The aviator and industrialist Howard Hughes spent his final years living in a luxurious hotel suite in Acapulco, a recluse who indulged in the heavy use of codeine and Valium. After he died in 1976—on his private plane, fittingly—it was said that Hughes had lost his mind long before.
One piece of business Hughes badly bungled in his final years was estate planning. He died without a valid will.
This was ironic, since Hughes had created his first will at the young age of nineteen, in 1925. In it, he stipulated that a portion of his estate go to a medical institute bearing his name. Later, in a bid to outwit the IRS, Hughes formally created such an institute and gave it all the stock of the Hughes Aircraft Company. It was an epic tax dodge, but Hughes’s interest in medical science was very real. Both his parents had died from medical problems early in his life, when he was still a teenager, and he himself sustained major injuries in a plane crash in 1946. The charter Hughes signed in 1953 creating the Howard Hughes Medical Institute (HHMI) stated that its purpose was the “promotion of human knowledge within the field of the basic sciences (principally the field of medical research and medical education) and the effective application thereof for the benefit of mankind.”
Hughes reportedly had intended to leave his entire estate to the medical institute, since he had no heirs. But his death without a valid will set off years of litigation, fragmenting his estate among many claimants. Eventually, though, a court ruled that HHMI was at least entitled to all shares of the Hughes Aircraft Company and appointed a group of trustees to oversee the institute. In turn, the board sold the company to General Motors in 1985 for $5.2 billion, which created one of the largest nonprofit endowments in the United States. In the past thirty years, that endowment has more than tripled, to over $18 billion.
These days, the Howard Hughes Medical Institute employs 2,500 people and gives out over $700 million a year. It makes grants to scientists all over the country from its sprawling brick headquarters in Chevy Chase, Maryland. The institute also hosts hundreds of researchers in the Janelia Research Campus, a vast modern research complex that sits on rolling farmland in Virginia. It features a 900-foot-long arc-shaped laboratory, with a design inspired in part by AT&T’s fabled Bell Laboratories. Janelia is a mecca for researchers, who are given full funding for six years, freeing them from the demands of teaching or chasing grants or ensuring that their research has commercial applications. Their work ranges across areas such as computational neuroscience and structural biology. Janelia even provides housing and childcare, and there’s also a pub on this campus without students. It’s a utopia for scientists, made possible by a man who’s been dead for over forty years.
The Howard Hughes Medical Institute is governed by a small board, operating in complete independence from legislative oversight or shareholders. It receives little scrutiny from the media and is beholden to neither a bottom line nor much of a constituency. It is designed to exist in perpetuity, and barring some catastrophe, it is likely to be funding research for centuries to come, growing ever richer and larger in a future where no one remembers who Howard Hughes was. Such is the long arm of philanthropy.
J. Paul Getty died the same year that Hughes did, in 1976, also leaving behind a fortune that now powers a fabulously wealthy institution offering a haven to researchers. The Getty Center sits high in the hills overlooking Los Angeles and the ocean. It cost over $1 billion to build, including construction of a train that brings visitors up to an extravagant travertine-encased complex that conjures up the Acropolis in Athens. While the Getty is best known as an art museum, it also houses a research institute “dedicated to furthering knowledge and advancing understanding of the visual arts,” and a foundation that pumps out millions in grants each year. Backstopping it all is the $12 billion J. Paul Getty Trust, which describes itself as the “world’s largest cultural and philanthropic organization dedicated to the visual arts.” The trust is run by a board of sixteen people. This institution, too, is designed to last in perpetuity. Since 2005, its endowment has more than doubled.
The Getty Center and the Howard Hughes Medical Institute have long stood out for their enormous resources and large footprint in the arenas in which they operate. But both institutions are becoming less unique as a new wave of wealthy patrons of the arts and sciences arrives on the scene.
Not far away from the Getty Center, in the Santa Monica Mountains, a think tank is being built, one that its iconoclastic founder, Nicolas Berggruen, has endowed with an initial gift of $500 million. Set on 450 acres, with endless views, the Berggruen Institute will expand its current work of exploring social and political ideas, convening leaders and thinkers from around the world. Berggruen has said that his vision is of a “society where people can flourish in harmony with one another.” The institute also works on more prosaic fronts, like reforming dysfunctional governance in California. Berggruen, who made his fortune from investing, has plans to eventually increase the institute’s endowment to a billion dollars. That’s not big money in science, where research is very expensive, but it’s a huge sum for a think tank—twice the endowment of the Brookings Institution, one of the largest and most influential think tanks in the world. It’s yet another reminder of the kind of game-changing wealth that is arriving in philanthropy, including in the most rarefied of arenas. Such wealth is coming to more fields faster, and in larger chunks.
When J. Paul Getty died forty years ago, he was among the very richest people in America, with a net worth of $2 billion, the equivalent of $8 billion in 2016. Hughes had a similar net worth. Both men drew enormous attention for fortunes whose size seemed to defy comprehension. Very few other Americans of their time were nearly as rich. (When the Forbes 400 list debuted in 1982, it had just thirteen billionaires on it.) Yet today, neither Getty nor Hughes would rank among the wealthiest hundred Americans. And that top tier of today’s super-rich includes quite a few billionaires who have embarked on ambitious projects to shape the realms of culture and science.
Consider Alice Walton. In 2011, Walton—long among the top twenty richest Americans, with a net worth of over $30 billion—presided over the opening of one of the most expensive new art museums ever built, Crystal Bridges Museum of American Art in Bentonville, Arkansas. She’d been interested in art all her life, buying her first painting at the age of ten—a reproduction of Picasso’s Blue Nude.
Since its founding, Crystal Bridges has amassed a nearly unmatched collection of American art, spending hundreds of millions of dollars of Walton money in an acquisition spree that has roiled art markets. Its prizes include Andy Warhol’s Coca-Cola (3), snatched up for $57 million, and Jimson Weed, by Georgia O’Keeffe, bought at Sotheby’s in 2014 for $44.4 million. It’s not known how much the museum paid for Rosie the Riveter, the classic painting by Norman Rockwell.
Crystal Bridges has also ramped up its research and scholarship functions, building the kind of highbrow back-office operation that you’ll only find at the world’s top museums. It wouldn’t be surprising to see grantmaking added to the mix. While Crystal Bridges cost around $1.6 billion to build and endow, there is plenty more where that came from: Alice Walton’s net worth is five times larger than J. Paul Getty’s was when he died. Is Alice Walton destined to one day emerge as the biggest arts philanthropist in American history? It’s quite possible.
Meanwhile, in Cambridge, Massachusetts, hundreds of scientists are pursuing breakthroughs in genomic medicine at the Broad Institute of MIT and Harvard, which sprawls across three large buildings. Despite its name, the Broad Institute is actually a free-standing entity with its own governing board that doesn’t answer to either MIT or Harvard. Since its founding in 2004, it’s pulled in nearly $2 billion in private donations—mostly from its founders, Eli and Edythe Broad, and another mega-donor, Ted Stanley, who gave it $650 million in 2014, one of the largest gifts ever for scientific research.
Stanley, who made his fortune in collectibles, became interested in biomedical research after his son had a manic episode as a college junior, running through the streets of New York until the police found him naked in a deli. In total, Stanley would give $825 million to the Broad Institute before he died in 2016. Eric Lander, the founding director of the institute, told the New York Times that these funds had enabled scientists there to make breakthroughs in identifying DNA associated with schizophrenia.
Giving like this reflects one of the oldest strains in philanthropy: the wealthy as benefactors to the creative class, a tradition that long predates government support for the arts and sciences. Half a millennium ago, the Medici family famously supported Galileo and Leonardo da Vinci. The railroad tycoon John Johnson helped create the Metropolitan Museum of Art in New York City in 1870. John D. Rockefeller created the Rockefeller Medical Institute in 1901, the first biomedical research center in the United States, and also the University of Chicago. His son, John Jr., underwrote the creation of the Museum of Modern Art, starting in the late 1920s.
Still, in terms of scale there is no comparison between past patronage of the arts and sciences, as well as higher education, and what is happening today.
Just as ever more donors are crowding into areas like education or the environment, more are showing up in the arts and sciences, covering the paychecks of molecular biologists, curators, neuroscientists, art conservationists, geneticists, professors holding endowed chairs, and on and on. Pick nearly any disease, and you’ll find a deep-pocketed donor who’s hot on the trail of a research breakthrough. Name a leading cultural institution, and chances are it’s lately received new infusions of cash from billionaire backers. Get lost in a top hospital, and you’ll find yourself wandering from one named wing to another. Visit any major university, and it will be hard to find a big building on campus that doesn’t bear the name of a mega-donor. In some cases, these names have been painted over those of earlier philanthropists whose gifts, huge at the time, seem rather paltry now.
Between 2005 and 2014—a period in which the combined net worth of the Forbes 400 nearly doubled—over 14,000 gifts of $1 million or more were made to colleges and universities. At least 100 of these were worth over $100 million. Health institutions pulled in nearly 5,000 gifts of a million dollars or more, with at least two topping a half-billion dollars. Arts and cultural institutions received 4,000 gifts of $1 million and up each during this same period. One of the largest of these was $400 million to the Dallas Museum of Art—a gift that underscores how today’s benefactors are now operating in more places, well outside the usual coastal orbits of yesteryear’s wealth elite, even including Bentonville, Arkansas, a city of just 40,000. If you’re a neuroscientist, you’ll probably find yourself in Seattle at some point, where a brain science institute financed by Paul Allen has grown by leaps and bounds since 2003. If you’re a molecular biologist or a geneticist, you may find yourself in Kansas City, Missouri, visiting the Stowers Institute for Medical Research, a huge facility that houses several hundred biomedical scientists. The money behind the institute, some $2 billion, has come from a mutual fund pioneer, Jim Stowers, and his wife, Virginia.
Wealthy local donors are also pumping up universities across the heartland. After Harvard and Yale, the University of Texas system has the largest endowment in the United States. The University of Minnesota now has a larger endowment than Brown University, thanks to the rise of new wealth in the Upper Midwest. The University of Michigan’s endowment is bigger than that of three Ivy League schools. None of this is much of a surprise given that some 70,000 Americans now have a net worth of $30 million or more, and not all of them live on the East or West coasts.
I’ll say more in a moment about what today’s Medicis are up to, but first let’s consider what’s at stake here. We are all affected by the direction of the arts and sciences, as well as of higher education. What cultural work gets valued and shared can shape how we understand the human experience, while the nature of cultural institutions themselves can influence how communities interact and evolve. The impact of science is far more tangible: Which problems researchers are funded to attack can determine which diseases people die from or what breakthrough technologies emerge. Top universities influence what ideas get traction and how tomorrow’s leaders think.
For a period, beginning in the 1950s and 1960s, the United States seemed headed toward a future in which these critical parts of society would be shaped by democratic governance. We wouldn’t depend on the munificence and preferences of millionaires to chart scientific and artistic progress, or to fund our universities. We’d do it together as citizens, through public agencies like the National Science Foundation (created in 1950) and the National Endowment for the Arts (created in 1965). Or through the great public university systems that were greatly expanded after World War II.
Now, that vision is dimming, as governments face new fiscal constraints and as vast resources are mobilized behind an earlier model of private patronage. To be sure, we are still early in this story. In science, even the biggest private funders still deploy minuscule funds compared to what government spends every year. “It’s a drop in the bucket,” Marilyn Simons told me, talking about the annual grantmaking budget of the Simons Foundation, which gave out $230 million in a recent year—compared to the nearly $40 billion that the National Institutes of Health (NIH) and the National Science Foundation (NSF) give annually.
Simons is right. Still, signs abound that the locus of influence in science funding is indeed shifting toward private benefactors. The new donors are often supporting younger scientists coming up and getting behind riskier or neglected areas that government agencies won’t touch. The choices of philanthropists are increasingly shaping which researchers are able to apply for government funding. In higher education, a torrent of new private money has flooded onto campus during the same period that has seen many states cut spending for public universities, even as academic researchers faced declining federal support. Meanwhile, in the arts, the pendulum has now swung far away from public influence after years of budget cuts to the NEA and state arts agencies. Here, philanthropic dollars dominate the funding landscape, both for individual artists and for arts institutions.
As further budget cuts kick in over the coming years, and mega-donors step up their giving, the shift toward private financing for scientific exploration, cultural expression, and advanced learning is likely to accelerate.
This is not a conscious power grab by the new Medicis, many of whom favor more public funding for the arts, sciences, and higher education. The wealthy can often be found leading the charge to defend the NSF or NEA from deficit hawks. Bill Gates has testified before Congress, calling for more science research funding, while Jim Simons has been a strong proponent of more public investment in math education. In some cases, private donors have stepped forward to write big checks to public universities only after watching in dismay as these institutions were hurt by budget cuts.
On the other hand, today’s era of austerity didn’t come about by accident. It was orchestrated in part by an upper class keen on reducing its taxes, along with the size of government. In some states, cuts to higher education have specifically helped finance tax reductions for the wealthy and corporations.
Donors from the far upper class have also underwritten the conservative policy groups that have been whacking away at public support for science and—especially—the arts since the 1980s. The Cato Institute, backed heavily by wealthy libertarians, has long called for the total elimination of government science funding. Scholars at the more moderate American Enterprise Institute, supported by a slew of billionaires, would never go this far, but many advocate sharp cuts in federal spending. Even more influential, as we saw, was Pete Peterson’s targeted philanthropy during the early Obama years to help move deficit reduction to the top of the national agenda. As a result of the Budget Control Act of 2011, government-funded scientific research through the NIH and the NSF will be on a downward slide for years to come. Veteran scientists have described the cuts so far as devastating. Further cuts lie ahead.
For its part, the NEA has never recovered from earlier attacks, when some Republicans—including President Reagan—worked to eliminate all government funding of the arts, a position championed by the Heritage Foundation and its wealthy donors. Heritage has kept up the attack on the NEA for over three decades now, publishing dozens of policy briefs attacking its funding. If the NEA’s budget had kept pace with inflation since 1981, it would now be over $400 million a year. Instead, in 2016, Congress appropriated just under $150 million to the NEA. State arts funding has also been in decline in many places, especially California. A web of right-wing think tanks in the states, modeled on Heritage and Cato, has been at the forefront of attacking local arts funding. Cutting such spending, for example, has been among the priorities of the North Carolina policy groups backed by Art Pope. Following the political revolution engineered by Pope in 2010, government funding for the arts in North Carolina fell sharply.
Many of the billionaires who underwrite efforts to reduce taxes and government also are big donors to the arts and biomedical research. Some, like David Koch, are libertarians who believe as a matter of doctrine that government shouldn’t be involved in funding such research. Others, like Bruce Kovner, may take a softer stance, but nevertheless favor fiscal policies that virtually guarantee cuts to the arts, science, and higher education. Hedge fund billionaires like Kovner or Kenneth Griffin get lots of praise when they write big checks to arts institutions (Kovner is the biggest donor ever to the Juilliard School of Music), but few observers connect the dots and realize that some of these same figures have been writing checks for years to groups and politicians that seek to downsize government, including spending for the arts.
To be sure, quite a few wealthy people have been on the other side of this debate, financing think tanks and Democratic politicians who have pushed for higher taxes on the wealthy and a more robust government. But in recent decades the overall weight of the donor class has been behind a fiscal conservatism that has left government with diminishing discretionary cash.
Critics of the public sector often argue that it has usurped roles that are better played by civil society, pointing out that philanthropy accomplished plenty of good before the era of big government. The Metropolitan Museum is just one of philanthropy’s greatest hits prior to the New Deal and the Great Society. Advanced medical research centers, great museums, top universities—you could find all these institutions a century ago, when Washington, D.C., was still a sleepy southern city that commanded just a small sliver of the nation’s GDP. What’s so wrong with a shift back to a time when nonprofits, as opposed to public agencies, charted the direction of culture, science, and higher learning? Also, as a practical matter, with government short on cash and vision, shouldn’t we be celebrating the arrival of new donors who can fill the vacuum? Haven’t these generous benefactors come along just in the nick of time?
Indeed, they have. And many are doing great things. But it’s important to keep in mind the backstory of why private philanthropists and their money now loom so much larger. What’s happening in the cultural and scientific realms tracks with what’s happening in other areas like education and public parks. As the great twentieth-century tide of public money recedes, in an era in which “big government is dead,” as Bill Clinton famously declared, a new tide of private money is flowing in—heralded by headlines about huge gifts to hospitals, museums, universities, and research centers.
Most of the donors behind these gifts simply want to do some good in the world. For every donor like David Geffen, who gave $100 million to Lincoln Center in 2015 in what struck many as a naked bid for status, there are many others who would just as soon duck the spotlight. In fact, since 2005, there have been at least ten philanthropic gifts of $100 million or more that have been made anonymously.
Yet whatever their motives, or their humility, donors do get something for their money, beyond mere satisfaction. They get influence over our culture, along with the arc of progress. And as the United States shifts back toward an earlier model of achieving big things, where civil society takes more of the lead, that influence is growing. Maybe in earlier times one could talk about ordinary people driving civil society forward; now it’s the givers who are the main drivers, and that’s especially true in the rarefied realms of the arts, science, and higher learning.
In short, what we have here is another complicated story about philanthropy and influence in a new Gilded Age. It’s hard not to be inspired by the vision and achievements of many donors—and equally hard not to be troubled by the bigger picture of more power shifting into private hands.
The Simons Foundation exemplifies the pace and scale of today’s new philanthropy. In just over a decade, it has emerged as one of the leading private funders of basic science in the United States, pushing forward the frontiers of knowledge about mathematics, physics, the life sciences, and more. The Manhattan-based foundation has also revolutionized autism research, spending hundreds of millions of dollars to draw new talent into a once-neglected field and helping orchestrate a series of breakthroughs on a condition that afflicts millions.
These are big accomplishments for a foundation that for many years was no more than a filing box in the dressing room of Marilyn Simons, the second wife of hedge fund billionaire Jim Simons. Jim got his PhD in mathematics and then worked in the defense sector in Washington before pursuing a successful academic career. He became the chair of the math department at SUNY Stony Brook and, in 1976, won the prestigious Oswald Veblen Prize in Geometry. His career took yet another turn when he started his hedge fund, Renaissance Technologies, in 1982. There, Simons and his teams created mathematical models to predict the behavior of financial markets. The firm was phenomenally successful. For a twenty-year period, from 1994 through mid-2014, Renaissance averaged a 71.8 percent annual return. In some of those years, Simons personally made over $1 billion. Eventually his net worth climbed to over $10 billion, and it has kept growing.
Jim and Marilyn started their foundation in December 1994. “We had always given to charity, since I had any money to give away,” Jim told me. The Simonses usually made those gifts around the holidays. Marilyn had the idea of formalizing things with a foundation, which was seeded with an initial gift of a million dollars. In 2001, Marilyn—who’d gotten a PhD in economics but never went into academia—rented a small office down the street from Gramercy Park and hired a few part-time staff. Still, the foundation was a pretty informal operation, and mostly it operated passively, fielding requests for money. “They were coming to us,” said Jim. “We didn’t sit around and say, ‘Oh, why don’t we do x or y or z.’ We were being reactive.” Then, one day, Marilyn recalled, Jim had an idea: “We should give to things we want to give to.”
That basic insight led the Simonses to think more carefully about where they might give money—and to start building a real foundation. Their main interests were math and science, but they were also keen on doing something about autism and learning disabilities. They pulled together a roundtable of experts for a day to learn about the research in this area. Jim said of that meeting: “We came away with the conclusion that there were two things we could do: one, bring better people into the field because the quality of the research was not all that good. And two, to focus at least initially on genetics, where it was clear that this was caused at least in part by one’s genes.”
The Simons Foundation made a few grants along these lines, but felt out of their depth when giving out money at this level. “We were lucky we picked a couple good people to support, but we didn’t really know how to do that,” Jim said. So he and Marilyn looked around for someone to help them, and soon hooked up with Gerald Fischbach, a neuroscientist who had spent years at NIH and also two medical schools before becoming a dean at Columbia, where he continued advanced research. In 2006, he joined the Simons Foundation as the scientific director overseeing its autism research funding.
It’s worth pausing here to point out that top foundation jobs can be very attractive, especially to academics or nonprofit executives who get tired of always hustling for grants. Moving to the other side of the funding game can be a nice break, not to mention hugely empowering since now you’re the one waving the magic funding wand to bring new projects to life. And it’s all the better if you’re getting in on the ground floor of a billionaire’s young foundation. The appeal of these jobs means that donors can easily recruit first-tier talent to advance their philanthropic dreams—in effect, building private brain trusts, a powerful asset in a society where expertise is a key currency of influence.
Hiring Fischbach was a paradigm shift, said Jim Simons, because he “introduced these methods of learning about the field, learning about the investigators, opening up an application process and reviewing.” The Simonses were so thrilled with this step forward that they decided to also professionalize their giving for basic math and science, which had tended to be haphazard as well. Within a few years, the Simons Foundation had top directors building up all its grantmaking areas. As the operation evolved, Marilyn stayed on as president, leading the work to scale up an outfit that soon occupied several floors in a lower Fifth Avenue office building not far from Madison Square Park. Along the way, the couple moved ever bigger chunks of money into the foundation’s endowment, which had risen above $2 billion by 2013. Annual grantmaking soared, too, and even doubled in some years. “It just grew,” Jim said.
Many new philanthropists these days are reluctant to build large foundations, fretting about the overhead costs and the dreaded thought of their philanthropy becoming “bureaucratic.”
Jim and Marilyn Simons never had any doubt about the need to hire a sizeable staff. “What we’re doing is very technical,” Jim said. “You can’t just give money to mathematics by throwing it out on the street and letting the mathematicians pick it up. You need to know who’s doing what, how good they are, what’s the likelihood they will use the money wisely, and so on. We’re giving a lot of money. Hundreds of millions of dollars every year. So we want to do it in a professional way.”
The Simons Foundation grew even larger in 2016, when it took over an eleven-story building near its headquarters and began populating the new space with several hundred researchers working in-house at a new operation called the Flatiron Institute. Like the Howard Hughes Medical Institute, the Simons Foundation is embracing a hybrid model of making millions of dollars in grants while also providing a cushy home for researchers. In time, Simons may well rival HHMI in size and influence. Jim and Marilyn Simons said in their Giving Pledge letter that “the great majority of our wealth will be devoted to philanthropic purposes.” As of 2016, the combined assets in their foundation and private investments totaled around $18 billion.
In March 2014, the New York Times published a front-page article ominously headlined “Billionaires with Big Ideas Are Privatizing American Science.” It named the many deep-pocketed donors that have moved into this space in recent years, including Jim Simons. “For better or worse,” said one analyst in the article, “the practice of science in the 21st century is becoming shaped less by national priorities or by peer-review groups and more by the particular preferences of individuals with huge amounts of money.” The age of grand federal research endeavors, the Times suggested, was winding down as science became “a private enterprise.”
Jim and Marilyn Simons were pleased with the piece, because it drew attention to the alarming decline of government funding for science. Jim knew firsthand how important such funding is, because he’d gotten his math PhD under a new federal program begun after the Soviets launched Sputnik in 1957. But they thought the Times claim that American science was becoming “privatized” was an overreach, given the modest resources of philanthropists compared to those of government.
Ironically, the keen awareness among science philanthropists of just how puny they are relative to the Feds has lately helped drive their influence to new heights. That’s because these funders have zeroed in on where they’re likely to make the biggest difference, which is in backing young researchers and those engaged in riskier work. “The NIH is a conservative outfit,” said Jim Simons. “The grants they give are for work that’s been mostly done already….They don’t want to give you money unless they’re pretty darn sure that you’re going to succeed. Well, if you’re doing great science, maybe you’ll succeed and maybe you won’t….For people who are thinking well outside the box, to do something that’s riskier, philanthropic support is much more likely than government support in many cases.” The Simonses have sought to operate at this edgy frontier of science.
Another funder who thinks the same way is Paul Allen, the Microsoft billionaire who is also among the big science funders to emerge in recent years. Allen has directed hundreds of millions of dollars to risky and experimental research areas, such as artificial intelligence and gene editing. Big chunks of that money could be wasted—or maybe transform life on earth.
Beyond flowing to safe bets, government research funds rarely go to anyone under forty who doesn’t already have a long track record. The result is that, for today’s younger scientists, private funders have become all-important gatekeepers.
Yes, philanthropy only accounts for a fraction of overall science funding, but the balance has been changing. One study charting this shift found that if you factor in endowment income, “science philanthropy provides almost 30% of the annual research funds of those in leading universities.” That figure offers a window into the growing role of private money in deciding which new ideas and young researchers get support.
The wealthy also play an ever larger role in deciding who lives and who dies. Or, more specifically, which medical problems get conquered versus which are neglected.
That ultimate power is not hard to understand. If donors take an interest in a particular disease or condition, moving new money into research, cures are more likely to be found and lives to be saved. Yet the pet health interests of rich people may or may not line up with what society overall should give priority to in seeking medical breakthroughs. As the Times warned: “The philanthropists’ war on disease risks widening that gap, as a number of the campaigns, driven by personal adversity, target illnesses that predominantly afflict white people—like cystic fibrosis, melanoma and ovarian cancer.”
Giving for health and medicine is among the most personal areas of philanthropy. Many wealthy donors make huge medical donations because they’ve had a brush with a particular disease or been helped by a specific hospital. Just look at how Memorial Sloan Kettering Cancer Center has thrived in recent years. Strategically located on the Upper East Side, it caters to some of the wealthiest cancer sufferers in the world—who, in turn, have shown their gratitude. David Koch, who lives in the neighborhood and was treated at Sloan Kettering for prostate cancer, has given it over $200 million. Another Upper East Sider, Henry Kravis, the private equity billionaire, gave $100 million to support “precision oncology” at Sloan Kettering that taps insights from genomic medicine.
Walk around in the vast labyrinth of New York Presbyterian Hospital, located a few blocks from Sloan Kettering, and you’ll find one pavilion and specialty center after another named after wealthy donors—some of whom live a short cab ride away. David Koch has also given to this hospital, helping finance an ambulatory care center named after him with a $100 million gift. In turn, that center will be the home of the new Alexandra & Steven Cohen Hospital for Women and Newborns, paid for by a $75 million gift from the hedge fund billionaire and his wife. Both these operations are housed in the hospital’s Weill Cornell campus, named in part after Sanford Weill, a philanthropist who once ran Citigroup.
Meanwhile, a few miles north in the Bronx, men have the lowest life expectancy of nearly anywhere in New York State—often dying from causes that could have been prevented if only they had access to basic health care. But helping out the hospitals and health clinics in the city’s poor neighborhoods has never been of much interest to wealthy donors. Nor do these donors tend to back work on pedestrian health problems like hypertension, one of the top killers stalking poor black men.
Such disparities in health funding make it tempting to settle on another simple storyline about self-serving, elitist philanthropy. As usual, things are more complicated. Many of the biggest health donations that go to name-brand institutions like Sloan Kettering or the Mayo Clinic, another strong money magnet, are for research that can potentially benefit everyone. David Koch’s huge gifts for cancer research are a case in point. Koch was drawn to this area after he survived a plane crash in the early 1990s, only to learn at the hospital that he had prostate cancer. He’s given millions for this cause, which is a big focus of the research he’s backed at Sloan Kettering. Koch has said: “Once you get that disease…you become a crusader to try to cure the disease not only for yourself but for other people.” In the case of prostate cancer, many of those other people are African American men, who are nearly 1.6 times more likely to get prostate cancer than Caucasian men and 2.4 times more likely to die from it.
The health giving of Herb Sandler, whom we met earlier in the book, also offers a counterpoint to the notion that such philanthropy favors the more affluent.
After Sandler and his wife, Marion, grew rich from banking, they didn’t give heavily just to progressive causes, like the Center for American Progress and the ACLU. They also began investing in medical research, in ways that would have a major effect on poor kids.
Marion suffered from severe asthma, which led the couple to research this chronic disease that affects millions of Americans, and which can be terrifying. “We wanted to know more about it,” Herb told me. The Sandlers learned two things as they dug in: First, that low-income kids of color were among the top sufferers of asthma, which is linked to pollution and cockroaches—both of which are found in abundance in many poor urban areas. The damage to these kids is enormous. Asthma is among the leading reasons that poor kids miss school; they are home with inhalers instead, or in the hospital, at a huge cost to Medicaid.
Second, the Sandlers learned that asthma research was a backwater within biomedicine. Very few breakthroughs had been made on asthma in the past half century, and few talented scientists were entering this area. Americans may have been suffering from several million asthma attacks a year, with a few thousand people dying annually, but the world of medical research—and health philanthropy—didn’t seem to much care.
The Sandlers set out to change that. They saw a unique opportunity: to boost asthma research up into the big leagues and, just maybe, mitigate a health challenge tormenting kids who already had the odds stacked against them.
Marion had the unusual thought of injecting big money into the asthma field—but only making grants available to researchers who had never worked on this problem before. “It was a wild idea,” Herb recalled, for bringing in “new blood.” It was also an idea that only people with huge financial resources might even have considered, given how much it cost to do medical research. An ordinary person could never imagine using their checkbook to get top-tier MDs and PhDs to shift their career path in a new direction. But billionaires like the Sandlers could imagine that, just as the Simonses—who had even more money—later had the same thought for pushing forward autism research.
Still, Marion’s idea was risky, and the couple was nervous as their project got under way, soliciting research proposals on asthma from newcomers to the field. “Nobody knew whether it would work,” Herb said. All doubts lifted once the applications started rolling in, including many from impressive scientists who’d never worked on asthma. In time, the organization the Sandlers helped start, the American Asthma Foundation, became the largest private funder of asthma research in the United States as the Sandlers pumped in $100 million that went out as grants. The foundation has brought over four hundred new researchers into the field, including at least three dozen who made major breakthroughs, such as advances that led to the development of new drugs. Its emergence has helped transform asthma research, with benefits for people of all economic levels.
Even greater universal gains may flow from a rising torrent of gifts for brain research. Paul Allen has been a leader here, pumping more than $500 million into the Allen Institute for Brain Science since 2003, but many other donors have followed. The Simonses’ giving for autism research, which has totaled hundreds of millions of dollars, has mainly sought to understand this complex disorder of brain development. Likewise, much of the $450 million in grants that the Michael J. Fox Foundation has given to cure Parkinson’s disease has gone to unlock the workings of the brain. Google co-founder Sergey Brin has been the single largest donor to the foundation, giving it at least $160 million. In late 2015, Chuck Feeney gave $177 million to the University of California, San Francisco (UCSF), for neuroscience research. Just a few months later, Sandy and Joan Weill gave even more for UCSF’s brain work, $185 million.
Well before these donors came along, Herb and Marion Sandler had given more than $25 million for neuroscience at NCSF. That giving wasn’t on par with the Sandlers’ backing of work on asthma, but it could have a greater impact, along with all the other money flowing for brain research these days. Why? Because few health challenges will inflict a greater toll on America in the twenty-first century than the explosive rise of neurodegenerative diseases. Already, the costs of caring for five million Americans with Alzheimer’s runs more than $250 billion a year, according to one study. Absent new medical breakthroughs, our society will be spending over a trillion dollars a year to care for thirteen million Alzheimer’s sufferers. The global costs will be far higher.
When you hear that billionaires like Paul Allen are funding experimental brain research, it can sound like a perfect example of elite philanthropy unmoored from most people’s day-to-day concerns. Allen, after all, is the same guy who’s spending big for private space travel and also financed the world’s largest airplane. His $200 million yacht, Octopus, has a ten-person submarine.
In fact, though, backing neuroscience is yet one more way that today’s mega-givers may be changing the lives of millions of Americans, in this case for the better.
The vast money pouring into already-wealthy elite universities would seem to offer up a more clear-cut storyline of the upper class feathering its own nests—and amplifying its own influence. The gifts to such institutions have become ever larger in recent years and, in some cases, ever harder to justify.
Consider the $400 million donation that Nike founder Phil Knight made to Stanford University in early 2016. The money will be used to cover tuition and living expenses for just one hundred grad students a year at Stanford, which has one of the largest endowments in the United States, over $20 billion. The idea is to train the next generation of leaders who will go on to “address society’s most intractable problems, including poverty and climate change.”
Of course, though, there are plenty of talented leaders who are already in the trenches working on these problems—and could sure use some help from the likes of Phil Knight. It’s hard to think of Stanford grad students, many of whom already get a tuition-free ride, as a needy bunch.
Since 2005, Stanford University, as well as the eight schools of the Ivy League, have received over thirty-five gifts of at least $100 million. (Stanford received four such gifts in 2015 alone.) During this same period, state funding for public universities and community colleges has fallen by 20 percent, according to some estimates, resulting in tuition hikes that put college out of reach for more low-income students. The value of Pell Grants has also been falling for decades. Once, these federal grants for needy students covered most of the cost of attending a public university; now they cover just a third of that cost.
It’s not surprising that the fortunes of elite schools have been soaring. A great many billionaires and multimillionaires have graduated from these schools. Knight got his MBA from Stanford, as did over 20 other billionaires. Harvard Business School has produced at least 64 billionaires, while one analysis found that 3,000 graduates of Harvard College were worth at least $30 million. Now richer than ever, the alums of wealthy universities are giving back in record-breaking ways. America’s universities raised over $40 billion in 2015, with 28 percent of that money going to just 20 top universities, much of it donated by rich alums.
Unfortunately, the ranks of financial winners include few graduates of community colleges, and as a result big gifts to such institutions are rare. When LaGuardia Community College in New York City received a $2 million donation from Goldman Sachs in 2015, it doubled the school’s endowment. The gift was unusual enough to make the New York Times. By comparison, Harvard raised an average of $3.1 million a day during 2015.
The richer schools are getting richer; the poor are getting poorer. Three-quarters of the $516 billion in endowment wealth held by U.S. colleges and universities in 2014 was concentrated in the hands of just 11 percent of schools. These numbers mirror broader inequalities in society.
The wealthy get a lot of credit for boosting the fortunes of higher education with their big gifts. But if you look at all their giving, philanthropic and political, the record is mixed. Many donors who give generously to their alma maters also give to conservative politicians and policy groups that have orchestrated cuts to public higher education. John Paulson, the hedge fund billionaire, is a great example. He’s been a huge backer of a Republican Party that has repeatedly sought to cut Pell Grants nationally and has cut spending to public universities in the states. Paulson also became, in 2015, the biggest donor in Harvard’s history when he made a $400 million gift to the school. That gift, to a university with a $36 billion endowment, could ultimately cost the U.S. Treasury more than $200 million, assuming this money would otherwise have been captured by estate taxes.
As it turns out, though, that huge Paulson gift shows why one should be wary of too quickly casting mega-giving to elite universities as another sign of emerging plutocracy.
Harvard isn’t just a place where the already privileged are groomed to tell everyone else what to do. It also advances research in multiple disciplines, especially science, and has produced forty-seven Nobel laureates. Harvard spends around a billion dollars on research every year, with more than half that money coming from the federal government, and the lion’s share going to studies in the life sciences aimed at yielding biomedical breakthroughs.
These numbers are a reminder that much of the advanced research that goes on in the United States is conducted at universities. Harvard isn’t even a leader in this regard. Johns Hopkins spent $2.2 billion on research in 2014, with the bulk of that money coming from the federal government, and especially the National Institutes of Health.
Federal funding for medical research has fared better than most government programs in the past two decades because Congress is besieged by constituents demanding cures to diseases that kill hundreds of thousands of Americans every year. There’s a lobbying group for every major disease you can think of. In contrast, funding for research on engineering, physics, and computational science has far fewer supporters, although breakthroughs in these areas are more likely to produce new inventions that drive economic growth. At most universities, including Harvard, researchers working outside the life sciences are more likely to struggle for funding, especially as the National Science Foundation gets hit with budget cuts.
This is where John Paulson’s gift came in. The money went to bolster engineering and applied sciences at Harvard. Such research taps the building blocks of basic science—the sort of research backed by the Simons Foundation—to invent stuff, like nanotechnology, robotics, and artificial intelligence.
Paulson’s gift was unusual in its size—and the ridicule it drew from critics—but otherwise it was similar to many of the largest gifts flowing to elite universities, many of which go to fund research. This has also been the focus of three other top higher education donors of our time: Michael Bloomberg, Gordon Moore, and Chuck Feeney.
Bloomberg has given more than $1 billion to Johns Hopkins, with most of that money going for research, including big investments in what became the Bloomberg School of Public Health. One gift, of $125 million, went to establish the Malaria Research Institute. Another, for $69 million, went to create the Institute for Cell Engineering, to advance stem-cell research. Yet another massive donation, in 2013, endowed fifty distinguished professors—the kind that mainly devote their time to research, not teaching.
Gordon Moore, the billionaire co-founder of Intel, has given $700 million to Caltech over the past fifteen years, helping turn this small school into one of the world’s top research universities. He’s been by far the biggest donor to a school that has fewer than 2,400 students—but has produced thirty-four Nobel laureates. As with other research universities, a steady stream of new inventions and new companies emerge from Caltech every year. Over 2,300 U.S. patents have been issued to Caltech researchers since 1985, and since 1995, 130 start-up companies have had their genesis on campus.
Chuck Feeney has spread his higher education gifts around more widely, but with a similar focus on research—like that $177 million gift for neuroscience he made to UCSF in 2015. Feeney gave his single biggest gift, of $350 million, to help finance a new Cornell science school on Roosevelt Island in New York City. Cornell Tech, as it is called, focuses on a “deep inquiry into many of the core disciplines of the digital age, including Computer Science, Electrical Engineering, Information Science, Operations Research and Business.” The new school also landed a $133 million gift from Irwin Jacobs, the founder of Qualcomm, and $100 million from Michael Bloomberg, who as mayor championed the idea of turning Roosevelt Island into a tech center. Bloomberg saw his big private gift as helping along a project that would become a huge economic driver for New York, bringing new scientific talent to the city and producing new start-ups, jobs, and growth.
Meanwhile, the generosity of campus givers means that some of the nation’s wealthiest schools are now able to offer a free ride to students from lower-income families. That practice was first started by Princeton in 2001, and since then the school has notably increased the economic diversity of its student body—although, overall, elite schools have made little progress on this front over the past few decades. And while more assistance may be flowing to needy students on these campuses, thanks to philanthropy, such giving also is a way that affluent alums transfer class privilege to their children, helping ensure “legacy” slots at elite schools that might otherwise go to more gifted students. It gets even worse. As Daniel Golden showed in his book, The Price of Admission, the kids of big donors who aren’t alums often receivable favorable treatment at admission time. It’s no secret that parents with wealth can buy their offspring a big head start in life. Less well known is how tax-deductible philanthropic gifts can be a means to this end.
Private money has long played a huge role in higher education. Now that role is growing, and this growth is especially striking at the state level, where there’s been a surge of new philanthropic dollars flowing into public universities even as their state funding has been cut back. Between 1992 and 2010, state appropriations for public research universities dropped from 38 percent to 23 percent of the universities’ total revenues.
Along the way, state schools got much better at currying favor with private donors. In 2015, six of the top twenty fundraising universities were public schools. In some cases, major donors have stepped forward in recent years to help public universities hit by budget cuts. Giving like this offers reassurance that it isn’t just the Princetons pulling in big money these days, as the great wealth boom in recent decades has spread far beyond elite coastal enclaves. Rich people are everywhere, and many have fond memories of their alma maters.
Yet anyone who knows how campuses work also knows that donors have influence—especially when their money is viewed as indispensable. Today, America’s public universities are being more heavily shaped by the wealthy than at any time since these institutions were created.
That clout can play out in troubling ways. At the University of Virginia, a cabal of wealthy donors forced out the school’s president, Teresa Sullivan, in 2012, causing an uproar. She was later reinstated, but the underlying conditions that made the failed coup possible haven’t changed. In 1990, the Virginia state government provided about a quarter of the university’s budget. Two decades later, that proportion had dwindled to under 7 percent, which meant the school relied far more on the goodwill of major private donors—donors who often have strong opinions as to how a public university founded by Thomas Jefferson should be run.
In another case, documented by the Los Angeles Times, major donors to the University of Illinois reportedly pressured the school’s leadership in 2014 to fire a professor, Steven Salaita, for a series of provocative tweets on Israel and Gaza. You can see why the university’s officials might be so attuned to private donors, given that the Illinois university system has faced punishing cuts in public funding that began well before the 2008 recession. Between 2002 and 2015, state appropriations for higher education in Illinois fell by 20 percent.
Public universities in Michigan have also been hit by spending cuts in recent years, including Wayne State in Detroit. Between 2011 and 2016, with fiscal conservatives led by GOP governor Rick Synder in total control of Michigan’s government, the school had been forced to accept $75 million in budget cuts. That battering may explain why leaders at Wayne State University in Detroit eagerly accepted a $40 million gift in 2015 from a wealthy local couple that came with controversial strings attached. Among other things, the donors were given input on the curriculum and strategic plan of the university’s business school, as well as “aspects of the educational experience.”
In his book Unmaking the Public University, Christopher Newfield documents the rising influence of private donors over state schools since the 1980s, and what it’s meant to have these schools increasingly catering to the “preferences, and sometimes the narrow-minded whims, of powerful outside figures.” The clout of donors on campus has risen in conjunction with that of corporations, which have also come to exercise new influence on campus through research funding and contracting, as Jennifer Washburn documented in her 2006 book, University, Inc.: The Corporate Corruption of Higher Education.
Some philanthropists have seen campus donations as a way to try to shape the ideology of students and the direction of academic research. After the so-called Powell memo of 1971 called on businesses to challenge liberalism on campuses, the Olin and Bradley foundations, both started by wealthy industrialists, poured money into campus work to promote free-market ideas. They underwrote research centers, endowed professorships and graduate scholarships. Charles Koch is another funder that moved aggressively to fund on campuses. In 2014 alone, his foundation directed $27 million in grants to some three hundred universities to back libertarian ideas that stress the virtues of markets and the downsides of government.
Koch has been interested in these ideas all his adult life. In his twenties, after graduating from MIT, he read lots of political theory at night while working as an energy consultant. He was deeply influenced by writers such as Friedrich Hayek and Michael Polanyi. He started making donations to think tanks and academic centers as early as the 1960s, and has so far channeled at least $200 million to universities alone. That’s a big stream of funding, but Koch has said he plans to expand such giving down the line.
State schools have been among the biggest beneficiaries of Koch largesse—which has occasionally caused controversy. Florida State University was embroiled in a flap after it was alleged in 2011 that a Koch grant had come with stipulations about what faculty could be hired and fired by the school’s economics department. The controversy caused a stir, and made national news. But it didn’t dampen FSU’s willingness to take $800,000 in additional Koch grants in 2016. Far bigger sums are flowing to other schools, like Montana State University, which landed a Koch $5.7 million grant the same year to fund research critical of government regulation.
It’s not uncommon for donors to make various demands in return for campus cash. In one case, the foundation of BB&T Bank offered $1 million for business education to Western Carolina University, a public state school in Cullowhee, North Carolina. Among the reported stipulations of the gift was that the university’s College of Business make Atlas Shrugged by Ayn Rand required reading for students. The school took the money.
This was not an isolated episode. The donor behind the offer, John Allison, the former chairman of BB&T and later the president of the Cato Institute, had offered similar deals to at least sixty-three schools going back over a decade. After Guilford College accepted a half-million dollar grant, with little consultation with faculty, a professor there wrote: “This deal with BB&T was simply an egregious case of the college administration deciding to sell a chunk of the curriculum.”
Allison framed his goals in terms strikingly similar to how Lewis Powell had in 1971: as a pushback against the pervasive liberal orthodoxy on campuses. “It’s really a battle of ideas,” he told a reporter. “If the ideas that made America great aren’t heard, then their influence will be destroyed.” Allison said in 2011 that he hoped to extend his grants to two hundred schools, but by 2015, BB&T claimed that it was no longer making such grants.
Meanwhile, plenty of liberal donors also bankroll campus work. Williams Institute at UCLA’s law school, initially underwritten by Chuck Williams and then backed by other top LGBT funders like Tim Gill, played a key role in formulating the legal ideas behind the quest for marriage equality and other anti-discrimination efforts. Thomas Piketty’s treatise on inequality, Capital in the Twenty-First Century, was partly informed by research done at the Center for Equitable Growth at the University of California at Berkeley, which has been supported by Herb Sandler, among other donors. Sandler has funded a similar institute in Washington, D.C., that makes grants to academics who are exploring how to reduce inequality and boost growth. A research outfit fueled with $75 million from George Soros and tech leader Jim Balsillie, the Institute for New Economic Thinking, has been backing economists in the United States and around the world to challenge “free market fundamentalism.”
The hedge fund billionaire Tom Steyer has donated millions for campus work on clean energy and climate change. Separately, through his NextGen Climate organization, Steyer has given money to register college students to vote.
In short, higher education is yet one more venue where more philanthropists are giving more money than ever in an effort to shape the direction of U.S. society.
Given the size of the federal budget, which totaled around $4 trillion in 2016, you might think that elected leaders would have plenty of leeway to increase spending on things like science, the arts, and education. Yet only about a quarter of the federal budget can be used in such discretionary ways, and far less if you don’t count defense spending. The rest is committed by law to mandatory outlays, chiefly for entitlements like Medicare and Social Security, but also to pay interest on the national debt. This mandatory spending is projected to grow dramatically in the next few decades as the boomers retire and more debt payments come due. Budget analysts say that without big changes in current policies, federal mandatory spending will equal 21 percent of GDP by 2046—which is as much as all federal spending in recent years. The squeeze on discretionary outlays will only grow more intense as time goes on.
Even a major boost in revenue through higher taxes, along with entitlement reform—both of which would be heavy lifts in a polarized Washington, D.C.—may do little to lessen that squeeze. We’re likely to see the steady shrinking of a pot of money that goes to not only science, education, and the arts, but also to NASA, the EPA, housing and community development, infrastructure, national parks, the Department of Energy, and so on. Already, according to one analysis, “the share of national income going to these programs…is rapidly approaching the lowest level (measured as a share of the economy) in at least five decades.”
The upshot is that we’re moving into an era in which dreamers who want to see big advances in areas like the arts, science, and higher education often feel they should be talking to people like Elon Musk, Paul Allen, or Alice Walton—the billionaires who actually have the resources to make stuff happen.
When philanthropists step into the breach left by a hollowed-out public sector, one reflex is to feel gratitude. I certainly felt that way, for example, when Jim Simons told me the story of how he had sounded the alarm for years about the decline of U.S. math education, an area he knew well, only to be ignored by Washington. Finally, he started funding a new program with his own money, Math for America (which now draws some state funding). That’s obviously a good deed. And, just as obviously, it’s troubling that it takes the wealth of a private citizen to tackle a problem that affects the entire U.S. economy.
The new mega-givers are not the villains in this story. Simons and other high-minded donors like him are coming along at a very fortuitous moment, and we should indeed be thankful as more of them step forward. Most are just trying to do a good thing. But as their power grows, so, too, must the scrutiny grow of how that power is used, along with the larger changes in U.S. society that are acting to amplify that power.