Public funding chopped, global competition on the rise, intruding on what used to be uncontested home turf. This is a hard time for most higher education institutions in Europe and North America, the two regions most affected by the global economic crisis. And when support from the state is no longer taken for granted, the kindness of strangers offers an alternative revenue stream.

Surprisingly, the amount of money raised by American universities has not diminished since 2008, when the crisis broke. On the contrary, a 4.7% increase in 2010-11 is estimated by The Council for Advancement and Support of Education, a Washington-based international association of education institutions, in its regular survey of HE fundraisers. And as the CASE Fundraising Index indicates, this breaks down to a 2.6% increase in gifts to public higher education institutions and 5.7% for private ones.

The fact that private institutions in the US receive more money than public ones is another indication that the state’s role in higher education is diminishing. Ironically enough, the crisis has been a tipping point for many tycoons who wish to follow Andrew Carnegie’s maxim: ‘the man who dies rich dies disgraced’. Some billionaires have decided to donate a slice of their fortune for the pursuit of noble causes like the fight against diseases and poverty. That is a blessing for research centres and of course for higher education institutions.

Globalised fundraising?

Another reason why donations have jumped despite the crisis is that fundraising has been globalised in scope. For universities chasing potential donors the most obvious target group is their global network of alumni, who can be affluent businessmen or influential statesmen. What makes these A-list donors an attractive target is that most of them are already involved in some charity. Giving away money to an institution where they have spent a part of their life can be a moral duty for them. That is the case of the Chinese businessman Zhang Lei, who offered $8,888,888 to Yale University in 2010 (8 is auspicious in China), though this outraged his compatriots for not offering the money to a Chinese institution.

Philanthropy

The case of Zhang Lei epitomises a trend among the international business community. As Chrystia Freeland claims in an influential article in the Atlantic, ‘The Rise of the New Global Elite’, a global elite of uber-philanthropists such as Bill Gates and Warren Buffett have devoted themselves to a number of causes, many of which look well beyond their home country. Philanthropy, for them, is another form of entrepreneurship that fills the gap created by the ebbing away of the state – what Freeland calls ‘philanthrocapitalism’. The founder of Facebook, Mark Zuckerberg, donated $100m last year for the restoration of several public schools in Newark, New Jersey.

Not that donations from overseas are always welcome. Some of them turn to be highly controversial, as in the case of the whopping donation that Osama Bin Laden’s family made to Harvard University in the 1990s. When the amount of the giveaway was disclosed ($5m), the local authorities asked Harvard to donate the money to charities that support families of 9/11 victims.

The global status of a university has become integral to fundraising strategies. In September 2011 the steel tycoon William S Dietrich donated $265m to Carnegie Mellon University, inspired, apparently, by the university’s ‘global approach and by the quality of its faculty and students’. Dietrich explained his decision by saying that ‘the school is one of a handful in the world that has the potential to become a truly global institution’. As noted in the Observatory’s 2009 report, ‘International Branch Campuses: Markets and Strategies’, Carnegie Mellon is active in transnational education and operates two branch campuses, in Qatar and Australia. Inside Higher Ed reported this week that CMU is to set up a branch campus in Rwanda, and last year there were reports of CMU involvement in a new university in Punjab.

A price to be paid

The shift from public to private funding for higher education institutions is not without caveats. Donors rarely give away money without expecting something back. International donors chase recognition, social status and praise from the media. Domestic donors appreciate these gifts, but can seek in addition a reward of a different kind: political leverage. Until recently, most philanthropists might be satisfied by having their name engraved over a door. It seems that this is not enough today: some donors get involved with academic affairs, such as recruitment policies and curricula. Is this a threat to academic freedom?

The issue has been recently raised in the States as a result of the Koch brothers scandal. This rich industrialist family is a prominent supporter of the Tea Party. The ultra-libertarian brothers pledged $1.5m to the economics department of Florida State University in 2008, for a new academic programme to promote ‘political economy and free enterprise’. But the deal included their involvement in screening applicants for the teaching staff. That will set off alarms in most places. According to tampabay.com, the Koch brothers have also donated more than $30m to the Virginia-based (public) George Mason University over the last 20 years. Their foundation is behind the Mercatus Center, a pro-business research unit at GMU.

For businessmen with political aspirations, a donation is like an intellectual investment. It buys support in academia and promotes ideas through academic programmes. For others it is more of a moral obligation arising from religious beliefs, as in the case of Mart Green, who in 2008 donated $70m to Oral Roberts University, an evangelical Christian university, and subsequently became its chairman.

This is a hotly debated issue in the US because philanthropy contributes enormously to the large endowments of the American universities. That is the rarely the case in Europe. There, the state has been the traditional provider in times of trouble.

Politically motivated philanthropy is not strictly domestic. For example, George Soros’s Open Society Foundation has a controversial reputation for big donations to institutions promoting the free market and democracy in eastern Europe and Asia. The OSF has backed the American University in Bulgaria and other higher education institutions in the region. In China and India, on the other hand, the picture is different. Their universities mainly receive donations from their international diasporas but lag behind in terms of fundraising policies.

As higher education fundraising becomes more international, questions naturally arise. Is it conducted fairly? Do all universities have access to the money given for the sake of scientific and economic progress? And can philanthropy replace public funding?

The truth is that even when it comes to a noble cause such as philanthropy, competition and big interests have a significant role to play. The biggest sums go to universities which seem to need them least. Cambridge University received $210m from the Gates Foundation for scholarships back in 2000. More recently, he noted that ‘On pure merit, we give a lot of our scientific research grants to UK universities. Doing world-class research is a real strength, and Britain is way better at that than the Continent. You want to preserve and strengthen that.’

Hard to argue with that, though donations to universities in Africa might get as good results.