When Money Doesn't Talk

Yale's never-ending story

Remember Yale’s abortive effort to establish a formal Western Civilization program? Of course you do—The Wall Street Journal brought national attention to the story of how the school ended up returning a $20 million donation from Lee Bass (Class of ‘79) that had been negotiated in 1991 with then-president Benno Schmidt and then-Yale College dean Donald Kagan. In 1995 Yale erupted over charges that the $20 million was lost because new (and current) president Richard Levin chose to side with powerful forces in the faculty and administration who objected to elevating Western culture above other cultures. It was high time, after all, to make room for the growing claims of ethnic, “gender,” and minority cultural studies.

Time has passed, Yale has moved on, and the Western Civ proposal envisioned by Schmidt, Kagan, and Lee Bass does not appear likely to be revived any time soon. Meanwhile, despite the fiscal and resource constraints cited by the University in rejecting the original Bass proposal, Yale has managed to find the wherewithal to launch a new program in Ethnicity, Race and Migration (ERM) and to bolster resources for gay and lesbian studies (as described in a detailed report in the conservative campus journal Light and Truth). Ironically, core learning about the fundamentals of Western civilization has become yet another “special interest” area for study, on a par with feminist literary analysis and Yale’s own new ERM major (which, being a special course of study, actually outranks Western Civ at Yale).

Why should this tale continue to concern either academia or the world of philanthropy? The answer is: because the incident, and its little-publicized aftermath, may suggest lessons for donors concerned about ensuring that their intent is honored, especially when the beneficiary in question is a large and well-endowed university.

Indeed, the Yale-Bass controversy illustrates the problem of donor intent in an unusually stark fashion: instead of wayward foundation officers straying from the donor’s wishes decades after the old man’s death, we have the recipient, Yale, deviating from the donor’s understanding just a few years after the gift was made (for the record, Yale disputes that it went outside its original understanding with Lee Bass).

Not only was Mr. Bass unable to make his original intent stick, he was unable to reach any subsequent accommodation with Yale that would, to his satisfaction, honor the original concept of a new program in Western studies. Nor has he (or any of the forces allied with him in the greater Yale community, particularly the Class of ‘37), succeeded in reviving anything like the original Schmidt-Kagan proposal at Yale. Why did Yale find it so easy to blow off a cool $20 million?

Wallets Are For Touching. . .

One answer to the question may be, as Fortune reporter John Rothschild wrote nearly two years ago, that at the time it returned the Bass gift, “Yale already had more money than it knew what to do with.” Rothschild noted that around the same time, Yale had launched a capital improvements program. But instead of tapping the huge endowment, “it launched a $1.5 billion renovation campaign and asked the alumni to give once again. Alumni wallets are for touching; endowments are for growing.”

It is difficult indeed to tell a donor how to exert leverage over a worthy recipient so well-endowed that even a $20 million gift is treated as marginal. But how about a $500 million gift? According to a number of Yale alumni who seem reliably informed, Lee Bass’s father Perry had been prepared to give Yale a gift of that magnitude, but has become so disenchanted by the University’s treatment of Lee’s gift (and its aftermath, as discussed below) that he will at least defer acting on that gift for now. Nor should any of this be news to President Levin. In a letter to the Yale president dated November 4, 1997, Donald Cummings (Yale ‘46) recalled a recent conversation with Schmidt and Levin at which the former Yale president confirmed the magnitude of the proposed Perry Bass gift, and Levin (according to Cummings) called it “a done deal.”

Tom Conroy of Yale’s public affairs office had no comment to offer on the alleged $500 million gift from Perry Bass, but noted that the only public sources claiming this was Bass’s intention were alumni interested in the Western Civ issue. Conroy did not claim there had been no discussions between Perry Bass and Yale on the matter, but agreed that such sensitive development matters would be kept confidential in any case.

Changing circumstances may yet induce Yale to work harder at pinning down such generous offers. Its $6.6 billion endowment is flush not just because of alumni loyalty, but because of the long-booming economy and stock market. Conceivably a little recession would make the University more receptive to friendly offers from people like the Basses. Or perhaps there are deeper-seated forces at work here.

. . .And Alumni Are For Testing

Whether you agree with their goals or not, it is indisputable that those seeking to bolster Western studies at Yale—including Benno Schmidt, Don Kagan, Lee and Perry Bass, and the Class of ‘37—have consistently pursued their objectives as loyal members of the Yale community. Lee Bass appears to have made a good-faith effort to rescue his initial grant after Yale dithered and deviated on implementing the new studies program, and to this day, members of the Class of ‘37 are working with the University to generate more funds for Yale’s Directed Studies program, which the school had modestly beefed up as one way to assuage the Western Civ advocates (this after ‘37’s own backup plan to raise money for a similar program got a thumbs-down from the school hierarchy). For their part, Schmidt, Kagan, and Perry Bass have conspicuously refrained from any public criticism of Yale.

Yet Yale, a great university that remains more attentive to the multicultural zeitgeist than to the ideals of a common heritage of learning, has continued to test the loyalty of alumni. As reported over the past two years in The Weekly Standard, The Wall Street Journal, Inside Academe, and Light and Truth, the University won’t even come clean with alumni about what actually happened with the original Bass grant. After appointing special investigators to look into the matter and report back to Yale (the investigators were Federal Judge Jose Cabranes and Lucent CEO Henry Schacht), the University has refused to share the results of that investigation with interested alumni.

Nor, in all likelihood, does Yale have any legal obligation to do so. Like most universities, Yale has procedures and practices that give management ample discretion in sharing information only when it deems that necessary. The problem in this case is that Yale alumni present at a May 1995 briefing on the controversy by William Draper III (representing the Yale Corporation) report that administration representatives assured them that the findings would be made public, and in fact used the very investigation as a means to mollify alumni concerned that Yale was drifting far from sound academic moorings.

In fact, reportedly it is this final insult—the refusal to come clean—that has sealed, at least for now, Perry Bass’s decision to withhold any major gift to Yale. Yet other members of the Bass family have continued to give to Yale, including Lee’s brother Robert. Philanthropy was unable to reach Perry Bass for comment, and indeed his unwillingness to comment on the controversy suggests that whatever his feelings, he remains a loyal alumnus. The Class of ‘37, meanwhile, continues its efforts to leverage at least a modest nod from Yale toward Western civilization in the curriculum.

Exit or Voice?

How can loyal alumni reconcile their admirable regard for traditional institutions with their desire to uphold traditions of learning which those very institutions reject? In his classic study of how organizations and institutions respond to pressure, Exit, Voice, Loyalty, Albert Hirschman juxtaposes the options of abandoning an institution, or of remaining with it, despite frustrations and obstacles, in order to seek a “voice” within the institution. In summarizing his work (and touching on the early work of Ralph Nader in raising the “consumer’s voice”), Hirschman says “Exit is not usually undertaken for the purpose of gaining more influence than one had as a member. That is nevertheless the way it often works out, especially when exit is a highly unusual event.” If Hirschman is right, the friends of Western Civ at Yale might advance their cause more effectively with a well-publicized, coherently thought-out plan for advancing their goals outside of the Yale community—preferably a plan that visibly brings a large number of potential Yale alumni donations with it.

The Class of ‘37 and its allies are not likely to go that far. But unless the forces of traditional learning and the proponents of a common yet evolving core of knowledge at the heart of liberal education are willing seriously to contemplate such steps, their progress is likely to be sporadic and limited at best. If nothing else, Yale’s “legally accurate” defense of its actions may spark a real debate over what donors like the Basses should do when endowments reach Yale-sized proportions and the principled concerns of alumni go for naught.

This article was originally published in the November / December 1998 issue of Philanthropy magazine