Expanding Schools of Business

  • Prosperity
  • 2008

Business education has been an American specialty ever since Joseph Wharton’s gift launched a special school at the University of Pennsylvania (see 1881 entry in this same section). Philanthropy remains the lifeblood of these institutions.

The largest recent gift in this area was a $300 million donation to the University of Chicago graduate school of business by David Booth in 2008. He and Rex Sinquefield, both Chicago MBAs, founded a money-management company and built it into a $300 billion fund. Having served as a research assistant to Nobel-winning economist Eugene Fama at Chicago, Booth applied many academic techniques of analysis in building his firm. Wishing to express his gratitude to the university, he made his large benefaction to the business school right in the teeth of the economic turmoil of 2008, when universities were struggling with large endowment losses. Booth’s gift was not only the biggest ever received by the University of Chicago, but also the fattest given to any business school nationwide. Renamed the Booth School, Chicago’s program is now ranked among the top U.S. MBA programs.

Among many other large gifts to business schools to recent years, here are some illustrative examples: The $200 million that real-estate developer Stephen Ross has given to the University of Michigan. Fisk Johnson’s $150 million endowment for the Cornell school in 2017. Investor Robert King’s $150 million donation to Stanford to encourage entrepreneurship overseas. John and Marion Anderson’s $142 million of support for UCLA’s school of business (which allowed it to entirely cease dependence on state funds). Real-estate investor Ernest Rady’s $130 million to build up the MBA program at the University of California, San Diego. David Tepper’s two grants to Carnegie Mellon University, focused on its business school, totaling $122 million. Nike founder Phil Knight’s $105 million gift to the Stanford b-school. (Knight also made a huge $400 million gift to Stanford that was funneled through the graduate school of business, for a program to “train global leaders.”) Florida State named its business school after Jim Moran after his widow Jan donated $100 million in 2015. In 2010, Henry Kravis gave $100 million to the Columbia Business School, and Ron Perelman offered the same sum to the same campus in 2013. When Marion Anderson donated $100 million to UCLA’s business school in 2017, that brought her family giving to that institution to $142 million in total. Fully 44 gifts of $40 million or more have been made to graduate schools of business around the country just between 2000 and 2017.

A philanthropist named Jeff Sandefer donated not only money but his full time to create an entirely new MBA program called the Acton School of Business. It grants MBAs focused wholly on entrepreneurship, using an unconventional curriculum and school structure. Acton instructors are successful businessmen themselves, and there is no tenure. The program relies on actual business cases and hands-on experience. Instead of conventional courses in finance, marketing, accounting, etc., classes are on topics like “customers” and “raising money.” Students have to sell items door-to-door, over the phone, and through a website, and they have to negotiate a real discounted sale with some merchant, or they cannot graduate. The first portion of academic work is done online, then candidates come to the campus and work intensively on a compressed schedule. This allows MBAs to be earned in one year, and, along with philanthropy donations and the fact that some top professors draw no salary and rely instead on their entrepreneurial income, lets students acquire their MBAs for about $50,000 instead of the typical price of two or three times that. Afterward, Acton graduates enter commerce much differently: while only about 5 percent of students at a conventional top MBA program start their own business right away, a quarter of Acton students do so within two months, and another quarter say they will soon.