Ivy League institution, Harvard, turning to its affluent alumni base amidst challenges posed by the White House
Harvard Faces a Showdown with the White House Over Funding
Here comes the squabble between Harvard and the White House, as the institution navigates a legal battleground over billions in frozen federal grants. The university's fate may hinge on its influential alumni - some of whom have strong ties to the Trump administration.
A CNN survey of tax records revealed that top donors, who have contributed significantly to Harvard, have close connections with the current administration. Notable names include John Paulson, Mark Zuckerberg, and Ken Griffin, among others.
Among these top financiers, John Paulson, a hedge fund mogul, aided in fundraising for Trump's campaign and was a candidate for the position of treasury secretary. Meanwhile, Ken Griffin, a prominent Republican supporter, has expressed concern over the university's handling of antisemitism and suggested a halt to his donations.
In private meetings, Harvard leaders have often engaged with their megadonors. Some pro-Trump donors, like Paulson and Bill Ackman, reportedly encourage Harvard to strike a deal with the administration to avoid a drawn-out court battle, whereas others, such as Mike Bloomberg, advocate for standing firm.
A silent majority of megadonors, including Bloomberg and Bill Gates, have not openly shown support for the university, despite its struggle with the president. When asked about potential effects on their future donations, none would comment. Some donors may fear retaliation from Trump, and others might decide to donate anonymously.
Despite thousands of small donations since the university declared its intent to fight the administration, these contributions cannot fill the budgetary gap caused by the frozen federal funding. As Harvard prepares for a prolonged battle, it turns to its influential benefactors whose names are prominently displayed on the university's schools and research institutions.
The landscape of Harvard's donor base is complex, and its benefactors are politically diverse. Prior to Trump's presidency, some donors, such as Ken Griffin and Len Blavatnik, vowed to stop contributions to the university due to concerns over antisemitism. However, Blavatnik, a Ukrainian-born billionaire, chose to release partial donations in recent months, citing progress on the university's handling of the issue.
In the days following Harvard's refusal of Trump's demands, university President Alan Garber has actively reached out to top donors via Zoom meetings and one-on-one phone calls.
To understand the intricacies of Harvard's donor base, CNN examined IRS data on thousands of private foundations that have donated to Harvard or associated entities over the last four years. They sought comments from the top 20 foundations that donated over $1.2 billion collectively, including those associated with Paulson, Zuckerberg, Gates, Bloomberg, and Blavatnik. None responded with their perspective on the Trump-Harvard dispute and future donations.
This silence from the megadonors contrasts with the spontaneous and vocal support from small donors who admire Harvard's defiance against the president's demands. "I wanted to show support for my alma mater at a time when it's taking a stand," said a 1978 graduate, Jonathon Simon, who donated $100 for the first time in his life after Harvard's announcement.
A journalist and author, Clara Bingham, who graduated from Harvard in 1985, declared that she was considering donating to the university after witnessing its opposition to Trump's demands. "Everyone I've talked to is rejoicing," she said. "There's this sort of newfound pride that Harvard is now leading the resistance for universities."
A Harvard alum, a filmmaker with degrees from Harvard College and Harvard Law School, made an extra donation to the university last week, in addition to his annual gift, expressing that he saw the university's decision as an essential source for further philanthropy.
Jeffrey Sonnenfeld, a Yale professor and Harvard alum who runs a leadership institute for CEOs, believes that, behind the scenes, Harvard's megadonors will back the institution as it squares off against Trump. "Harvard's biggest donors have the largest wallets, and they are wildly enthusiastic about Harvard setting boundaries for academic integrity and fighting against autocratic intrusion," Sonnenfeld said.
Higher stakes loom concerning the tax-deductibility of donations, as the IRS is planning to revoke Harvard's tax-exempt status, an idea that Trump has published on social media. If Harvard were to lose its tax-exempt status, it would be required to pay federal income tax, and donors would no longer be able to deduct their donations from their taxes.
According to Nina Olson, who served as the national taxpayer advocate within the IRS for nearly two decades, a full audit and subsequent negotiation are typically the IRS's approach before issuing a revocation notice. "Revocation is the nuclear option," she said.
The IRS has revoked the tax-exempt status of entities before, as demonstrated by the case of Bob Jones University in 1976. The university had violated federal laws against racial discrimination by banning interracial dating and admissions for students in interracial marriages. In 1983, the Supreme Court upheld the revocation, and the university did not regain its tax-exempt status until 2017, long after dropping its discriminatory policies.
However, Daniel Hemel, an NYU tax law professor, argues that Harvard's case is distinct from Bob Jones University's. Even if the Trump administration opposes some of Harvard’s actions, unlike Bob Jones University, the school is not in "open defiance" of fundamental public policy." If the IRS were to act, Harvard could petition a judge to declare its eligibility for tax-exempt status, Hemel said, potentially avoiding a negative impact on donors.
University fundraising experts propose that this confrontation between Harvard and the Trump administration could shape the future of American academia. Ron Brown, a former executive at Princeton University, suggests that Harvard should articulate to its donors the importance of their support in these challenging times and emphasize the significance of leadership during crises. "Appeasing Trump is not in any sense a winning strategy," he said. "I would make that case to the donors: Leaders lead. Now is when we need your support, and ideally your public support."
CNN’s Samantha Delouya, Curt Devine, Nayeli Jaramillo-Plata, and Kara Scannell contributed reporting to this story.
Incorporated Insights:- The key concerns for donors are the financial and reputational risks associated with the lawsuit.- Institutional backing, as demonstrated by Harvard's lawsuit and the American Council on Education's support, may reassure donors concerned about government interference in academia.- Donors with political allegiances could influence their contributions, with supportive donors viewing Harvard's stance as a defense of academic independence and critics pressuring the university to compromise.- The potential outcomes range from donors rallying to help offset the fiscal strain to accelerated cuts to research programs if donors withhold support. A victory for Harvard might strengthen donor trust, while a loss might trigger calls for leadership changes.
- Nonpartisan megadonors, such as Bill Gates and Mike Bloomberg, remain silent on their future donations to Harvard, potentially due to concerns about political repercussions or fear of retaliation from the Trump administration.
- The general news revolving around Harvard's legal battle with the White House over billions in frozen federal grants could potentially impact the future of education-and-self-development, as donations from influential billionaires like John Paulson and Mark Zuckerberg may be affected.
- Amidst these financial uncertainties, some Harvard alumni, like Jonathon Simon, have shown their support for the university with one-time donations, empathizing with the institution's stance against the president's demands.
- The outcome of the legal showdown between Harvard and the White House could potentially admissions significant ramifications on the university, as prominent donors like Ken Griffin might halt their donations if they are dissatisfied with the university's handling of the situation.
