a movement that promotes boycotts and other economic sanctions against Israel for its occupation of Palestinian territories, has also gained strength on college campuses in recent years.
Lawrence Summers, the former president of Harvard and US Treasury Secretary, has criticized the "morally unconscionable" student statement and Harvard leaders' response.
But he said that financial threats from donors were not the right solution to influencing universities' positions on these issues.
"I believe the adjustments from universities should come from their conscience and conversations within their communities, not in response to financial pressure," Summers told CNN Tuesday.
UPenn caught in the crossfire
At UPenn, former US Ambassador Jon Huntsman blasted the university's alleged "silence" to the attacks and promised to halt his family's donations to the university.
Wall Street CEO Marc Rowan called for the leaders of the university to resign and donors to close their checkbooks. Billionare Ronald Lauder, a powerful financial backer of the university, threatened to cut off donations if the school doesn't do more to fight antisemitism.
These donors were also critical of the university's position on a multi-day event called the Palestine Writes Literature Festival, which took place on the UPenn campus last month.
The festival featured more than 100 Palestinian writers, filmmakers, and artists, including several that UPenn's administration acknowledged had a history of antisemitic comments.
Organizers of the Palestine Writes festival denied that it embraced antisemitism, according to UPenn student newspaper The Daily Pennsylvanian.
Susan Abulhawa, executive director of the Palestine Writes Literature Festival, told CNN the festival was meant to celebrate Palestinian culture and literature and talk about "our predicament" and "resistance."
UPenn leaders issued a statement ahead of the festival condemning antisemitism broadly, though not the festival specifically.
"We unequivocally — and emphatically — condemn antisemitism as antithetical to our institutional values," the university said before the event. "As a university, we also fiercely support the free exchange of ideas as central to our educational mission. This includes the expression of views that are controversial and even those that are incompatible with our institutional values."
UPenn President Liz Magill conceded over the weekend that the response to the Palestine Writes Literature Festival was inadequate.
"While we did communicate, we should have moved faster to share our position strongly and more broadly with the UPenn community," Magill said in a statement Sunday.
She said she knows how "painful the presence of these speakers" on campus was for the Jewish community, especially during the holiest time of the Jewish year. "The University did not, and emphatically does not, endorse these speakers or their views," Magill said.