Private Foundations and American Higher Education

By Soheli Khadiza Azad

A note to the reader: This piece is based on a paper I wrote in the fall of 2020 for my graduate course in Higher Education Administration at Baruch College. The original paper was written as an academic assignment with a specific course audience in mind. I am sharing it here in a revised form, with updated statistics drawn from the most recent available data (2024–2025). The arguments and analysis are mine. The numbers are current.

Carnegie and Rockefeller funded the work of Edward Thorndike, which advised changing the curriculum for Black students from liberal arts to "realistic and industrial" subjects — effectively helping to promote a segregated education system in the South and an underclass of cheap Black labor (Drezner, 2011). These same foundations, with their massive funding support, exerted tremendous influence on reforming higher education. They worked with the United Bureau of Education to standardize higher education. Andrew Carnegie and John D. Rockefeller made an unprecedented combined financial contribution to various higher education initiatives — worth $10 billion in 2013 dollars (Thelin & Richard, 2014).

This is the central tension in the history of private foundations and higher education. The same foundations that built the institutional infrastructure of American higher education also determined which institutions would be allowed to flourish, how they would be organized, and what they would teach (Osei-Kofi, 2010). The same money that opened doors also decided, often quietly, which doors opened for whom.

Despite this long history of interdependence, critiques have consistently questioned the ulterior motive of giving. They argue that foundation giving is not altruistic in its real sense, and that broader political or personal self-interest often lies beneath it (Parmar, 2015; Bernstein, 2013; Drezner, 2011). Recently, the Gates Foundation has been under scrutiny for having an "overly prescriptive agenda" to overhaul education (Parry et al., 2013). I consider this historically contested relationship and argue that the relationship between private foundations and higher education has been one of mutual benefit and trust more than of harm and skepticism. I also argue that institutions can reinforce these relationships toward a more significant future benefit with a prudent and pragmatic approach.

Background: How Private Foundations Came to Be

Although philanthropy has been intrinsically related to higher education since its inception, the end of the colonial period witnessed a greater need for organized giving. Higher education was in a dire financial crisis — colonial support had ended and state patronage was unreliable (Thelin & Richard, 2014; Bernstein, 2013). Two landmark developments during that period fostered organized philanthropy in higher education.

First: the Morrill Land Grant Act of 1862 and 1890 created a massive expansion of higher education institution-building, followed by increased enrollment demand from previously underserved populations. Second: a new capitalist regime with unprecedented industrial fortune made inroads into higher education financing. Massive donations went into magnificent campus architecture and endowments at namesake colleges and universities — Vanderbilt, Johns Hopkins, Cornell, Carnegie Mellon, Clark, Tulane, and Stanford. Large donations required systematic planning and careful spending, a financial intelligence that institutions often lacked. This frequently resulted in extravagant single investments or unchecked spending. The need for more systematic and organized philanthropy became inevitable. Private foundations came into the picture at this stage (Thelin & Richard, 2014).

Three Generations, One Complicated Record

Private foundations fall under three broad timelines (Thelin & Richard, 2014).

The first generation includes The Carnegie Foundation for the Advancement of Teaching (CFAT), the Rockefeller Foundation, the Rosenwald Fund, the General Education Board (GEB), and the Russell Sage Foundation. Between 1920 and 1940, these foundations, with their massive funding support, exerted tremendous influence on reforming higher education. The Carnegie Foundation and Rockefeller Foundation's General Board of Education worked with the United Bureau of Education to standardize higher education. Andrew Carnegie and John D. Rockefeller made an unprecedented combined financial contribution to various higher education initiatives — worth $10 billion in 2013 dollars (Thelin & Richard, 2014).

And yet these same foundations adopted a corporate model of structure and culture to promote industrial principles in higher education (Drezner, 2011; Thelin, 2011; Osei-Kofi, 2010). Their operating strategies support the widespread claim that self-interest is indispensable to philanthropic motivation — that they use philanthropy to promote and sustain a stable social order that does not challenge the powerful and the elite (Parmar, 2015; Drezner, 2011). Critics argue that these foundations, with their enormous economic capital, exercise elite hegemonic control over higher education by manipulating intellectuals' cultural capital and dictating what counts as legitimate knowledge (Parmar, 2015). Most critically, with unregulated wealth and unaccountable power, they perpetuated social inequality and reproduced class structures (Osei-Kofi, 2010; Drezner, 2011).

The second generation — the Ford Foundation, the Lilly Endowment, The Sloan Foundation, the Packard Foundation, the Hewlett Foundation, and others — spans roughly 1934 to 1970. After the Second World War, the G.I. Bill led to a more egalitarian mass higher education model, facilitating millions of veterans' admission to higher education institutions. Foundations made significant contributions to making higher education accessible for the underserved (Bernstein, 2013; Thelin, 2011). In 1955, the Ford Foundation made a $560 million commitment (equivalent to $3.6 trillion in 2000 dollars) to assist private colleges and universities in raising teachers' salaries (Thelin, 2011). Between 1951 and 1954, the Ford Foundation awarded an average of $45 million to $50 million in grants annually to promote social and behavioral science programs, foreign aid, and fellowship programs (Thelin & Richard, 2014). It also supported historically Black colleges and universities in overcoming their inadequate funding, and used incentive programs and matching grants to help institutions develop systematic fundraising infrastructure (Thelin, 2011).

But the Ford Foundation, during the Civil Rights era, also donated to a few Black colleges specifically to recruit white students as a form of integration (Drezner, 2011). The same foundation that helped HBCUs survive also used them to serve its own vision of what racial integration should look like. This is not a small footnote. It speaks to exactly the kind of unaccountable power that critics have consistently and rightly raised.

The third generation is represented by the Lumina Foundation and the Bill and Melinda Gates Foundation, both of which attracted public attention in the early twenty-first century for their mega contributions to higher education (Thelin & Richard, 2014). Since 2000, the Gates Foundation has spent over $100 billion on its global programs — with U.S. education remaining a core priority. In May 2025, the Gates Foundation announced a historic $200 billion commitment through 2045, when it plans to permanently close — the largest philanthropic commitment in modern history (Gates Foundation, 2025). The aim continues to be opening pathways for more students — including low-income students — to and through college (Parry et al., 2013). The Lumina Foundation, devoted solely to higher education, has continued its reform investments well into the 2020s.

Critics have questioned the technology-based system that narrowly focuses on students' short-term employability (Parry et al., 2013). Some have argued that an overly prescriptive agenda would further enhance social divisions through separate and unequal programs (Parry et al., 2013).

Old-generation foundations also continued with their efforts into the 1990s and beyond. The Andrew W. Mellon Foundation in 1995 supported the creation of JSTOR — the online digital repository of journals, periodicals, and books that higher education now takes for granted. In the late 1990s, Pew Charitable Trusts, Kellogg, Atlantic Philanthropies, and Ford supported establishing two independent research entities: the Center for Policy Studies in Higher Education in California and the Institute for Higher Education Policy in Washington (Bernstein, 2013).

To pause on what this catalogue of names and numbers actually means in human terms: a first-generation college student sitting in a university library today, pulling up a journal article on JSTOR for free, is the direct beneficiary of a foundation decision made thirty years ago. A veteran who enrolled on the G.I. Bill, a Black student at an HBCU that survived the 1950s on Ford Foundation grants, a professor whose retirement security rests on a Carnegie-funded pension system — the reach of foundation giving is not abstract. It is structural. It is in the architecture of the system that millions of people move through every day, often without knowing who built it, or what it cost, or who was left out.

The Harder Critique: Power Without Accountability

Many scholars have seen philanthropy's educational intervention as morally problematic (Drezner, 2011). Critics argue that providing education as an essential public service is the government's responsibility. Leaving public goods to philanthropy, they say, renounces the government's obligation to its citizens, who should fund education through taxes (Drezner, 2011).

The most commonly stated allegation against private foundations remains their elite favoritism. Most recipient institutions are tier-one. In 2001, almost 2,500 higher education institutions received foundation grants — yet only one percent of institutions accounted for nearly 30 percent of the money (Frumkin & Kaplan, 2010). Stanford, the University of California, and Harvard received 8.15 percent, 2.50 percent, and 2.29 percent respectively of the total grant dollar (Frumkin & Kaplan, 2010). This pattern has not fundamentally changed, and it remains one of the most legitimate and difficult-to-dismiss critiques of foundation behavior.

I agree with many of these critical reflections. The history of racial manipulation, elite favoritism, and unaccountable power is real and documented. It should not be minimized.

My Case for the Relationship — With Conditions

At the same time, I take a pragmatic stand on two specific points.

First: donor motive is a complex issue. Research on mega-gift donor motivations suggests that most donors have multiple motivations (Worth et al., 2020). The most commonly observed motivation is altruism — a moral obligation to give back for benefits already received. The desire to leave an impact is another strong driver. Frumkin and Kaplan (2010) see higher education's potential as a great social equalizer and a critical gateway to reach the disadvantaged as the primary reason foundations devote tremendous resources to it. Despite philanthropy's inability to operate as a fully non-biased, non-partisan, and apolitical system, a blanket dismissal of donor motives tends to discount the immense and transformational contributions private foundations have made to American higher education. Both things can be true simultaneously — a donor can be genuinely altruistic and still cause structural harm. What matters is not dismissing the relationship wholesale, but engaging with it critically.

Consider what the specific record shows on the benefit side — not in the aggregate, but in concrete moments. The Ford Foundation's $560 million in 1955 assisted private colleges and universities in raising teachers' salaries at a time when federal support for higher education was still limited and institutions had few other options for faculty compensation (Thelin, 2011). The Gates Foundation's investment in community college completion programs — however contested its methods — contributed to measurable increases in graduation rates for low-income students at participating institutions (Parry et al., 2013). The Lumina Foundation's Goal 2025 initiative set a national target for post-secondary credential attainment and pushed institutions to track and report completion data for underserved populations in ways they had not done before. These are not small or incidental outcomes. They are the kinds of systemic nudges that government policy, moving at the pace of legislation and appropriation, rarely manages in the same timeframe.

Second: by all means, governments are responsible for providing social services to their citizens. But in developing countries where governments lack financial capability, infrastructure, and skilled workforce, the importance of private foundations is undeniable. Even in American higher education — widely seen as a well-resourced system — federal government funding after World War II was significant but not revolutionary. American higher education has long remained a mixed political economy of private and public funds (Wheatley, 2010).

Where Things Stand Now

The present situation has yet to experience a marked difference from the past. Over the past few decades, institutions have been diversifying their revenue sources due to declining state support. Total charitable giving to U.S. higher education reached $61.5 billion in fiscal year 2024 — a 3 percent inflation-adjusted increase from the prior year (CASE, 2025). Foundation giving led the way, increasing by 10.1 percent to $20.4 billion, making foundations higher education's single largest philanthropic source (CASE, 2025).

The Gates Foundation's trajectory is particularly significant. In May 2025, Bill Gates announced that the foundation would spend an additional $200 billion before closing permanently in 2045 — representing the largest philanthropic commitment in modern history (Gates Foundation, 2025). Education remains the foundation's top U.S. priority.

This is a pivotal moment for the field. The financial stakes are higher than they have ever been. The debates around accountability, equity, and the proper role of private wealth in public education are not going away — if anything, a commitment of this scale will intensify them. I believe the more productive question is not whether foundations should be involved in higher education — the financial reality makes that question moot — but how that involvement is structured, accountable, and equitable.

Conclusion

Despite their continued interdependence with higher education, foundations of all generations have come under scrutiny for their inherent lack of accountability. Since the 1990s, however, foundations' approach to philanthropy has changed. Today's philanthropy is described as "catalytic" or "strategic" — characterized by highly engaged grantmaking (Gose, 2013). Unlike earlier approaches, foundations now prefer strategically engaging with institutions rather than simply partnering with accomplished institutions to run proposed projects (Gose, 2013).

Interestingly, Joel J. Orosz, an emeritus professor of philanthropic studies at Grand Valley State University, observed some years ago that "home-grown ideas have the greatest potential for lasting impact because they are far more likely to be sustained after the grant maker's inevitable withdrawal" (Gose, 2013). This resonates deeply with the Gates Foundation's own recent admission, through Melinda Gates's annual letter, that twenty years of financial commitment did not always produce the desired outcomes in education. The foundation's newer approach is to find local, student- and teacher-specific solutions tailored to particular localities — rather than imposing a single universal model (Hess, 2020).

Higher education and private foundations have become mature industries in the twenty-first century. Education leaders need to make informed decisions about foundation involvement, grounded in core institutional values and mission. And foundations — especially those with the unprecedented resources and reach of a Gates or a Lumina — need to step outside their comfort zones and direct more of their giving toward underserved institutions. The historical pattern of elite favoritism is not a permanent feature of this relationship. It is a choice. And it can be changed.

References

Bernstein, A. R. (2013). Funding the Future: Philanthropy's Influence on American Higher Education. Lanham: R&L Education.

CASE. (2025). CASE Insights on Voluntary Support of Education: 2024 Key Findings. Council for Advancement and Support of Education.

Drezner, N. D. (2011). Philanthropy and fundraising in American higher education. San Francisco, CA: Jossey-Bass.

Finchum-Mason, E., Husted, K., & Suárez, D. (2020). Philanthropic Foundation Responses to COVID-19. Nonprofit and Voluntary Sector Quarterly, 49(6), 1129–1141.

Frumkin, P., & Kaplan, G. (2010). Foundations and Higher Education. In Anheier, H. & Hammack, D. (Eds.), American Foundations: Roles and Contributions (pp. 98–119). Brookings Institution Press.

Gates Foundation. (2025, May 8). Gates Foundation Will Double Spending Over Next 20 Years to Accelerate Progress on Saving and Improving Lives [Press release]. https://www.gatesfoundation.org/ideas/media-center/press-releases/2025/05/25th-anniversary-announcement

Gose, B. (2013, July 14). Strategic Philanthropy Comes to Higher Education. The Chronicle of Higher Education.

Hess, A. J. (2020, February 12). Bill and Melinda Gates have spent billions trying to fix U.S. public education but say it's not having the impact they want. CNBC.

Osei-Kofi, N. (2010). Coercion, possibility, or context? Questioning the role of private foundations in American higher education. Discourse: Studies in the Cultural Politics of Education, 31(1), 17–28.

Parmar, I. (2015). The "Big 3" Foundations and American Global Power. American Journal of Economics and Sociology, 74, 676–703.

Parry, M., Field, K., & Supiano, B. (2013, July 19). The Gates Effect. The Chronicle of Higher Education, 59(42).

Shaker, G. G., & Borden, V. M. H. (2020). Analyzing Three Decades of Philanthropic Giving to U.S. Higher Education (1988–2018). Philanthropy & Education, 4(1), 1+.

Thelin, J. R., & Richard, T. W. (2014). Philanthropy and American higher education. New York: Palgrave Macmillan.

Thelin, J. R. (2011). A history of American higher education. Baltimore, MD: Johns Hopkins University Press.

Wheatley, S. (2010). The Partnerships of Foundations and Research Universities. In Anheier, H. & Hammack, D. (Eds.), American Foundations: Roles and Contributions (pp. 73–97). Brookings Institution Press.

Worth, M. J., Pandey, S., Pandey, S. K., & Qadumm, S. (2019). Understanding Motivations of Mega-Gift Donors to Higher Education: A Qualitative Study. Public Administration Review, 80(2), 281–293.