Like most donors, Tony Wheeler wanted to thank his alma mater. A masters degree from the London Business School honed his marketing skills, which helped him to build a publishing business that he and Maureen Wheeler, his wife and co-founder, sold to the BBC for £130m in 2011.
The Wheelers founded Lonely Planet, the international travel publisher (it has since been sold by the BBC). The couple made a £10m gift to LBS this year.
“The degree wasn’t vital to what I’ve done, but it gave me a grounding in the fundamentals,” Mr Wheeler says.
Their gift will fund a new Wheeler Institute for Business and Development, which will train entrepreneurial students to work on social and economic problems in the developing world. Because students are often held back by debt, Mr Wheeler, who received a maintenance bursary for his studies, hopes the gift will provide scholarships, too.
“I feel a bit obliged, given I got a free ride effectively,” he says.
Some donors insist the projects funded by their donations are named after them, but Mr Wheeler made no such demands. LBS offered to name the institute after him, he says. “I’m a favoured son of LBS. We thought my name might inspire students to do what I’ve done [and start a business].”
Donors believe the challenges the world is facing, such as inequality, cannot be addressed by government or NGO intervention alone
The Wheelers’ gift is one of many substantial donations to business schools in recent years. Others include $150m handed to the University of Illinois at Urbana-Champaign by Larry Gies, CEO of conglomerate Madison Industries, and his wife, Beth, in October. It was the largest donation in the school’s history.
“Business schools are enjoying a boom in donations,” says Nida Januskis, associate dean of advancement and alumni relations at Insead. In 2011-12, Insead raised $7.2m; in 2016-17 it raised $41.3m. “The big reason [for the increase] is that donors are seeking impact,” she says.
Philanthropic donations of any kind usually attract tax breaks, but there are specific reasons why business school alumni choose to give away cash to schools. “Donors believe the challenges the world is facing, such as inequality, cannot be addressed by government or NGO intervention alone. They believe business is part of the solution and they want to bring business closer to society through their gifts,” says Ms Januski.
One example is Insead’s Centre for the study of Wealth Inequality, which conducts research and provides teaching. It is funded by a $2.5m donation from James Stone, founder of the Plymouth Rock group of insurance companies, and his wife Cathleen.
Some of the largest business school donations of all time
$300m
David G Booth
University of Chicago Booth, US, (2008)
The school said it would spend part of the money on ‘attracting and retaining star faculty’.
$150m
Robert and Dorothy King
Stanford GSB, US, (2011)
The gift established an institute to contribute to the alleviation of global poverty.
$150m
H Fisk Johnson
Cornell University: SC Johnson, US, (2017)
Part of the fund is spent on research, with a focus on sustainability and technology.
High-profile donors are increasingly comfortable giving large sums to business schools as the global economy strengthens, says Robert Sullivan, dean of the Rady School of Management at the University of California. Ernest Rady, a financial and property magnate, and family pledged $100m to the school in 2015 after a $30m “naming gift” he and his wife Evelyn made in 2004.
“Everybody suffered during the great recession, but markets have come back and some individuals have done extremely well,” Mr Sullivan says.
Many schools have pursued donations after coming under financial pressure. At Manhattan College in New York City, which has a business school, funding from a significant state scheme known as Bundy Aid has fallen from about $273,000 in 2016-17 to $254,000 in 2017-18, according to the college.
The growing need to offer scholarships is a major reason why we are trying to increase philanthropy
Meanwhile financial aid, necessary to attract applications from a diverse cohort of students in a competitive admissions market, has increased from $58.7m overall to $66.6m in that time.
A diverse intake of students by gender, race and nationality is a priority for schools because students and employers demand it, and because it contributes to success in global rankings. “The growing need to offer scholarships is a major reason why we are trying to increase philanthropy,” says Brennan O’Donnell, Manhattan College president. “All of us [in New York state] are aware that public [state] funding is not to be depended on because there’s been a push to reduce or eliminate that.”
While philanthropy has provided a source of income for business schools, it presents problems. For example, some donors set conditions on how their money is spent and can withdraw funds if the terms are not met.
More high-profile donors: how schools spend the money
$117m
Jay H Shilder
Hawaii: Shidler College, US, (2017)
The funding will be used for campus improvements, scholarships, plus to recruit and retain top faculty.
$105m
Philip Knight
Stanford GSB, US, (2006)
Most of the gift, from Nike founder, provided the down payment for a new campus — the Knight Management Center, opened in 2011.
$100m
Stephen M Ross
University of Michigan Ross, US, (2004)
The gift supported various efforts including the construction of a new building and new study spaces for students.
$100m
Henry R Kravis
Columbia Business School, US, (2010)
The money was used to build a new campus in Manhattanville, NY, with state-of-the-art facilities.
Donald Knauss, former chief executive of Clorox, the household products maker, and his wife Ellie recently donated $20m to the University of San Diego’s School of Business. Mr Knauss, who is chairman of the board of trustees at USD, says they made the gift contingent on it being used to construct a complex that will bear their name.
Mr Knauss says he would rethink financial support if funds were deployed for another purpose. “We want to be involved in the design of the building, but too much control would be unfair,” he says. “Ultimately, you have to place a high level of trust in a school’s leadership to steward your gift in the right way.”
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Mark Taylor, dean of the Olin Business School at Washington University in St Louis, says he would reject a donation if it were pledged for a project that the school did not want. But it is rare for a school to be offered money by a donor whose interests are not aligned. “We spend a lot of time developing relationships with donors to see if their goals fit ours,” Prof Taylor says. “People don’t turn up on the doorstep out of the blue with a sack of money.”
The bigger problem is that excessive donor influence can be unethical. During his previous deanship at the Wisconsin School of Business, François Ortalo-Magné turned down a donor who pledged $10m in return for “building a particular viewpoint [through research] that would have been helpful to that person”.
“They had the objective of purchasing influence over us, Prof Ortalo-Magné, now LBS dean, says. “But gifts are gifts, not equity investments.”
Not all gifts are welcome
Business schools must choose donors carefully because they can damage a school’s reputation. For example, in 2011 the London School of Economics was caught in a scandal after accepting a £1.5m ($2.1m) gift from the family of Muammer Gaddafi, the late Libyan dictator.
Most schools carry out background checks on potential donors and look for anything that could indicate future problems, such as whether their companies have been involved in wrongdoing such as fraud.
But Jeffrey Brown, dean of the Gies College of Business at the University of Illinois at Urbana-Champaign, points out that it is impossible to predict a donor’s future behaviour.
He believes that a big-name philanthropist is vital to a business school’s success because the publicity can attract more student applications. “A lot of the top business schools have come to be known by their donor’s name, not the university,” he says, such as University of Chicago’s Booth School of Business, which was named after the investor David Booth following a $300m gift.
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