Big philanthropic investments a bright spot for HBCUs amid financial uncertainty worsened by pandemic

With the COVID-19 pandemic exacerbating an already challenging financial environment, several historically Black colleges and universities (HBCUs) have received welcome news of large philanthropic investments, including record-breaking donations to Howard University, Spelman College, and Morehouse College. HBCU leaders have greeted the high-profile giving with cautious optimism, hoping it’s the start of a trend that will help address the historical financial disparities between HBCUs and predominantly white institutions (PWIs). 

Summer of historic gifts

Philanthropist and author MacKenzie Scott this week announced giving totaling $1.7 billion to 116 organizations, including a number of HBCUs. Her $40 million gift to Howard University is the largest single-donor contribution in the school’s history; she also made eight-figure gifts to other HBCUs and HBCU advocacy groups, including Spelman College, Morehouse College, Xavier University of Louisiana, Hampton University, Tuskegee University, the Thurgood Marshall College Fund (TMCF), and the United Negro College Fund (UNCF), The Washington Post reports

“The organizations [receiving gifts] offer a daily reminder that we can each carry more than we imagine,” Scott wrote in a post on Medium announcing her philanthropic donations. “And they offer an opportunity to invest our good fortune in change, no matter what form our good fortune has taken.”

Scott’s historic donations to HBCUs follow the June announcement by Netflix CEO Reed Hastings and his wife Patty Quillin that they were committing $120 million to Spelman and Morehouse colleges and UNCF, which funds scholarships for students at 37 private HBCUs. Meanwhile, Dominion Energy recently awarded $35 million to 11 historically Black colleges, to be distributed across the next six years. According to a company spokesperson, the colleges were chosen based on “opportunities to make immediate impact,” and the grants will be used for operating costs, “urgent” capital needs, institutional endowments, and scholarships.

A moment or a movement to address historic disparities?

“We hope this is a pattern that is not simply a moment,” Brian Bridges, UNCF’s vice president of research and member engagement, tells EducationDive. “We hope that this is a movement that directs more investment toward HBCUs in the long-term.”

Such investment could begin to address the financial imbalance between HBCUs and PWIs, a disparity that is particularly stark when viewed through the lens of endowments: In 2019, all HBCU endowments together totaled just over $2 billion, while 54 PWIs had more than $2 billion in their individual institutional endowments. 

The financial disparity derives from broader systemic issues, including discrimination in lending policies and disproportionately harsh accreditation scrutiny. In addition, the wealth gap experienced by Black people means that HBCU students need more financial aid and can’t give as much in donations after they graduate—especially if that financial aid came in the form of loans, which deepens their debt burden.

Related: HBCUs experimenting to reduce students’ debt burden

“A lot of times, I’ll hear people say, well, alumni don’t give to HBCUs or people don’t give to HBCUs. And one thing that we have to remember is African Americans don’t have the same kinds of assets,” Marybeth Gasman, director of the Rutgers Center for Minority Serving Institutions, told Marketplace

The coronavirus pandemic has only exacerbated this disparity for HBCUs, most of which rely on strong enrollment numbers to sustain revenue. 

“I typically have certainty around a number of very critical components to the university’s financial position,” says Sidney Evans, chief financial officer at Morgan State University, when discussing uncertainty about enrollment projections. And with lower tuition rates than PWIs to begin with, HBCUs are “behind the eight ball from the very beginning.” 

Recent gifts disproportionately benefit a few big names

Lesser-known HBCUs also operate at a disadvantage compared with renowned institutions like Howard, Spelman, and Morehouse, who have largely been the beneficiaries of recent philanthropic trends. 

Gregory Price, professor of economics at the University of New Orleans, says this trend holds across higher education, where prestige attracts more donations. 

“You see the same thing in Black colleges—they’re known, they’re highly visible. So if you want to make a high philanthropic mark, you give to those.”

Why are they more visible? In part, because of financial resources, according to Shaw University President Paulette Dillard. “The reasons those institutions attract funding at a higher rate and are more visible is simply because they are much better funded than some of the rest of us,” she says. “With higher visibility comes people wanting to back a winner.” 

According to Inside Higher Ed, almost 80 percent of Shaw’s student population qualifies for federal Pell grants, compared to 40 percent of the entire undergraduate population across higher education institutions nationwide. With what Price calls a “shoestring budget” and a need to increase the university’s endowment, Shaw’s leadership, like that at many other HBCUs facing financial challenges even before the pandemic, have had to double down on fundraising efforts to stay above water.  

“We are lovingly known as the mother of the other HBCUs,” Dillard says, noting that Shaw alumni went on to found other southern HBCUs. “If all of us could tell our stories to the right audience and people can see what a difference we’ve made with very little, imagine what we could do with a sizable investment.”

Memphis-based LeMoyne-Owen College will offer one vision of that scenario, after receiving a $40 million gift—quadrupling the college’s existing endowment of $13 million—from the Community Foundation of Greater Memphis earlier this summer, the Commercial Appeal reports. With 90 percent of its student body qualifying for financial aid, the school had been struggling financially even before the pandemic but still was doing “transformative work,” the Foundation President Bob Fockler said. With the gift, Fockler noted, “we are committed to ensuring that work continues to benefit students and their families for years to come.”

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