Paul L. Caron
Dean


Friday, December 6, 2019

Are 'Transformative' Law School Naming Gifts Really Transformative?

Brian Leiter (Chicago), Are "Transformative Gifts" Really Transformative?:

Law.com has a list of naming gifts to law schools over the last few decades, with the majority coming in the last two decades.  Here are the biggest gifts, by year:

    1998:    $115 million to the University of Arizona
    2001:    $30 million to Ohio State University
    2008:    $35 million to Indiana University, Bloomington
    2011:    $30 million to the University of Maryland
    2013:    $50 million to Chapman University
    2014:    $50 million to Drexel University
    2015:    $100 million to Northwestern University
    2016:    $30 million to George Mason University
    2019:    $50 million to Pepperdine University
    2019:    $125 million to the University of Pennsylvania ...

It remains to be seen whether any of these gifts will really change the strength and status of any of these schools. In ten years, we'll probably have a clearer idea of the impact given how recent many of the largest gifts are. 

Robert Anderson (Pepperdine):

Today, @BrianLeiter asks whether "transformative" law school gifts are really transformative, with examples. My guess is the reason they're not is (1) much of the money isn't "real" (2) deans [spend] it on pet programs (3) Univ admin "steals" it through overhead.

Derek Muller (Pepperdine), What Makes a Donation to a Law School a "Transformative" Gift? One Idea Might Be Free Tuition For All Students:

[T]he single most dramatic thing a school could attempt to do? Make it free.

When UC-Irvine announced that its first law school incoming class would have zero tuition for all students, it was probably the single most interesting and significant law school expenditure announcement I recall in… well, recent memory for sure, and perhaps in my lifetime. It didn’t mean that some students with low LSAT & UGPA predictors would pay full tuition while subsidizing scholarships for others. It meant that the graduates would have some debt from cost of living for three years, but likely quite manageable for many. Free tuition? Hard to beat that idea. UC-Irvine admitted a highly selective class of about 60 for that first year. But it couldn’t continue it beyond the first year.

I think about recent medical schools like NYU that recently announced offering free tuition. I think about the recent commencement speaker at Morehouse College who announced he would pay off every graduate’s student loans.

It’s true that most lawyers often go on lucrative careers. But it’s also true that student loans are tough, tuition keeps rising, young graduates’ career choices are often defined by repaying loans or debt forgiveness program compliance, not to mention the life choices that come from it.

It’s true that it would require a lot of present cash to create this option—or, at least, some cash followed by the announcement and vigorous fundraising off it. A non-trivial number of law schools have budgets of less than $25 million a year, and a $500 million gift could endow the entire annual budget. A $1 billion gift would endow a $50 million budget. Essentially, such types of massive infusions would truly transform legal education.

https://taxprof.typepad.com/taxprof_blog/2019/12/are-transformative-law-school-naming-gifts-really-transformative.html

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Comments

It's important to put the size of (many) of these gifts into a larger perspective. To you and me $20 million seems like an enormous sum that would surely transform our personal lives, but that's probably equivalent, at most, to just a single year of a lean-running law school's overall operating budget. Now assume that the $20 million is put into the school's endowment, and that the endowment pays out a conservative but realistic 4.5% annually--that's only $900,000 per year. Assuming a law professor, with fringe benefits, costs $250,000 (probably on the low side) that's less than four new professors funded. A typical faculty will have maybe 30-40 tenure track professors, so you would be increasing the size of the faculty a mere 10 percent. Why would we ever expect "transformation" in that case? Or, imagine giving all the $900,000 to full ride scholarships. That only funds 18 of them, assuming tuition of $50,000/year!

Posted by: Jason Yackee | Dec 6, 2019 11:54:08 AM

Many large gifts are not lump sum gifts, but phased over the period of time or are otherwise future gifts. Sometimes, as with Drexel, which received real estate, you can't "spend" those today. So, I think caution is in order before concluding the gift wasn't transformative. The celebration and announcement are occasionally accelerated, even when it's in reality a future gift.

Posted by: TS | Dec 7, 2019 3:14:40 PM

NYU's medical school seems to be the exception -- I believe they went tuition-free recently.

Posted by: Anon | Dec 8, 2019 4:09:17 PM