Philanthropy Paradox
Educational philanthropy is a prime example of human generosity and the will to help others. It is especially fruitful when geared into the education and productivity of the youth, and it perhaps seems luring as a break-down of the cynical premise of ‘rationality’ that is the life-blood of conventional economics.
But can good-natured, well-intentioned philanthropy not do the good it is meant to do? Could it even lead to elitism and inequality? Could it be… harmful? On the surface, one is inclined to say no (especially as a donor), but a deeper look is warranted:
Education is, of course, as a merit and public good, funded partly by the government. The government makes special provisions for students by paying a hefty chunk of their tuition, or offering cheap, easily repayable loans; however, private philanthropy is growing as a much-relied-upon revenue stream, which many universities especially in the United States are leaning on, in the wake of declining public-sector spending on education. Another critical truth about the industry, that goes often underappreciated, is that it is as strong as its weakest link. This is to ensure that students from lower-income backgrounds, with fewer resources to expend on their education, can still consume enough resources to harness their abilities well, and become productive members of society.
The first to set an impression in this matter was Hank Rowan, who, in the spring of 1992, made a donation to Glassboro State College (now Rowan University) in New Jersey, of $100 million, the largest donation of its time. It was meant to rescue the college from bankruptcy, and to act as a reliable springboard for future engineers of the country. He was lauded a hero, and had a statue dedicated to his generosity after his death in 2015. This set the stone rolling for educational philanthropy. And people were inspired to followed his example.
But did they?
As of now, the largest donations are attracted to some of the most elite and expensive universities, e.g. in the last year, the University of Oxford received the largest donation of £75 million. Is this the same as Hank Rowan’s charity to the Glassboro State College?
This can be answered by looking at what the money is being spent on. Each marginal dollar that was donated by Rowan bought necessary technology for students of the engineering department, allowing a dramatic increase in students’ learning and productivity. The marginal impact for each dollar donated, however, is much smaller for universities with gargantuan endowments to begin with, with shrinking room for improving their educational standards. The improved quality, in fact, may even set a precedent to demand more fees in tuition, making such institutions more elitist. This would decrease the ability of lower-income students to access higher quality education.
Philanthropy is not evil: it has the capability for great good, but it can be misdirected. Instead of gifting the well-endowed, perhaps it’s time to refocus on the smaller, less-resourced institutions, who can do so much more with that money.