The media, universities, and Higher Ed Cabinets: Or, why doesn’t Harvard buy the New York Times?

A potentially symbiotic relationship between the ‘quality’ media in the USA, and institutions of higher education, has been discussed from time to time in a variety of fora. Fiscal stress in the print media, for example, has led some to suggest that the well endowed (e.g., Harvard, with nearly $40 billion in interest generating capital) should rescue outlets like the New York Times, or actually facilitate the creation of a quality newspaper in Chicago (the Chicago Tribune is shockingly bad for a city of eight million). Instead, we see a significant component of the New York Times being sold off to Mexican billionaire Carlos Slim Helú last week, or the Washington Post dependent upon the profits being generated by Kaplan.

Yet quality newspapers play a critically important role in the higher education process, let along the broader socio-economic development process. Many professors (including myself) use newspaper articles in courses, and we require term-length newspaper subscriptions to complement more traditional readings. Newspapers are also important outlets for the circulation of knowledge that is produced in universities, and they help observers of the world of higher ed (including global higher ed) keep up on what is happening.

In this context, it is worth noting that the New York Times teamed up with the Chronicle of Higher Education today to host the USA’s:

first Higher Education Cabinet, comprising presidents, trustees and leaders from 76 colleges, universities and higher-education associations. The goal of the cabinet is to identify trends and direct discussions about the most pressing issues facing higher education today.

The first meeting of the cabinet will be held today at The New York Times Building. The welcome address will be given by Janet L. Robinson, president and chief executive officer of The New York Times Company, followed by remarks from Jeffrey Selingo, editor of The Chronicle of Higher Education. Topics to be discussed at the cabinet meeting included e-learning, internationalization [“Internationalization” – How will you compete globally?], financing models, assessment and accountability.

“The New York Times is committed to fostering discussion about the changing landscape of higher education,” said Felice Nudelman, executive director, education, The New York Times. “We are delighted to be hosting the inaugural Chronicle of Higher Education/New York Times Higher Education Cabinet meeting and look forward to continued opportunities to facilitate creative and collective discussions about the key topics in higher education.”

Today’s ‘Cabinet meeting’ is apparently the first of many (to be held on an annual basis), and will be supplemented by quarterly online meetings “conducted via the EpsilenTM environment, an e-learning and meeting platform”, which is:

the result of six years of research and development within the Purdue School of Engineering and Technology at IUPUI.  Epsilen Products and Services are commercially available through BehNeem LLC, the holding company created in Indiana to commercialize, market and further develop the Epsilen Environment. The New York Times is an equity and strategic partner in the company.

The bringing together of institutions of higher education and the quality general and higher ed media cannot help but generate positive benefits. Yet, I cannot help but wonder if the leaders of the many well resourced universities participating in this scheme – people focused on generating maximum annual returns off of endowments, or selling their innovative learning technologies like Epsilen to the media (or to universities and colleges) – reflected much, if at all, about the structural problems facing media companies like the New York Times Company.

Autonomy of university foundation offices and administrators aside, imagine if just a few of these universities decided to pool parts of their endowments, and preserve if not enhance the quality media in the USA, a country desperately in need of better news and analysis. So, instead of Columbia’s Bollinger working for the Washington Post Company, imagine if the Washington Post worked for Bollinger, or the Chicago Tribune worked for Penn’s Guttman, or the New York Times worked for Harvard’s Gilpin Faust. Not ideal, perhaps, but better than watching these important media firms get ravaged by the forces of socio-economic and technological change. But, might this be expecting too much of inward looking universities in the era of the marketplace?

Kris Olds

The “new global wealth machine” and its universities

Further to our most recent entry on the King Abdullah University of Science & Technology (KAUST), the Financial Times notes, today, that KAUST’s endowment could swell to a level that would make it the world’s second largest endowment (after Harvard), and it has not even finished building its first building!

As the FT suggests, this is setting off a scramble in the fund management world:

The King Abdullah University of Science & Technology will not open until 2009 but it is already holding talks on its endowment with fund managers such as BlackRock and private equity firms including Bain Capital, people familiar with the matter say.

The university has received $10bn for its endowment from King Abdullah, which would make it the sixth biggest university endowment in the world, said a university spokesman based in Washington.

People familiar with the endowment negotiations say they have been told the fund could grow to as much as $25bn, which would make it the world’s second biggest university endowment after Harvard’s $35bn nest egg.

The endowment would be one of several significant Saudi investment bodies. So far, the Saudi approach has been to refrain from giving any one arm too much money in the hope of maintaining a low profile and preventing a foreign backlash, bankers say.

“The Saudis under-represent both the amount of their reserves and the investments they make overseas,” said the head of the Dubai branch of one large Wall Street firm. “The last thing the Saudis want is to attract attention.”

Noteworthy, of course, was the visit by US President George W. Bush to Saudi Arabia last week, where he pleaded with the same King Abdullah to open the spigots a little wider.

News items like this are reminders that some of the so-called ‘hotspots‘ in the global higher ed world are linked, in quite fascinating ways, to the people controlling political regimes in countries like Saudi Arabia, the UAE, and Singapore.

On this note, the New York Times graphic below, which was recently profiled by the Center for Graphic Facilitation, hints at the fact that several of the key people behind Singapore’s Global Schoolhouse development initiative (which we will be writing about in the next 1-2 weeks) are also managing the Government of Singapore’s Government Investment Corporation (GIC), a sovereign wealth fund worth at least $330 billion.

As the same FT article notes:

Money from endowments is considered particularly desirable by fund managers because universities have such a long-term investment focus. Some sovereign funds in the Gulf, such as the Kuwait Investment Authority, have adopted the endowments of leading universities such as Harvard and Yale as their role models.

The new political economy of such development initiatives is complicated in nature, yet prising key elements of them apart is a challenging and entirely worthwhile task.

Kris Olds

Cisco, KAUST, and Microsoft: hybrid offerings for global higher ed

The globalization of higher education has been going hand in hand with novel experiments in the provision of education services, as well as in the production of knowledge via R&D. These experiments have been enabled by the broad but highly uneven liberalization of regulatory systems, and spurred on by the perception (and sometimes reality) of inadequate levels of state support for higher education and research. A myriad of policies, programs and projects, of an increasingly sophisticated nature, are now bringing many of these experiments to life.

Experimentation is also being facilitated on some traditional public university campuses, with hybrid units in development (e.g., see the Oxford-Man Institute of Quantitative Finance), offers to select foreign universities to establish a formal presence on another campus (e.g., see this entry regarding the University of Warwick), and even private ‘campuses’ under construction by firms that lease space to mobile higher education service providers (e.g., see this entry on Chaska’s ‘Field of Dreams’).

Over the last few weeks a variety of examples of such institutional experimentation have bubbled up.

Cisco Systems, Inc.

First, the San Jose-based firm, Cisco Systems, Inc., announced that its Networking Academy, which has been in operation since 1997:

has achieved a key milestone with a record 47 percent increase in the total number of students enrolled in Morocco in the past 12 months. Since the program’s inception, this brings the total number of Networking Academy students over 7,500. Each student undergoes a comprehensive technology-based training curriculum that can provide them with skills which they can utilize in their future professional careers.

According to Cisco, its Networking Academy provides educational services in more than 160 countries, reaching 600,000 students per year. The Network Academy topics (e.g., LANs, IT networks, network infrastructure essentials) can be standardized in a relatively easy manner, which enables Cisco to offer the same “high-quality education, supported by online content and assessments, performance tracking, hands-on labs, and interactive learning tools”, across all 160 countries.

And growth is rapid: in Morocco, for example:

The first Networking Academy in Morocco started in Ain Bordja in February 2001, long before Cisco’s office in Morocco was established. Today, the total number of Networking Academies has grown to 39 throughout the entire Kingdom with many more new Academies across Morocco to be announced in the very near future.

Cisco’s growth in providing these education services partly reflects problems in the Moroccan higher education system (see, for example, the World Bank’s 2008 report The Road Not Traveled: Education Reform in the Middle East and North Africa). It is noteworthy that nearly 1/3 of the students are female; a level of enrollment perceived my most analysts of the region to be significant and positive.

Further information on the Networking Academy is available in this short video clip. This initiative is akin to the Oracle Corporation‘s Oracle Academy, which has “partnered with more than 3,400 institutions and supported 397,000 students across 83 countries“. Today, coincidentally, marks the official opening of the Oracle Academy of the Hanoi University and Hanoi University of Commerce in Vietnam.

King Abdullah University of Science and Technology (KAUST)

Second, over the last week the King Abdullah University of Science and Technology (KAUST), an institution we have profiled several times (see here and here), announced a series of major funding initiatives that will support other universities, around the world, to develop major R&D initiatives. The logic is to kick-start the creation of KAUST’s global networks (recalling that the KAUST campus is only now being built from scratch, as one of many photographs from the KAUST website, conveys).

KAUST’s Global Research Partnership (GRP) will be funding:

So three American universities, and one UK university. Further information on these centers can be found here.

KAUST also announced that its Center-in-Development scheme (note the in development moniker) will be funding one Saudi, one Asian and one European university in the form of:

Further information on these initiatives can be located here.

Thus we have a Saudi institution, which is really an instantaneously endowed foundation (to the tune of $10 billion), projecting itself out via funded programs, and translating institutional and researcher agendas in key centres of scientific calculation (to use some Latourian phrases), so as to enable itself to morph into a globally recognized, respected, and highly networked science and technology university within five years. Moreover, KAUST is forging ties with other types of knowledge-related institutions, including the US Library of Congress, so as to:

complement its academic and research programs in cutting-edge science and engineering with research and outreach programs aimed at giving students and faculty an appreciation of the rich history of scientific inquiry and discovery in the Arab and Islamic worlds.

Microsoft & Cisco

Finally, my own university, the University of Wisconsin-Madison, has embarked upon two initiatives that splice together the institutional fabrics of a major public university, and select private sector firms (in software and the life sciences), with both initiatives facilitated by the alumni effect (another topic we have recently written about).

In the first, Seattle-based Microsoft is contributing substantial support to help UW-Madison open the Microsoft Jim Gray Systems Lab, which will focus on the advanced development of database systems. As the formal UW-Madison press release notes, this lab is:

helping expand on a highly productive 20-year research and alumni relationship between the company and the University of Wisconsin-Madison computer sciences department.

The Microsoft Jim Gray Systems Lab, named in honor of the Microsoft executive who was a founding father of the database industry, will open in downtown Madison under the direction of UW-Madison emeritus computer sciences professor, and Microsoft Technical Fellow, David DeWitt, one of the world leaders in database research.

“Microsoft is here because we are doing some of the best database work in the world and we have produced scores of graduates who have gone on to successful careers in the industry,” says DeWitt. “Our focus will be on continuing the production of talented graduate students and taking on some of the great challenges in database systems.”

David DeWitt (pictured above) was the John P. Morgridge Professor of Computer Sciences, though he has now taken up emeritus status to focus on this initiative. Further information on DeWitt and this scheme is available here.

And returning to the Cisco theme, the Wisconsin Alumni Research Foundation (WARF) sponsored a ground breaking ceremony last Friday for the development of the Wisconsin Institutes for Discovery (WID), a $150 million project we briefly profiled here. WID is being developed with funding and other forms of support from UW-Madison, WARF, John and Tashia Morgridge (he is the former CEO of Cisco, while she is a former special education teacher), and the State of Wisconsin.

WID will open in 2010, though it is already in action via the efforts of WID’s interim director Marsha Mailick Selzer, and pioneer stem cell researcher, James Thomson. It is worth noting, though, that even the private component of WID (the Morgridge Institute for Research) is not-for-profit. This said the competitive impulse was loud and clear at the opening ceremony, according to the local newspaper reporter that covered the event:

The building will house an ambitious effort by the state to capture what Doyle hopes to be 10 percent of the market in regenerative medicine and stem cell technologies by 2015. The building is the centerpiece of a $750 million inititiave to develop stem cell research and biotechnology in Wisconsin.

So experiments aplenty. Fortunately, from the perspective of 7,500 Moroccan students, and UW-Madison’s researchers, Cisco Kid was a friend of mine (it’s bad, I know :)).

Kris Olds

Australia, be careful what you wish for

Editor’s note: this is the second contribution to GlobalHigherEd by Ellen Hazelkorn, Director, Dublin Institute of Technology, Ireland. Ellen is also Dean of the Faculty of Applied Arts, and Director, Higher Education Policy Research Unit (HEPRU) at DIT. She also works with the OECD’s Programme for Institutional Management of Higher Education (IMHE), including on the impact of rankings on higher education. Ellen’s first, and related, entry for GlobalHigherEd is titled ‘Has higher education become a victim of its own propaganda?‘.
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When Julie Gillard, MP, the new Australian Labour Party Deputy Prime Minister and Minister for Education, Employment, Workplace Relations and Social Inclusion, opened the recent AFR HE conference, her speech was praised as being the “most positive in 12 years”. Gillard’s speech combined a rousing attack on the conservative Howard government’s policies towards higher education, and society generally, with the promise to usher in “a new era of cooperation…For the first time in many years, Australian universities will have a Federal government that trusts and respects them”. But, are the universities reading the tea-leaves correctly?

Because attention is focused on higher education as a vital indicator of a country’s economic super-power status, universities are regarded as ‘ideal talent-catching machines’ with linkages to the national innovation system. Australia, a big country with a small population, is realising that its global ambitions are constrained by accelerating competition and the vast sums which other countries and regions, e.g., Europe and the US, seem able to invest.

Its dependence on international students, which comprise 17.3% of the student population exceeds the OECD average of 6.7%, but Australia lags behind in the vital postgraduate/PhD student market. Here, international students comprise only 17.8% of the total student population while universities elsewhere have up to 50%. Thus, there is concern that, on a simple country comparison, only 2 Australian universities are included in the top 100 on the Shanghai Jiao Tong ARWU or 8 in the ‘less-considered’ Times QS Ranking of World Universities – albeit if the data were recalibrated for population or GDP, Australia is fourth on both measures sharing this top four ranking with Hong Kong, Singapore, Switzerland and New Zealand. According to Simon Marginson, Australia lacks “truly stellar research universities, now seen as vital attractors of human, intellectual and financial capital in a knowledge economy”

anu.jpgIn response, Ian Chubb, Vice Chancellor, Australia National University (pictured to the left), says the government should abandon its egalitarian policies and preferentially fund a select number of internationally competitive universities while Margaret Gardner, Vice Chancellor, RMIT University, says Australia needs a top university system.

Australia may be able to reconcile these competing and divergent views through more competitive and targeted funding linked to mission (see below on compacts) or, perhaps more controversially, by using the forthcoming HE review (see below) to reaffirm the principles of educational equity while using the complementary innovation review to build-up critical mass in designated fields in select universities. Whichever direction it chooses, it needs to ensure pursuit of its slice of the global knowledge society doesn’t simply become advantageous for the south-east corner of its vast landscape.

Indeed, those who argue that government should fund institutions on the basis of their contribution to the economy and society may find that the metrics used are less kind to them than they think. Not only does research suggest some universities over-inflate their claims, (see Siegfried et al, ‘The Economic Impact of Colleges and Universities’) but better value-for-money and social return on investment may be achievable from improving pre-school or primary education, job chances for 16-19 year olds, building a hospital, or other large-scale facility in the vicinity. Another possibility, in a country which ostensibly values egalitarianism and is committed to balanced regional growth, is that universities ranked lower may become preferred beneficiaries at the expense of more highly ranked institutions. This is exactly the argument that underpinned the first Shanghai Jiao Tong ranking; in other words, the team was anxious to show how poorly Chinese universities were doing vis-à-vis other countries. While Australia’s Go8 universities may seek to use this argument to their advantage, they should also be mindful that poor rankings could incentivize a government to spend more financial resources on weaker institutions (see Zhe Jin and Whalley, 2007). Or, rather than using citations – which it could be argued refers to articles read only by other academics – as a measure or metric of output, impact measurements – including community/regional engagement – could be used to measure contribution to the economy and society. This format may favor a different set of institutions.

heausreview.jpgThe Australian government has begun a review of its HE system. One likely outcome will be the use of negotiated ‘compacts’ between universities and the government which will, in turn, become the basis for determining funding linked to mission and targets. The concept was initially presented in the Australian Labour Party white paper Australia’s Universities: Building our Future in the World (2006):

The mission-based compacts will facilitate diversification of the higher education system, wider student choice and the continuation of university functions of wider community benefit that would otherwise be lost in a purely market-driven system.

Broadly welcomed, these ‘compacts’ are being wildly interpreted as a method of institutional self-definition, on the one hand, or a recipe for micro-management, on the other. They appear to share some characteristics of the Danish system of performance contracts, mentioned in the University Act of 2003 (see section 10.8), and are in line with a trend away from government regulation to steerage by planning. The actual result will probably be somewhere in-between.However, given the time and resources required on both sides to ‘negotiate’, it seems clear this may not be the panacea many universities believe it to be. How much institutional autonomy or self-declaration is realistically possible? At what stage in the negotiations does the government announce the ‘end of talking’?

Another reality-check may be in store as Australian universities celebrate replacement of the Research Quality Framework with the new Excellence in Research for Australia (ERA) initiative which combines metrics with peer evaluation. Whatever arguments against the previous system, several HE leaders claim they had reached a point of near-satisfaction about how research was to be measured, including measuring not just output but also outcome and impact. These issues may need to be re-negotiated under the new system. Another unknown is the extent to which the ‘outcome’ of the ERA itself is linked to ‘compacts’ and research prioritization and concentration – with implications not just for existing fields but new fields of discovery and new research teams.

The challenges for institutions and governments are huge, and the stakes are high and getting higher. To succeed, institutions need to employ the same critical rigorous approach to their arguments that they would expect from their students. Universities everywhere should take note.

Ellen Hazelkorn

Has higher education become a victim of its own propaganda?

eh.jpgEditor’s note: today’s guest entry was kindly written by Ellen Hazelkorn, Director, and Dean of the Faculty of Applied Arts, and Director, Higher Education Policy Research Unit (HEPRU), Dublin Institute of Technology, Ireland. She also works with the OECD’s Programme for Institutional Management of Higher Education (IMHE). Her entry should be read in conjunction with some of our recent entries on the linkages and tensions between the Bologna Process and the Lisbon Strategy, the role of foundations and endowments in facilitating innovative research yet also heightening resource inequities, as well as the ever present benchmarking and ranking debates.

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councilpr.jpgThe recent Council of the European Union’s statement on the role of higher education is another in a long list of statements from the EU, national governments, the OECD, UNESCO, etc., proclaiming the importance of higher education (HE) to/for economic development. While HE has long yearned for the time in which it would head the policy agenda, and be rewarded with vast sums of public investment, it may not have realised that increased funding would be accompanied with calls for greater accountability and scrutiny, pressure for value-for-money, and organisational and governance reform. Many critics cite these developments as changing the fundamentals of higher education. Has higher education become the victim of its own propaganda?

At a recent conference in Brussels a representative from the EU reflected on this paradox. The Lisbon Strategy identified a future in which Europe would be a/the leader of the global knowledge economy. But when the statistics were reviewed, there was a wide gap between vision and reality. The Shanghai Academic Ranking of World Universities, which has become the gold standard of worldwide HE rankings, has identified too few European universities among the top 100. This was, he said, a serious problem and blow to the European strategy. Change is required, urgently.

sciencespo.jpgUniversity rankings are, whether we like it or not, beginning to influence the behaviour of higher education institutions and higher education policy because they arguably provide a snap-shot of competition within the global knowledge industrial sector (see E. Hazelkorn, Higher Education Management and Policy, 19:2, and forthcoming Higher Education Policy, 2008). Denmark and France have introduced new legislation to encourage mergers or the formation of ‘pôles’ to enhance critical mass and visibility, while Germany and the UK are using national research rankings or teaching/learning evaluations as a ‘market’ mechanism to effect change. Others, like Germany, Denmark and Ireland, are enforcing changes in institutional governance, replacing elected rectors with corporate CEO-type leadership. Performance funding is a feature everywhere. Even the European Research Council’s method of ‘empowering’ (funding) the researcher rather than the institution is likely to fuel institutional competition.

In response, universities and other HEIs are having to look more strategically at the way they conduct their business, organise their affairs, and the quality of their various ‘products’, e.g., educational programming and research. In return for increased autonomy, governments want more accountability; in return for more funding, governments want more income-generation; in return for greater support for research, governments want to identify ‘winners’; and in return for valuing HE’s contribution to society, governments want measurable outputs (see, for example, this call for an “ombudsman” for higher education in Ireland).

European governments are moving from an egalitarian approach – where all institutions are broadly equal in status and quality – to one in which excellence is promoted through elite institutions, differentiation is encouraged through competitive funding, public accountability is driven by performance measurements or institutional contacts, and student fees are a reflection of consumer buoyancy.

But neither the financial costs nor implications of this strategy – for both governments and institutions – have been thought through. The German government has invested €1.9b over five years in the Excellence Initiative but this sum pales into insignificance compared with claims that a single ‘world class’ university is a $1b – $1.5b annual operation, plus $500m with a medical school, or with other national investment strategies, e.g., China’s $20b ‘211 Project’ or Korea’s $1.2b ‘Brain 21’ programme, or with the fund-raising capabilities of US universities (‘Updates on Billion-Dollar Campaigns at 31 Universities’; ‘Foundations, endowments and higher education: Europe ruminates while the USA stratifies‘).

Given public and policy disdain for increased taxation, if European governments wish to compete in this environment, which policy objectives will be sacrificed? Is the rush to establish ‘world-class’ European universities hiding a growing gap between private and public, research and teaching, elite and mass education? Evidence from Ireland suggests that despite efforts to retain a ‘binary’ system, students are fleeing from less endowed, less prestigious institutes of technology in favour of ‘universities’. At one stage, the UK government promoted the idea of concentrating research activity in a few select institutions/centres until critics, notably the Lambert report and more recently the OECD, argued that regionality does matter.

Europeans are keen to establish a ‘world class’ HE system which can compete with the best US universities. But it is clear that such efforts are being undertaken without a full understanding of the implications, intended and unintended.

Ellen Hazelkorn

Foundations, endowments and higher education: Europe ruminates while the USA stratifies

The role of university endowment funds in supporting higher education institutions varies significantly across space and time. Some higher education systems make no use of them, nor do they plan on doing so, while others are grappling with the socio-cultural, legal and political hurdles preventing their emergence as tangible material forces.

uwfound.jpgOver the course of the last six years, following a move to the United States (I’m based at the University of Wisconsin-Madison, est., 1848) I’ve had a crash course on the socio-cultural foundations of endowment funds. It is this dimension that is amongst the most significant yet intangible force facilitating the development of endowments. I’ve acquired insights on this issue via guiding some visitors from Europe (including people involved in the Bologna Process, as well as from the European Commission) to the University of Wisconsin-Madison’s Foundation (pictured above), and simply by living and working in this context (an unplanned ethnography, if you will). The UW Foundation, which is the 46th largest in the US, has an endowment worth $1,645,250,000 (at the end of 2007). Note, though, that it is a separate endowment from the University’s autonomous technology transfer office (WARF) which has its own $1.5 billion endowment, and the UW Trust Funds (worth $450 million) that support all 26 campuses in the UW System.

During tours through the UW Foundation offices at 1848 University Avenue, which employs approximately 130 people, we witnessed a veritable machine in motion: counselors guiding dialogue between prospective donors and options for targeted initiatives; strategists working out the aggregate demographics of alumni base transformations; analysts working with integrated data bases that can identify thousands of data points including the occupations (including employers) of individual alumni, the value of their houses, and the ideal time (in terms of career and generational transition) to court them for large-scale donations; and a large room with computers and headsets where an additional 110 students (paid on an hourly basis, with free pizza on Friday nights) work from approximately 3:00 pm on so as to call alumni spread across the country while they are home at the end of the working day, but before they start winding down for bedtime.

Institutionalization aside, I’ve also witnessed the construction of a family-like university-alumni relationship such that the university, via the provision of a high quality (usually) education, generates a lasting social relationship with individuals. Apart from in the classroom, this also occurs via the establishment and maintenance of carefully crafted places where lasting memories of a positive nature can be created (such as the lake-side student union and Bascom Hill), events (including sporting events) which are often associated with planned spectacles (e.g., see the 49 second video clip below) that spark memorable experiences,

and the saturation of students’ senses with visual icons – in Madison’s case numerous trademarked logos, and the beloved starburst chairs that are placed on the lake-side student union. These places, events, and icons are seared into the memories of all alumni, with subtle but equally effective reinforcement provided by their inclusion in the free alumni magazines that get mailed out on a regular basis.

uwchair.jpgUpon reflection, the Canadians on campus, and visiting Europeans, view the construction of such a propulsive system with both fascination and a touch of unease. The brazenness of the effort to construct ‘family’, and then the application of advanced data bases to mine these relations to acquire financial gifts, can seem a touch too strategic and material in orientation. But when I meet alumni while parking cars at my son’s school playing field (a fundraiser that takes advantage of the fact that the 82,000 seat university football stadium is a mere three blocks away), I engage in direct conversations regarding, and observations of, that intangible alumni feeling. To be sure it is overtly strategic in some ways, but these people also feel like they are ‘giving back’: they are, in their minds, honouring the institution that played such a fundamental role in reshaping their lives, in connecting them to lasting friends (and often romantic partners), and marking their transition to adulthood. Of course they are also, via their donations, supporting subsequent cohorts of students. And the effects on the university are striking, with the John and Tashia Morgridge-funded Institutes of Discovery but one of the more striking examples. Indeed one group of alumni even donated $85 million in 2007 to ensure that the Business School is not named after any one person for the next 20 years; a surreal donation, in some ways, given the present logic of the system. In short, while the structural context is clearly a factor, it is the intangible socio-cultural dimensions that play a fundamentally important role in facilitating this development process.

nytendowment.jpgWhile universities in many parts of the world begin to grapple with socio-cultural, legal, and ideological dimensions of foundations, and endowment bases, it is also worth taking into account the emerging effects these endowments have in aggregate. Recently released data by the National Association of College and Business Officers (NACUBO) in the US identifies a clear private/public schism, and it is this schism that is the topic of discussion in today’s New York Times. As the NYT article notes:

The result is that America’s already stratified system of higher education is becoming ever more so, and the chasm is creating all sorts of tensions as the less wealthy colleges try to compete. Even state universities are going into fund-raising overdrive and trying to increase endowments to catch up.

The wealthiest colleges can tap their endowments to give substantial financial aid to families earning $180,000 or more. They can lure star professors with high salaries and hard-to-get apartments. They are starting sophisticated new research laboratories, expanding their campuses and putting up architecturally notable buildings….

Higher education has always been stratified, but the disparities were never as large as today. In the early 1990s, endowment income represented a small part of revenues at most colleges and universities. In 1990 Harvard’s endowment was $4.4 billion.

The last decade brought a sea change, as sophisticated money managers hired by the universities moved their portfolios into hedge funds, private equities and other high-performing investments, and endowments skyrocketed.

Some of the effects of the hastening stratification are evident even in my own relatively well-endowed university, where high quality departments (e.g., Political Science) have been raided by private Ivy League universities, leading to the departure of about ¼ of all of the professors in the last three years. Business Week also has two related stories (‘The dangerous wealth of the Ivy League‘ and ‘Educational excellence, without Ivy‘) regarding the effects of this stratification process.

Many European universities are in the early stages of establishing foundations and building up endowments, though most really have no idea how to do so. This said one emerging trend is to acquire gifts via firms (i.e., not high ‘net worth’ individuals), which will inevitably fuel the relative growth of business schools (unless these monies are taxed for the benefit of all assuming the business school is not stand-alone). Yet the development process is fraught with unresolved debates: is this a good idea?; is this a workable idea?; how does one overcome the socio-cultural barriers to the idea of donating money when ‘already’ paying via the tax system?; how can the European Higher Education Area (EHEA) compete (assuming it wants to) with the US without endowments, or at least substantially enhanced and concentrated funding of select universities?; etc. It is also noteworthy that key institutions, including the European University Association (EUA) and the European Commission, have yet to acquire accurate and systematic data about what endowments (if any) exist within individual European universities (though not for lack of trying). And at a broader scale the OECD has not conducted any serious research on this issue; a somewhat surprising fact given the policy relevance of the phenomenon.

So as Europe ruminates (or perhaps equivocates), it does make me wonder if this not too significant of an issue, and a debate, to be left to individual European countries (with the UK the most active), European universities, and European politicians, to grapple with. In short, why is there no systematic analysis and coordinated discussion?

Kris Olds