Should Students and/or Faculty Play a Role in Higher Education Finance Decisions?

My latest column for Verdict begins with a discussion of the recent revelation in The Intercept that Leonard Leo, having made substantial progress in filling the federal bench with very conservative jurists, has in the last few years turned his attention--and the vast pile of money he controls--to the legal academy. The story reports on an unsuccessful attempt by Leo to donate $25 million to Cornell Law School to establish a "Center for the Study of the Structural Constitution." As the story reports (and as I confirm in the Verdict column in light of the fact that the story itself quotes my colleague George Hay confirming), that's accurate. We turned down the money.

In principle, the study of the structural Constitution has no ideological valence. I've written numerous articles and essays from a liberal/progressive perspective focusing on principles of separation of powers and federalism--the two pillars of structural constitutionalism. Accordingly, there's nothing more inherently problematic about a center for the study of the structural Constitution than there is about, say, a center for the study of public international law, corporate governance, or any other subject matter that can be studied from a variety of perspectives.

Nonetheless, my colleagues and I understood that as Leo envisioned it, the "structural Constitution" was code for right-wing scholarship on the Constitution. The center would probably have included some liberals in its programming--much as the Federalist Society, to its credit, does at its conferences. However, and also like the Federalist Society (within which Leo has long held leadership positions), the core mission of the structural Constitution center would be to shift constitutional scholarship to the right.

Wary of what seemed to us an effort to impose an ideological agenda on the law school, we asked the Dean if Leo (who, for all of his flaws, is a loyal Cornell alum) could be persuaded to make a donation with fewer strings attached. Apparently he could not be, and so, The Intercept story reports, he took his cash to Texas A&M and other, unnamed, law schools with a different conception of the relation between donors and institutions of higher education.

My Verdict column offers some thoughts about how higher education is funded. It concludes that alumni and other donors who genuinely wish to support colleges and universities ought to be careful not to make too many or too ideologically driven demands regarding how the money is spent, lest they undermine the very purpose of such institutions--although I recognize that some donors will nonetheless prefer to make such demands.

In the balance of this essay, I want to consider the question from the other direction. If ideological donor direction is problematic, are efforts by faculty and/or students to impose their ideological vision on how endowment and other funds are invested likewise suspect?

Student protesters have lately been demanding that universities divest from companies affiliated in various respects with the state of Israel. Such demands have previously been made with respect to fossil fuel companies and, prior to the end of apartheid, companies doing business in South Africa. Putting aside the substantive merits of the underlying objections to Israel's war in Gaza, fossil fuel companies, and South African apartheid (as well as any other causes, which could include demands that code as politically conservative, not just liberal), is this whole enterprise misguided?

To be clear, in asking that question, I don't mean to ask whether divestment is effective in influencing policy. If universities hold very large stakes in the relevant companies, divesting could drive down share prices, but more commonly it just shifts ownership to others. Meanwhile, divestment arguably makes things worse because it reduces whatever leverage the university might have had as an activist shareholder. However, divestment might be justified even if it has no impact (or even a negative impact) on the behavior of the companies from which shares are divested. One might choose to sell one's shares in a company one regards as engaged in unethical conduct simply to avoid complicity in that conduct.

As I said, however, I want to put all of that aside. The question I'm asking now is who in a university should have a say in how the endowment portfolio is invested. Just as funders shouldn't dictate personnel or programs based on ideology, maybe students and faculty should leave the management of the endowment to the people whose job that is.

We might analogize the university to a well-run newspaper, which has a firewall between the news and business sides of the operation. An investigative journalist should not be discouraged from covering possible misdeeds by a local business simply because the business is a key advertiser. Meanwhile, the journalists don't get involved in selling advertisements because that could also taint or bias their judgment.

Yet the analogy does not go very far. Within a news organization, the purpose of the firewall is to protect the newsroom from the sales team, not vice-versa. Even more so, with a university. Improper or excessively ideological input from funders risks sacrificing the core research and teaching mission of the university. By contrast, the main risk that arises out of student or faculty pressure to divest from (or invest in) any particular portfolio items is that the investment decision might prove less lucrative than one driven solely by an approach that aims to maximize the monetary value of the portfolio.

To be sure, there are other risks that arise out of student activism targeting a university's portfolio. That's most clearly true where the divestment target is controversial. Divesting from some set of holdings to please one group of student activists could displease other groups. For that reason and others, universities should listen to students' arguments for divestment (or other actions) but act on those arguments only if persuaded, not simply because the students demand action.

That's a principle that covers just about all student demands, not just divestment. And we could say that phrased that way, it also applies to donors. It is unrealistic to assume that high-dollar benefactors of a university will not have greater access than others to top administrators. They will sometimes use that access to attempt to persuade the administration to take some action or another. If the grounds are inimical to principles of open inquiry and academic freedom, they should be rejected out of hand. But where a donor makes a genuinely persuasive case for some program--a case not tied to the implicit promise to give or implicit threat to withhold funds--it seems fair to agree to their terms.