What Happens When a Public University Lands Game Changing Gifts?

Phil Knight loves the University of Oregon. He graduated from the school in 1959 and co-founded Nike with his college track coach. He recently told the university president he has “webbed feet” (Oregon’s mascot is a duck). And while he’s given UO millions here and there, including large sums to the school’s athletic program, there’s been nothing quite like the huge donations Phil and Penny Knight have been shelling out lately to other schools.

The Knights last year fulfilled a $500 million challenge grant to Oregon Health & Science University, and this year, gave $400 million to Stanford. So there had been rumblings for a while now that the alma mater was due for a windfall. The eventual gift did not disappoint—a $500 million commitment over 10 years toward an envisioned $1 billion Knight Campus for Accelerating Scientific Impact, which will in some ways reshape the public university in Eugene, Oregon.

That covers a full quarter of the university’s current fundraising campaign, and brings the Knights’ combined giving to universities to around $2 billion. It’s an astounding amount of giving from the athletic wear tycoon, who’s worth $24 billion and has pledged to give most of his money away to charity. In contrast to older billionaire donors who have pumped a lot of their wealth into endowed foundations, or upstarts like Mark Zuckerberg, who created a sort of charitable corporation, Knight is cranking out big checks to schools he and Penny support.

While the Knights have a penchant for campus athletics, they have also supported some big research endeavors. In a period when public funding for science research is vulnerable to cuts and stagnation, private donations like the Knights’ have become an important and welcome source for filling gaps and pursuing approaches that might be overlooked by government sources. UO administration and faculty seem practically giddy over what they’ll be able to do with the donation.

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But as with all of these outsized gifts, the Knight donation raises all kinds of interesting questions about what this means for the university, and in a broader sense, research and higher ed. While it’s still hard to tell exactly how the new campus will play out, there are a few things that set this donation apart right off the bat.

It’s a massive gift—but especially for a public school

A lot of people have developed a real distaste for massive university donations, mainly in the case of wealthy private universities, which are usually the recipients of such donations. The biggest target has certainly been Harvard, which has a $36 billion endowment, but still hauls in billions more in donations from its wealthy alumni. Bloggers and none other than Malcolm Gladwell have turned their flamethrowers on such gifts, calling them immoral, a waste of money, and philanthropy at its worst. Phil Knight even took heat for giving to Stanford.

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While we appreciate the spirit of these arguments—Harvard is looking especially villainous these days with its high-profile labor disputes—we’ve also pointed out the nuances of such gifts, and that it’s an oversimplification to play the “worthy school/unworthy school” game of philanthropy criticism. A lot of these large Ivy League gifts, for example, go toward expanding research—work that struggles for public dollars but has tremendous public benefit.

The UO gift funds precisely that, expansion of research, and there’s been no backlash, because Oregon is a very different kind of school than Harvard or Stanford. As the university president pointed out, Oregon is a relatively poor state, the university is hurting for funding, and more than one-third of its students are eligible for low-income grants. That’s not the usual recipient of such a mega-gift.

But even a large gift to a modest state university raises its own set of issues, especially when you consider the size of the donation in proportion to the school’s finances. That creates a tremendous ability for even one donor to shape a public institution, since they often have at least some level of influence over what their donations benefit.

Consider that UO has a relatively small endowment of around $750 million that it’s been working hard to build up, and an annual operating budget of $932 million. A single donation of $500 million is profound, even spread out over 10 years—not to mention the additional $500 million in mostly private donations it plans to raise to round out the Knight Campus. This term is thrown around a lot these days, but it is truly a transformative gift for a school like Oregon.

With public universities hurting for state and local funding per student, they’re increasingly seeking such private donations to compete, making them potentially more like their private counterparts that bank on wealthy alumni to return dividends.

As UO President Michael Schill told the Oregonian, "We're playing the game that private universities have played for so many years, which is to look to their alumni to be able to support new innovative and spectacular ventures."

It’s about expansion

Oregon, like many state schools, has been hurting financially. The state legislature capped property taxes back in 1990, cutting into local funding. State funding per full-time student for Oregon’s public universities dropped 41 percent between 1994 and 2014. That’s led many schools to turn to higher tuition, more out-of-state students, or increased fundraising.

The Knight gift won’t resolve the university’s funding woes, in the sense that it’s a new endeavor to build a “campus within a campus.” That includes a vision for three new 70,000-square-foot buildings, 30 new teams of scientists and support staff, 550 student researchers, and a 30 percent overall increase in annual sponsored research activity.

The school announcement points out that the Knight Campus does not divert dollars away from other areas, but neither does it address other funding needs throughout the university. In other words, this is its own thing.

Knight and the administration hope that it will make UO more competitive, drawing new elite faculty members and top students. Again, Schill says, “We’ll fight as hard as we can to keep our state funding, but it’s not even enough to pay our operating funds. It’s not going to be the answer to do new competitive things.”

Big donations often present tension between the need to cover existing operations and the desire to build new, flashy attractions. More often than not, donors want something new and exciting to attach themselves to, something we see in everything from city parks to art museums. And while recipients might prefer a no-strings check, the idea of a new high-dollar endeavor certainly has appeal, injecting a new dose of prestige. That’s the route the Knight gift is taking.

It will change how research works and strengthen industry ties

So what will the Knight Campus do, and who came up with it? According to the university, the idea came from faculty, who pitched to the president a plan to speed up the research and development cycle to create products and applications based on the school’s discoveries.

This is a notably different approach than a lot of academic research gifts. For example, some of the more typical uses of private donations include:

expanding or creating a new department in one field (like Knight’s OHSU cancer center gift or Harvard’s big engineering gift);
an interdisciplinary department in a field such as data science or sustainability, bringing together faculty members behind a promising field;
creating endowed professorships or other positions in certain departments;
expanding facilities or tools;
unrestricted funds for individual researchers (think HHMI).

The Knight project is unique in that seeks no such specific outcome or subject that it’s supporting, nor is it tied to any researcher or team’s work.

Instead, it focuses on how the school’s research plays out. University of Oregon’s existing research is primarily in fundamental science (no application intended), and it doesn’t have a medical or engineering school, leaving other institutions to take its discoveries to the next step.

The goal of the new center will be for on-campus researchers to take a finding, say in the school’s renowned work in zebrafish genetics, and start working on applications and products. Initially, hiring will be in life sciences, but is expected to expand into other fields.

It’s a little hard to say exactly how all that will play out, in terms of who actually gets money for what. But one definite implication of the Knight gift will be forging tighter ties with industry, a huge trend we’re seeing in campus giving. So many campus donations these days, especially corporate gifts, are creating these tightly knit relationships between schools and surrounding companies, building pipelines between campuses and industry.

The school, and likely a lot of state officials, are hoping the Knight Campus will attract a bunch of new business to the area, sited in the shadows of Silicon Valley and Seattle. After it’s up and running, the school is estimating an impact of $80 million in annual statewide economic activity. The Knight campus also will provide students with training to enter “the fast-paced innovation economy.”

You could imagine they’re going for something like the biotechnology hubs in Greater Boston and the Bay Area, where elite schools rub shoulders with large and startup private industry firms.

There’s no reason to believe this is somehow masterminded by Phil Knight, or even that this approach is different from what the university might do if its coffers were full to the brim with public funding. But it’s important to watch how private money is reshaping state universities, and this will be a big case study.

The University of Oregon is on track to be a very different place, thanks in large part to one generous billionaire and his webbed feet.