The ‘mega gifts’ transforming financial aid

This week, The Chronicle of Philanthropy explored the impact of “mega gifts” for students from underserved communities, highlighting former Mayor Michael Bloomberg’s 2018 $1.8 billion donation through Bloomberg Philanthropies to his alma mater Johns Hopkins University. The donation, the largest gift to a U.S. academic institution, ensured that students would be admitted through a need-blind process and receive loan-free financial aid packages that meet their full demonstrated need.

Bloomberg’s gift is one of several high-profile gifts in recent years intended to increase college access for low- and middle-income students, who typically face multiple barriers to a college education.

A ‘trend’ in philanthropic gifts

Big-dollar donations funding scholarships to elite institutions have become “a trend” among philanthropists eager to leave a “specific and enduring” impact, William Foster, a managing partner at Bridgespan Group, a philanthropy consultancy, tells The Chronicle. These gifts come as the annual sticker price at a handful of institutions could reach close to six figures annually as early as next year. Most college students receive need- and/or merit-based financial aid and do not pay full tuition, but “many, many times the financial aid is not enough to make it affordable for students who are low-income,” Sarah Reber, an economics studies fellow at the Brookings Institution, tells The Chronicle.

In March, Albert Einstein College of Medicine received a $1 billion donation from former professor and board chair Ruth L. Gottesman, Clinical Professor Emerita at the school and widow of Wall Street financier David S. Gottesman, and Dartmouth College received its largest scholarship bequest ($150 million) from alumnus and former Time Warner CEO Glenn Britt and his wife Barbara. In January, Spelman College received $100 million, the largest single donation to a Historically Black College or University (HBCU), from businesswoman Ronda E. Stryker and her husband, William Johnston, chair of Greenleaf Trust. Since 2018, Home Depot co-founder Kenneth Langone and his wife Elaine have donated a total of $300 million to New York University’s medical schools to provide tuition-free medical education. 

Who benefits from big donations?

Bloomberg’s $1.8 billion gift “transformed what we’re able to do, and it’s transformed our student body,” allowing the university to reduce college costs for low- and middle-income students in the midst of tuition increases, says Johns Hopkins Vice Provost David Phillips. University officials say that, in the five years since Bloomberg’s donation, the student population’s academic performance and diversity has risen. Among Johns Hopkins’ 1,300 first-years, the percentage of first-generation college students grew from 11.8% in 2018 to 19.4% in 2023. First-generation, limited-income students, described as having minimal to no financial contribution or other sources of funding, meanwhile rose from over 20% to close to 30% of the student population.

But Johns Hopkins is just one institution, and a highly selective one at that, experts point out. While elite institutions tend to have strong student outcomes, most undergraduates do not attend highly selective schools due to academic, financial, and other barriers. Experts wonder about the impact large gifts could have at less selective four-year institutions and community colleges, which disproportionately enroll students from underserved communities and tend to have fewer resources to support them. 

The Chronicle article also highlights wider-ranging programs providing tuition-free education, such as Michigan’s Kalamazoo Promise program, which is funded by anonymous donors and covers 100% of students’ tuition and fees for the city’s high school graduates to attend various higher education institutions in the state.

Bloomberg recently emphasized the national importance of higher education affordability in an April 3 LinkedIn post calling attention to the mission of the American Talent Initiative, of which Georgetown University is a founding member, to expand higher education access for low- and middle-income students. “If we want America to remain the world’s greatest meritocracy, a place where the American dream isn’t defined by class or color, then educational institutions must lead the way,” he writes.

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