Fundraising in academia and the Epstein problem

In the high-rolling context of academic philanthropy and fundraising, convicted sexual predator Jeffrey Epstein made gifts to elite universities, including Harvard and MIT, that were modest in size and impact. Had his sordid crimes and recent suicide not attracted massive media attention, his gifts would likely have gone unnoticed by few beyond those directly benefiting from them.

But donations he made to the MIT Media Lab after his 2008 conviction, and revelations by The New Yorker’s investigative journalists that the Media Lab covered up key details of his philanthropy, provoked the resignation of Joi Ito, the Lab’s well-connected director, and could threaten the reputation of other university leaders pending external investigations of who knew what when.

What was the context in which events like this might occur?

Philanthropy is essential to the operating budgets and long-range planning of academic institutions. Though this might come as a surprise to some, philanthropy may be more important for the largest and most elite research-intensive institutions, despite their endowments. Their broad scope of activities create continuously increasing financial needs and many giving opportunities, and their reputations confer advantages on those associated with them. When U.S. universities hire presidents and deans, fundraising is an explicit expectation. Along with other less quantifiable metrics, it’s a major criterion for judging their success.

The sources and uses of philanthropy vary. Alumni giving is universally sought, providing modest but reliable support for operations. Funds are also pursued for specific functions, such as scholarships, facilities, and research. Philanthropists, whether or not they are personally connected to the institution, are often vital to funding new initiatives.

When I was the dean of Harvard Medical School, a $30 million gift from a donor who chose to remain anonymous allowed the school to launch an ambitious and much-desired Center for Primary Care. Based on our budget after the recession of 2008, the center would not have begun without that gift. Large gifts established the Broad Institute of Harvard and MIT and the Wyss Institute for Biologically Inspired Engineering at Harvard.

The immense gifts needed to build endowments are increasingly given in exchange for naming existing schools, like the University of Pennsylvania’s Perelman School of Medicine ($225 million), the David Geffen School of Medicine at UCLA ($200 million), and the Harvard T. H. Chan School of Public Health ($350 million).

The pursuit of philanthropy is consistent with institutional missions and goals as they are generally understood and accepted. Leaders who wouldn’t plan to seek such donations would never be offered their positions. That said, the potential effect of philanthropy on academic governance must be carefully managed, and this seems to have been a problem at the Media Lab, whose operations didn’t resemble any academic organization I am aware of.

The work of fundraising is the job of development offices, often of considerable size, with functions that include research, finance, communications, event planning, and donor outreach. These efforts may be fully centralized or distributed to schools or units with central administrative guidance and support. Development leaders are chosen by and report to presidents and deans, who strategize priorities, decide on development budgets, and meet, often multiple times, with selected groups and past and potential donors of the greatest capacity.

Few institutional leaders spend less than 20% of their time on fundraising broadly defined, and many considerably more. During my deanship, we planned and launched a $750 million capital campaign, and completed it in early 2018. My fondest memories of it were the many opportunities to meet and befriend remarkable philanthropists whose generosity supported the several missions of the school. Of course, not every ask received a positive answer, so disappointment was also an expected part of the process.

The consideration of academic philanthropy raises many meta-issues. First is whether the intensity of institutional leaders’ roles in fundraising is a good thing. Can it become excessive, resulting in inadequate attention to important academic issues? There’s no simple answer to that question, but I strongly suspect there are cases of excessive attention to fundraising compared to other academic goals. Since fiduciary boards are themselves committed to fundraising, oversight in this domain may be challenging.

A second issue results from donors who seek through their gifts to obtain excessive influence over academic directions. The bigger the gift, the more this occurs. This may arise from the donor alone, or through alliances between a donor and specific faculty members who have gained the donor’s confidence and employ the leverage of a large gift. Of course, terrific ideas worth implementing can and do arise outside the walls of academia, but donors sometimes push for programs or directions that leaders see as misguided. Leaders must balance trade-offs between the desire to land major gifts and the need to avoid those with the potential to corrupt the integrity of the institution’s governance and mission.

A third issue directly relates to the Epstein-related Media Lab fiasco. How should institutions go about assessing the worthiness of individual donors?

On a practical level, this differs across levels of giving. At the lower level that involves the largest number of donors — think annual appeals to alumni — there may be little or no attention to donors’ reputations: send a thank you letter and cash the check. As giving levels rise, let’s say to gifts of $50,000 to several million dollars, development staffers would be expected to Google the donors and base further inquiries on any worrisome reputational findings that emerge. At the highest level, and especially when naming opportunities are involved, detailed reputational evaluations of prospective donors must be the norm. Few such cases rise to the attention of presidents and deans, but those that do are quite consequential.

What might block an institution from accepting gifts from specific donors, to protect their reputation and a clash with institutional mission and values? The most obvious, as in the Epstein case, would be a donor accused or found guilty of a significant crime. A variant would be gifts from an autocratic country like Saudi Arabia, guilty of human rights violations or even murder.

Donors involved in non-criminal but embarrassing personal or professional events are also reputationally problematic. Another class of objections relates to politics, such as a donor whose political views and funding of causes that are not popular in the recipient community create angst about naming opportunities. David Koch, a prominent philanthropist who died last month, is a relevant case study. Though his politics were opposed by many, his substantial philanthropy was accepted by diverse New York arts institutions and several leading cancer centers, including the Koch Institute for Integrative Cancer Research at MIT, presumably following internal debate about balancing potential adverse effects on image and reputation against the benefits to mission.

Whatever the potential objections, institutional decisions about donor fitness are most critical before gift agreements are signed, though issues arise when previously unobjectionable gifts are followed by subsequent donor offenses or embarrassments or revelations. Major gift agreements may or may not stipulate future conditions that can trigger revocation of an agreement or naming rights.

Despite appropriate vigilance and integrity, problematic donors will periodically emerge, and institutions should be judged by how they respond to them. In my view, it’s most important that institutional leaders take responsibility for such issues. The all too common approaches of “no comment” statements or institutional silence reflect weakness, and make ultimate resolution more difficult.

When issues of donor behavior and reputation arise after a gift’s consummation, sometimes many years later, resolution may be especially difficult, possibly involving contractual complexities. Such instances are quite uncommon. In such cases, institutional choices range from stating that the university doesn’t comment “on individual gifts or their status,” expressions of regret, returning the gift, or pledging to provide an equivalent sum to a charity linked to the donor’s offense.

How to handle naming rights after later revelations of donor improprieties is another tough issue, unless stipulated in advance. It’s most important that presidents and deans speak honestly, in a timely fashion, and avoid any semblance of a cover-up. Nothing could be worse than that.

It’s also important to distinguish between an institution’s acceptance of a gift and the practice of faculty members interacting with — or riding on the plane or having dinner with — reputationally challenged donors. I am continually surprised to learn of faculty members who were unaware of the reputations of people who appeared on their schedules, believing — in the mode of the absentminded professor — that they would be alerted by someone who knew better. Others simply placed the wrong bet.

All faculty should learn from the Epstein affair to pay more attention to the reputations of potential donors. Though the fundamental right of association of faculty members should not be tampered with, errant decisions may harm their reputations, even when the errors are honestly made.

Despite the imbroglio of Epstein’s funding of the MIT Media Lab, we shouldn’t lose sight of the fact that fundraising is important to the health of higher education and the world of biomedicine in which I have lived, and it occurs on a daily basis without any of these issues arising. During my nine years as dean of Harvard Medical School, I met many philanthropists whose accomplishments and character I greatly admired, and was fortunate never to have encountered the need to reject a gift from a donor of questionable character.

Philanthropy can provide enormous benefits, and should be encouraged, but it can also create terrible reputational damage when a donor turns out to be toxic, especially if the response to it is mishandled. It’s in academic leaders’ job descriptions, written and unwritten, to manage the approach to fundraising and the problems that sometimes arise from it with transparency and integrity, so as to maximize philanthropy’s obvious benefits and reduce its much less prevalent potential harms.

Jeffrey S. Flier, M.D., is Harvard University Distinguished Service Professor and professor of physiology and medicine. He was dean of Harvard Medical School from 2007 to 2016.