Seniors woke up yesterday to an email that generations of Penn alumni have seen in one form or another: a plea from the Penn Fund for Penn seniors to contribute. Although their entreaty is framed with noble intentions to “immediately and directly [impact] the undergraduate student experience,'' the reality is that if seniors want to do something good with their often limited resources, they shouldn’t donate to the Penn Fund.
This University has amassed an incredible amount of wealth, much of which has come from exploitative or otherwise problematic sources, like billionaire donor and former Penn trustee Steve Wynn, whose name was removed from campus following allegations he had committed sexual abuse for decades.
Most crucially, the utility of donating to Penn is very low when compared with other options for philanthropy. Malcolm Gladwell made this point years ago when billionaire investor John Paulson donated $400 million to Harvard.
Universities with billion-dollar endowments derive a very low marginal utility from even absurdly large donations like Paulson’s, and that problem is even stronger when you consider that the average Penn senior’s donation is going to be orders and orders of magnitude less.
Making rich schools richer does not directly help the positive causes supported by Penn’s resources in the way that the Penn Fund might want you to believe. Contributions to the Penn Fund go towards Penn’s operating budget, which for the 2020 fiscal year totals $3.5 billion, of which the undergraduate financial aid budget comprises about 7%.
While it's laudable to think that donations will support low-income students through financial aid, and it’s true that much of the Penn Fund’s resources are directed towards that effort, the impact that a small donation will have on the University’s ability to increase the financial aid budget is effectively zero – it has everything to do with resource allocation decisions instead.
In fact, although the undergraduate financial aid budget has grown 192% since 2005, when Amy Gutmann became University president, the corresponding growth of the endowment has been 245% during that same period. If the University really wanted to make undergraduate financial aid a priority like they’ve claimed, they could have just chosen to allocate resources there as the endowment (and, by extension, the operating budget) grew.
A frequent response to claims like this is that it’s wrong to criticize philanthropic giving because people should be encouraged to give to charity and not be made to feel bad about which charity they pick. However, if the goal of philanthropists is to affect positive change, then it is incumbent upon them to use a critical eye when looking at organizations like the Penn Fund, because not all giving is created equal. This is particularly true for recent graduates on starting salaries who may not have sufficient extra income to donate to several different charitable organizations.
If the argument in favor of the Penn Fund is that the University will do good things with the money, then one must ask the question, who else could do more good with it instead?
Malcolm Gladwell argues convincingly on his podcast “Revisionist History” that small, oft-neglected public schools are a good place to start when considering organizations that can do more good per dollar donated. But why even stay in academia?
GiveWell, an organization that evaluates charities, suggests the Against Malaria Foundation as one of the best places to donate to effectively because it's possible to save multiple lives with only a few dollars. Seniors more inclined towards local efforts can find myriad organizations in Philadelphia working to shelter homeless people, feed food-insecure residents, and provide treatment for people suffering from addiction. Seniors can even donate to the Philadelphia public school system, which would go a lot further towards providing equal access to education than donating to the Penn Fund.
The point is, Penn doesn’t need your money. They want it, and some good would likely come from giving it to them, whether it’s through financial aid, research, or other University programs. However, seniors should consider the potential negative externalities that come from allowing Penn to amass billions of dollars invested in potentially unethical areas. And particularly if the Penn Fund will be your only donation in the coming year, you should consider whether you’re really giving money to those who need it most.
Editorials represent the majority view of members of The Daily Pennsylvanian, Inc. Editorial Board, which meets regularly to discuss issues relevant to Penn's campus. Participants in these meetings are not involved in the reporting of articles on related topics.
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