Philanthropic funding can be a risky game for universities
This article was first published by UniversityWorldNews on 11 March 2023.
The University of Oxford’s relationship to the tainted Sackler family’s charitable trusts speaks to the challenge of donor risk management across a complex institution which is both a world-class research university and a treasured United Kingdom institution.
The most recent outcry follows a Financial Times investigation into solicitations made to the Sackler family, former owners of Purdue Pharma, which in 2020 agreed a settlement of more than US$8 billion over its role in fuelling the United States opioid epidemic. Purdue Pharma was owned by members of the Sackler family until it was dissolved in 2021 in the wake of the scandal. The University of Oxford is reported to have received over £10 million (US$12 million) from the Sackler’s philanthropy since 1991, a relative drop in the ocean in the family’s estimated US$11 billion wealth.
“In pursuing Sackler family philanthropy, Oxford... has been left looking amoral and greedy.”
What appears to have been more egregious is the active solicitation of money from the Sacklers by very senior office holders at the university at a time when other institutions ranging from the Metropolitan Museum of Art to Yale University were removing the Sackler name from their infrastructure.
Moreover, those approaches appeared to have been made after the family had been heavily criticised in a US Congressional hearing in December 2020 in which members refused to bear responsibility or apologise for their part in Purdue Pharma’s disgraced operations.
According to the Financial Times, letters, bank statements and event attendee lists from 2020 to late 2022 show that Oxford “has extended exclusive invitations to a Sackler family member and accepted funds from Sackler family charities as it maintained the Sackler’s naming rights on university buildings and fellowships”.
The Sackler Library, incorporating the older library collections of the Ashmolean, which opened in 2001, is one example. The Sackler Keeper of Antiquities is another.
What happens at Oxford matters because, along with the University of Cambridge, it ranks as one of the world’s leading public universities. They set the bar for state-funded institutions around the world. So the Sackler affair begs the question: how a sophisticated institution with a highly respected fundraising operation such as Oxford could have made such a misjudgement?
Donor risk management
It also serves to highlight three challenges associated with donor risk management. First, Oxford will have in place a fundraising policy supported by a good risk management process anchored in its Development Office. The issue for large structures such as universities – especially a disparate institution such as Oxford with its autonomous college system – is ensuring institutional-wide adherence to process.
Were the communications and solicitations instigated by the university’s development (fundraising) team or were they being done without its knowledge? Was the risk assessment about the Sackler family presented to the university’s leadership and decisions actively taken accordingly? Did the university leadership listen to the advice of its chief development officer on how to handle the relationship with the Sacklers?
Unfortunately, fundraising, especially in higher education circles beyond the US, has long been seen as a soft-skill set, to which anyone can turn their hand. This can lead to the best of policies being neglected. In pursuing Sackler family philanthropy, Oxford – which sits on a £6 billion (US$7.2 billion) endowment fund, an unfathomable amount viewed from an African university – has been left looking amoral and greedy.
Second, alignment of donation to purpose matters. Is it reasonable to reprimand Oxford for soliciting funding from the Sacklers when other institutions continued to accept their money? For example, King’s College London accepted a donation of £750,000 in 2021, larger than the sums Oxford received. The difference, perhaps, is that the donation to King’s was to support research into neurological disorders, which could have a potential benefit to the victims of the opioid crisis.
Third, there are inherent risks in a name. Oxford is no stranger to both scrutiny and criticism of who it accepts funding from. In November 2021, the university announced it was accepting a £155 million donation from the Vietnamese businesswoman Nguyen Thi Phuong Thao, which would lead to the renaming of the university’s Linacre College in her honour. This caused a furore and led to a government investigation, which swiftly concluded the name change could go ahead. It was hardly the fanfare that Oxford would have wanted.
The Dangers of High Visibility
“Donor-naming creates moral hazard”
The challenge for Oxford in both the Sackler and Thao cases is that such donors appear to seek significant name recognition, ensuring their philanthropy is prominent. There are thousands of donors who give major gifts to universities each year and rarely does it present an issue. Most give generously, often discreetly, viewing higher education as key to both individual opportunity and achievement and contributing to societal progression.
In the case of those donors who demand highly visible recognition, universities should proceed carefully. Donor-naming creates moral hazard and has left universities around the world, including the University of Cape Town, scarred with tainted names adorning infrastructure.
Philanthropy is booming, driven by the inexorable rise in people of high net-worth wealth. As the business of giving on the one side and fundraising on the other expands, it becomes more institutionalised and professionalised. The University of Oxford’s Sackler debacle is a reminder that university fundraising is more complex than a discreet word in the ear at high table.