Some of the most powerful people in business have taken aim at universities over their response to Hamas terrorist attacks on Israel and allegations of anti-Semitism.
Mark Rowan, chief executive of Apollo Global Management and a major donor to the University of Pennsylvania, has called for the resignation of the school’s president and its president. Former Ambassador Jon Huntsman stopped donating to the school and Estée Lauder Cosmetics heir Ron Lauder said he was “re-examining” his financial support.
Donors accused Penn of inconsistently applying its free-speech values. Clifford Asness, chief investment officer of AQR Capital Management, wrote in a letter to the university’s Wharton School this week that he was “disappointed by the long-standing move away from true freedom of thought” and would not consider donating unless That “meaningful change may not be evident.”
At Harvard, Israeli billionaire Idan Ofer and Victoria’s Secret founder Leslie Wexner have severed ties with the school after student groups signed a petition blaming Israel for the Hamas attack.
Large donors to universities have long expected special treatment, such as priority for their children’s applications. But these demands are aimed at shaping the core values of universities and unseating the top leadership.
Universities helped create the expectation that donations come with influence. Like most nonprofits, American universities enhance relationships with certain donors by providing them seats on their boards of trustees. The job comes with real power: Trustees vote on decisions like tenure and the selection of the university president. For smaller donors, schools sometimes offer membership in alumni councils or advisory boards, which do not come with fiduciary responsibilities but provide a forum to influence decisions.
The question is how far the influence of individual donors should extend. Law professor Edward Rock said, “The job of a college or university president is very difficult because, on the one hand, he has to keep the trustees happy – because they are big donors and because they can fire the president. ” said the one specializing in corporate governance at New York University. “At the same time, he must ensure that the academic mission of the university is not compromised by external forces, be they political forces or economic forces.”
This potential conflict is not new. In 1995, Yale returned a $20 million gift from a billionaire alumnus because he sought to select professors in the Western Civilization program he funded. Leaders of Penn’s Faculty Senate argued in a letter this week that the university’s president and president are under pressure to resign over a Palestinian literature festival held on campus, which donors say presented anti-Semitic views. The donors who pushed for it had gone too far.
He wrote, “Academic freedom is at the heart of our educational and research missions.” “And we demand that it remain free from internal or external pressure or coercion.”
Even the best-funded universities work to retain large donors. The endowments of elite universities are as large as some of today’s most famous funds. Penn has an endowment of $21 billion. Harvard is $50 billion, Even with such a large treasury, the apparent exodus of money makes sense, experts told DealBook.
Criticism from well-known businessmen can influence small and future donors. And often, donor contributions are allocated to specific programs, meaning universities have less cash to spend freely than headline sums.
“No matter what happens, it’s going to create a crisis for their operating funds,” said Larissa Rees, a consultant with Ashley Rountree & Associates, who advises schools on fund-raising. “Even Harvard, with its resources and endowment, still needs an annual endowment to keep some basic things running at the university.”
Not all of Penn’s major donors are willing to withdraw support over the current debate. Blackstone Group CEO John Gray, who along with his wife donated $55 million to Penn cancer Research and for $10 million supporting low income childrenSaid this week that he would continue to support the university despite Rowan’s campaign.
“They are long-term missions for us,” Gray told Bloomberg. “The decision about his future,” he said, referring to the university’s president, “remains with Penn’s Board of Trustees.” – Lauren Hirsch
In Case You Missed It
Representative Jim Jordan is out as a candidate for House Speaker. After the far-right Ohio lawmaker failed to win election as speaker for a third term on Friday, Republicans voted to remove him as a candidate. There is no consensus among Republicans about an alternative candidate, as the House is stalled.
Netflix shares surged on strong subscriber growth. The streaming giant reported better-than-expected earnings on Wednesday, despite film and television production coming to a near halt due to the Hollywood strikes. Netflix added nearly nine million new subscribers last quarter, even as it stepped up its crackdown on password sharing. Investors are also happy with the news that it will raise prices on some subscription plans.
Jay Powell has left the door open for further increases in interest rates. The Federal Reserve chairman signaled on Thursday that the central bank was prepared to leave rates unchanged at its meeting in November, but could raise rates later if data shows the economy is running too hot. Powell said policymakers are also keeping a close eye on geopolitical tensions. Oil prices have risen in recent days due to turmoil in the Middle East, which could increase inflation and weigh on growth.
The US deficit doubled last year. The Treasury reported a deficit of $1.7 trillion for the 2023 fiscal year, which ended Sept. 30, but the total actually reached $2 trillion when taking into account President Biden’s student-loan plan and its demise. Republicans have blamed excessive federal spending for the shortfall; Democrats have pointed to Trump’s tax cuts. It appears the big culprit is lower tax revenues unrelated to those cuts.
right way to fail
Amy Edmondson, management professor at Harvard Business School, is an expert on what makes teams and organizations successful. His latest book, “The Right Kind of Wrong,” argues that a key part of that puzzle is the willingness to fail.
DealBook spoke to Edmondson about why failure can be useful if done right. The interview has been condensed and edited.
You call one of your concepts “intelligent failure.” How is it different from a mistake?
For a mistake to occur, there must be a prescription to be used and it was not used. An intelligent failure is one that occurs in new territory in pursuit of a goal, where you had good reason to believe that what you tried could work.
You’ve written that a healthy relationship with failure allows people to “play to win” rather than “play not to lose.” What do you mean by this?
When we play to avoid losing, we do not take risks. We go for good enough. This is more definite than stretch goals, and therefore safer and more natural to do. But no innovation ever came this way.
How do business leaders avoid creating an organization that encourages people to play, not lose?
Organizations punish people for the things that go wrong rather than rewarding the well-intentioned, thoughtful, smart efforts that those failures represent. I’ve had countless managers at all levels say to me, “I was trying something new, I was innovating, our team learned a lot from it,” but then later in their annual performance review they were like, “Okay. Something along the lines of, ” was heard. We see that you have made this mistake here, and we hold it against you.”
How does your previous work about “psychological safety” impact how managers can create an environment where it is OK to fail?
Psychological safety is an environment where people feel confident enough to take interpersonal risks, which is to speak truthfully about what is really happening. And they believe that they will not be punished or punished or humiliated for such candor. And so it’s important for both innovation and encouraging people to take risks.
It is also important to prevent preventable failures. I am in favor of preventing as many failures as possible due to error in any humanly known area. And this can only happen when people are willing to speak up about concerns or questions they have about something and ask for help when they need it.
Are there any examples that show the wrong kind of failure?
Sam Bankman-Fried provides one of the most visible business failure stories in the news today. The massive failure of his company does not qualify as intelligence. Yes, this was new territory; Yes, he did his homework and was deeply knowledgeable about technology and the markets; And, yes, it was driven by a goal. But the size of the failure is not helpful in providing valuable new information about Bitcoin. And, instead of honest experiments and genuine innovation, lies and deception were built into the business model for a long time.
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