The Bloomberg report makes discusses funding generally, with a focus on the efforts of John Allison, former chairman of bank holding company BB&T Corp. philanthropist’s efforts to get universities to teach Ayn Rand‘s Atas Shrugged, and makes no mention of the Kochs. FSU apparently has also accepted funds from BB&T.
John Allison, former chairman of bank holding company BB&T Corp. (BBT), admires author Ayn Rand so much that he devised a strategy to spread her laissez-faire principles on U.S. campuses. Allison, working through the BB&T Charitable Foundation, gives schools grants of as much as $2 million if they agree to create a course on capitalism and make Rand’s masterwork, “Atlas Shrugged,” required reading.
Allison’s crusade to counter what he considers the anti- capitalist orthodoxy at universities has produced results — and controversy. Some 60 schools, including at least four campuses of the University of North Carolina, began teaching Rand’s book after getting the foundation money. Faculty at several schools that have accepted Allison’s terms are protesting, saying donors shouldn’t have the power to set the curriculum to pursue their political agendas, Bloomberg Markets magazine reports in its June issue.
“We have sought out professors who wanted to teach these ideas,” says Allison, now a professor at Wake Forest University’s business school in Winston-Salem, North Carolina. “It’s really a battle of ideas. If the ideas that made America great aren’t heard, then their influence will be destroyed.”
Allison, 62, is one of a number of wealthy philanthropists who are making bold demands on schools as a condition of giving, says Jack Siegel, a lawyer whose Chicago-based Charity Governance Consulting LLC works with colleges and nonprofit groups.
Seeking to leave their imprint on everything from the direction of scientific research to the performance of sports teams, these benefactors are stirring conflicts when their causes don’t fit with the priorities of administrators and faculty.
Strings Attached
The strings attached to the gifts present university presidents with tough choices: While schools suffering from diminished endowments and government funding cuts following the recession need the money, administrators are sometimes forced to reject the offers to avoid a dust-up on campus.
“I have known some gifts in which the university just could not agree to the terms,” Ohio State University President E. Gordon Gee says. “If there are too many strings attached, you have done yourself a disservice. If someone gave me $100 million to start a school of massage at Ohio State University, I’d have to say, ‘Sorry, it’s just not in our strategic plan.’”
Donors as far back as John Harvard, the first benefactor of what was renamed Harvard College after his death in 1638, have gotten their names enshrined on buildings in a quest for immortality. “They’re building a tombstone,” Siegel says.
….
A C$35 million ($36 million) gift from the family foundation of billionaire Peter Munk has been met with as much scorn as appreciation at the University of Toronto. The money from Munk, chairman of Toronto-based Barrick Gold Corp. (ABX), was used to help create the Munk School of Global Affairs.
Paul Hamel, a professor of medicine, and John Valleau, an emeritus chemistry professor, attacked the university’s agreement to accept the donation in a 7,361-word essay published in February in an online campus magazine. Students also staged protests outside the university’s governing council meetings.
Barrick’s Mines
In the funding deal, the Munk foundation will release the final C$15 million at its own discretion and only if the university meets 23 requirements laid out in a 26-page memorandum of agreement. The professors claim that the structure of the agreement will make scholars at the Munk school reluctant to criticize Barrick, the world’s largest miner of precious metals.
Amnesty International and CorpWatch have alleged that Barrick’s operations have caused pollution and violated the human rights of workers in Papua New Guinea and Australia. In Tanzania, security guards at Barrick’s mines have allegedly shot and killed villagers who scavenge for small pieces of gold. Barrick has publicly denied that it’s responsible for these alleged violations.
“Anti-mining activists frequently make wide-ranging accusations against Barrick, often relying on information that is just plain wrong,” spokesman Andy Lloyd says. “The company is fully committed to responsible environmental stewardship and upholding human rights.”
Front Entrance
The essay also lashes out at the demands attached to Munk’s gift. Among the 23 requirements, the university must stage an opening celebration for the Munk school and hire a media tracking service to evaluate its branding strategy.
The professors were especially incensed at the rule that said lower-level staff will not be allowed to use the front entrance of the building, which they say violates the social norms of a public university.
“The main entrance of the school, remodeled at considerable public expense, is to be restricted to ‘senior staff’ (defined how?), while everyone else, including their assistants and students and even their less-senior faculty colleagues, are to walk around to a back door!” the professors wrote.
President David Naylor posted a spirited defense of the Munk agreement on the university’s website. “Personal attacks such as those we have seen on Peter Munk are a deplorable affront to the values of rational and respectful discourse that are supposed to characterize a university,” Naylor said.
The university also said that critics misinterpreted the requirement about the building’s front entrance, saying everyone was free to use it. Barrick declined to make Munk available for comment.
…
Exxon Donation
Benefactors rarely deviate from the university’s preferred projects, says Martin Shell, Stanford’s vice president for development. “We want to make sure we understand what the donor has agreed to and what we’ve agreed on, to make sure there’s a meeting of minds so there’s no confusion down the road,” Shell says.
Stanford’s tightly scripted fundraising program didn’t prevent a blowup with Hollywood producer Stephen Bing. After Bing pledged $2.5 million for an undisclosed purpose, he learned that Exxon Mobil Corp. (XOM) was running advertisements touting its earlier promise to donate up to $100 million to Stanford to support climate change and energy research.
Bing, who backs environmental causes, demanded that Stanford prevent Exxon from using the school’s good name in its marketing to promote itself as a green company. A group of alumni rallied to Bing’s cause and lobbied the school’s board of trustees to vote their shares in support of a 2007 Exxon shareholder resolution calling on the oil giant to reduce its contributions to global warming.
But that wasn’t enough for Bing, who rescinded his donation in 2007 because Stanford refused to end its relationship with Exxon. Bing declined to comment.
Ayn Rand
Allison, who promotes Ayn Rand’s writings, will likely generate more conflicts on campuses as he seeks to expand his foundation’s gifts to 200 schools nationwide. In 2006, Meredith College in Raleigh, North Carolina, gave up a seven-year, $420,000 grant from the BB&T foundation after some faculty bristled at the president’s decision to accept the money on the condition that the school teach “Atlas Shrugged.”
After Guilford College in Greensboro, North Carolina, accepted a 10-year, $500,000 grant from Allison’s foundation, Richard Zweigenhaft, a professor of psychology, protested the decision in an article for Academe, a magazine published by the American Association of University Professors. He said the appropriate faculty committees weren’t consulted before the school decided to take the money.
“This deal with BB&T was simply an egregious case of the college administration deciding to sell a chunk of the curriculum,” Zweigenhaft says.
As private donors gain more power on campuses, it’s just the kind of shift away from state control that Rand would applaud.
Thanks for your comments, Stephan.
1. Calling shareholders “passive” might be a fair representation of the existing, government-created system – especially for listed, “public” companies, but that’s pretty much my point. This is NOT true of partnership or other traditional types of business organization, and the grant of limited liability itself deliberately signals shareholders that they can turn a blind eye to activities that profit the company while posing costs and risks to others.
Sure, it’s probably not now “fair” to passive shareholders to “attribute vicarious liability to them … for torts committed by employees”, but that is both a strawman and besides the point. The point is that the government grant of limited liability MAKES A DIFFERENCE; the strawman is that I am certainly NOT proposing a new rule that shareholders be assigned liability for acts by corporate employees, but simply that the limitation on liability be eliminated – just as other grants by the government of liability limits (nuclear power, offshore oil drilling, and pollution permitting generally) should be eliminated.
Your assertion that limited liability of shareholders “would also be present in a free society in which private contractual ‘corporations’ arose” is totally unsupported. Can you point to where Rothbard, Hessen or Pilon argue that private contracts that limit liability of investors against voluntary creditors could serve to limit their personal liability against INVOLUNTARY creditors, viz., tort victims?
Just as you, surely, have no objection to private agreements between parties to protect the information created by one of them (private “intellectual property”) but simply oppose state-created IP, so too should you (as a lawyer!) be able to understand that in principle, of course, I have no objection to contract-based companies, but oppose the obvious and important favors granted by the state in the case of all corporations?
2. Not to be missed is that the grant of limited liability is extremely important and consequential:
See: The Cliff Notes version of my stilted enviro-fascist view of corporations and government – TT’s Lost in Tokyo http://bit.ly/9oBkC7
It has allowed owners to divorce themselves from formal reponsibility for the acts of their agents/employees, to divorce themselves from the communities in which their firms act, and to dodge claims of moral responsibility.
So we are left with massive corporations which are massively entangled with government and are powerful buyers of favors, which citizens forever clamor for “more control!”, and which lack any clear locus of responsibility — and in which we find anarchist libertarians like yourself and Lew Rockwell acting as their lawyers, and calling them and their shareholders “the biggest victims” (not the little people on the short end of the stick of projects like Gulf oil drilling, nuclear reactor meltdowns or even mundane health/air/water/soil damage from pollution) whenever bad decisions resulting from government-institutionalized buck-passing results in unfortunate “accidents”.
As Mises long ago noted, moral hazard matters. Mises on fixing externalities: progress along the Kuznets curve is not magic, but the result of institution-building – TT’s Lost in Tokyohttp://bit.ly/cM4iVb
Clearly, our continuing crises in our banking sector are due not simply to money-printing by the Fed, but to massive moral hazard within banks, investment banks and other advisers, all of which can be laid at least in part at the foot of government. Government’s role in guaranteeing deposits has the effect of telling them they get a free lunch, and don’t need to worry about how well the banks invest their deposits – and of shifting to our wonderful government the risk of failure. Government responds by imposing “prudential rules” (like “investment-grade” requirements and capital standards that are always gamed by insiders to put bonuses in pockets, while leaving risks to the banks and thus the government. Somehow – inevitably – the government is always late to diagnose the gaming and to tighten up rules – which, like Sarbanes^Oxley and other rules imposed on super-duper “public” companies, serve to further raise barriers to entry and to distance managers from shareholder control.
Tell me again that the massive games that a fairly insulated managerial class is engaged in at mega-firms are both natural and inconsequential?
3. While in principle any partnership can keep going even when one partner dies or decides to leave and new partners are added, surely you are aware that this is a very cumbersome process, not in small part because of the concerns that the partners and its lenders, suppliers and customers all have about who, precisely, is managing the business and who has liability for potential losses?
Just as for limited liability, the grants of legal entity status, unlimited life, unlimited purposes and the ability to own subsidiaries are all substantial AND consequence-laden gifts from the state.
Show me a partnership that has any of these, without a grant from the state. Precisely because all of these matter, business people of all stripes clamor to incorporate (or to adopt a new, state-created limited partnership form that makes pass-through tax treatment possible).
4. Your long paragraph of the entity theory that “the state has foisted” on us has much I agree with. The state creation of corporations has do much to muddle who, exactly, is responsible for injuries to third parties caused by “the corporation”. In fact, this is one of my points about limited liability and other benefits that the state bestowed on individual investors – and you and Lew exhibited the same confusion yourself last year when you were stumbling over yourselves to feel sorry for BP’s shareholders, executives and employees:
Corporations uber Alles: Conveniently inconsistent on “abstractions” like “the environment”, Austrians overlook their preference for “corporations” over individuals,& their lack of interest in problem-solving – TT’s Lost in Tokyo http://bit.ly/lWpvol
http://mises.org/Community/blogs/tokyotom/search.aspx?q=kinsella+victim
Getting rid of limited liability would do much to provide moral clarity, and to end not simply risk-shifting and purchase of government favor, but demands by citizens for preventative regulation by government.
5. I would note that, just as if deposit insurance were eliminated, market actors would step up to advise on which banks are safe and to provide deposit insurance, so too would insurers step up if limited liability were ended.
We are NOT talking about bringing down capitalism.
Thanks for the substantive engagement.
Best,
Tom