Epilog: After they “cave,” then what?
The Gift is Announced
In 2014, UNCF announced the fifth largest gift in its history (the $1.5 billion Gates Foundation gift is undisputed number one and destined to remain that way) — a $25 million gift, $18 million of it scholarship aid. Considering that over 90% of UNCF students come from families qualifying for federal grants and that most are the first in their families to attend college, this gift surely demands our unqualified approval.
Beware of Anyone Bearing Gifts
Not so fast. Like most heaven-sent opportunities this one is loaded with caveats. First and foremost the donors: Charles and David Koch and the Koch Brothers Foundation are serial givers to programs to curtail or eliminate collective bargaining, eliminate or reduce government participation in creating and enforcing industrial regulations, and subscribe to a political agenda that proposes to cut federal programs on which HBCUs depend. In short, from a liberal and centrist perspective, the Kochs are neoliberal moguls who use their political action committees to elect right wing and tea party candidates. What then to make of their gift to UNCF?
The Donors and UNCF Agree: It’s a Once in a Lifetime Opportunity
Dr. Michael Lomax, UNCF president and CEO, is viewed in some quarters as a water carrier for the Kochs. Stealing a leaf from “the ladies who lunch,” Dr. Lomax and Charles Koch often lunch together to discuss their agreement on a wide variety of education issues, sharing “a profound belief in the importance of education…there are a lot of talented young people whose lives will be transformed if they get a chance to complete a college degree.” An article written by Dr. Lomax that appeared in the Koch Industries newsletter in July, 2014 hinted at a major sell out —“We are enormously grateful to Koch Industries and Charles Koch for their long-standing support of UNCF and for helping create new opportunities for earned success and a better future for our students.”
Lomax may see his chummy relationship with Charles Koch as an example of UNCF’s reaching out to all without an “ideological lens,” but that is not necessarily a majority view. His annual salary of $1.5 million listed on UNCF’s 990 tax forms as “other compensation” and “deferred compensation” gives added weight to the image of a decision that has more to do with personal financial gain than the financial plight of UNCF students.
Lomax probably didn’t make his case more appealing with subsequent justifications like “At UNCF we’re not big idea people…We’re just trying to move a needle…getting African American kids to and through college…and so I’m here in this partnership because this is what we’ve been doing for seventy years and we’ve got to do a whole lot more.” Or this “Washington’s partisanship has really poisoned the thinking of some people…there’s this kind of purity thing that unless we agree on everything, there is no common ground.
UNCF Presidents Weigh In
More heartfelt — and more believable —are the comments of two presidents of UNCF schools. Dillard University President Walter Kimbrough makes no bones about his disagreement with the political philosophy and actions of the Koch brothers but has no qualms about the gift’s usefulness “I’ll still fight for things important to the African American community and I’ll use their money to do it.” Miles College President George T. French has a slightly different take on the gift but comes to the same conclusion “As an HBCU president, my goal is to meet the needs of my students…I have neither the time nor the inclination to explain to a student who is having to drop out of college due to lack of resources why I would engage in the politics of a donor rather than focus on my mission of education.”
A Story of Survival
UNCF college presidents have one thing to gain from the Koch gift: survival. I witnessed their fierce struggle to stay afloat when I worked for UNCF from 1974 to 2004. A colleague told me of a visit he made to one of the colleges. While he was in a meeting with the president, the lights went out and the office was plunged into darkness. Without missing a beat, the president picked up the phone and called the electric company. On the spot, the president negotiated a two week extension to come up with the money to pay the college’s overdue bill, Stories like these were more rule than exception for many of the smaller, poorer UNCF schools.
The Obama Administration Plays Mr. Fix-It
Sadly, for many UNCF institutions, little has changed in three decades. Making a bad situation worse, even the federal programs that made a small dent in the financial crisis, a permanent fixture at many HBCUs, were savaged in the last year of Obama’s first term. In 2011, Obama’s Education Secretary Arnie Duncan announced drastic cuts in Pell Grant (federal aid that does not have to be repaid) eligibility. The time limit to get a Pell was slashed from 18 to 12 semesters. And Pells could no longer be used for summer classes. Disastrous consequences flowed out of this flawed rule making. 5,000 students lost Pell eligibility starting in the Fall of 2012; another 17,000 suffered the same fate in 2013. Perhaps the most eye-opening development — with the 2011 revision, Pells covered the smallest portion of overall college costs, less than 30%, in the history of the program. Compare that with 1980 when Pells covered half the cost. When you consider that over 90% of UNCF students rely on Pell grants and the schools they attend use these grants to pay the bills, it’s not hard to figure out why the Koch gift looks like manna from heaven.
More bad news was on the way. Also in 2011, the aptly named PLUS loans, used mostly by parents to complete the financing package for their child’s college education, were also undergoing drastic and ruinous changes. Admittedly these loans carry a lot of baggage —their interest rates are far higher than the rates of federally subsidized loans, they are not eligible for income based repayment plans and are not dischargeable in bankruptcy. Even with their downside, Cheryl Smith, UNCF’s Senior Vice President for Public Policy and Government Affairs points to their necessity “a critical piece of the financing package for low-income (i.e. UNCF) students.” How critical? 78% of HBCU graduates need loans to complete their college education. Compare that with 60% relying on loans at predominantly white schools. What the Obama Administration decided would be the most politic way to a grand budget-cutting bargain with the republicans was to cut the programs aimed at poor, minority families hoping no one “who counted” would notice. Those “revisions” tightened eligibility criteria denying the loan applications of families with even minor black marks on their credit history. The results of this tinkering could have been predicted by even the dullards staffing Obama’s Office of Education. According to Rachel Fishman author of a New America Foundation report: (not exactly a foundation in the wide eyed liberal class as it accepts donations from the likes of Pete Peterson, Bill and Melinda Gates and supports the extension of common core standard to higher education) “Many families and their educational institutions were shocked to find that parents approved for the loans one year were…denied the next…students in the middle of their academic careers found themselves scrambling to cover a much larger portion of the bill upfront.
The Results are Catastrophic
Here’s the damage by the numbers. From 2011 (the year PLUS revisions went into effect) to 2013 there were 45% fewer PLUS loans recipients at HBCUs. At Howard University, enrollment tumbled 6% in 2012 leading to a credit ratings downgrade by Moody’s. Overall enrollment at HBCUs declined 14% in 2011, after soaring 42% in the previous decade (2000-2010). In the Fall of 2012, 14,616 parents with previous PLUS loans were denied continued funding. Obama’s curtsey to the republican congress cost HBCUs $168 million in lost tuition income.
Public Protest to the Rescue
If the Obama administration thought nobody was watching, they had another think coming. Surveying the devastation, the HBCUs swung into action. With the heavy hitters on the boards of some of the better-known HCBUs (e.g. Tuskegee, Morehouse, Howard), the HBCU Presidents, affected students and parents lobbied the administration in battering ram fashion. As it had done so many times before, the administration realizing it had been caught, backtracked rapidly. The revised (yet again) criteria for PLUS loans made it easier for those with blotches on their credit histories to still qualify for the loans. In fact, the administration feeling the hot seat getting hotter pushed up the date for the revision to go into effect. While hardly a ringing endorsement, David Swinton, President of UNCF’s Benedict College put the coda on the effort “We came out as well as we could have hoped under the circumstances. We are satisfied with the results.” (N.B. the original PLUS loan revision cost his institution 700 students, a 29% enrollment decline)
Even with the relaxing of the eligibility criteria for PLUS loans, the educational dilemma faced by those unable to afford college without substantial outside funds is hardly solved. As Steve Gunderson, President of the Association of Private Sector Colleges and Universities, summed up the no exit dilemma of higher education: “I don’t think we can…deal with PLUS loans in isolation…How are we going to address…access and affordability for low income students…when 65% to 85% of all jobs require some level of post-secondary education?”
A College Education = Lifetime Indebtedness
How bleak is the financial picture for low-income students? The maximum Pell grant award for the upcoming academic year (7/1/2016 – 6/30/2017) will be $5,815. Total annual cost (room, board, books, fees) to attend even the less expensive UNCF institutions is around 21,000 —leaving a Pell grant recipient scrambling for another $15,000 for each of the four years. At graduation time, those students and their families will probably be on the hook for over $60,000 in loans. Is it any wonder that nine out of ten Pell grant recipients have student loan debts?
That makes the Koch gift a no-brainer you’re probably thinking. The need is off the charts, no good-hearted Samaritan is waiting in the wings and the chance of increased help from the feds is off the table. So why not grab the $25 million and put it to good use?
What is a Properly Motivated Gift?
Complicating matters is the issue of “the properly motivated gift. If it isn’t, does it count? I fell into that trap when I was the director of direct mail at UNCF in the late seventies. One day we received a $1,000 gift (equivalent to almost $4,000 today) with the following letter: “Please use this money to send the colored kids to your schools so white people can go to Queens College.” I was outraged feeling sure that Chris Edley, UNCF executive director, would feel as I did and would not accept the gift. He did no such thing and taught me a lesson I will never forget. We run a business, he said, the business of raising money so that UNCF schools can survive. If we only accepted what we considered “properly motivated” gifts, we would go out of business. He instructed me to do two things. First, send the check to accounting and second write our new donor a warm and friendly thank you letter assuring him his gift will be put to good use.
The Last Word goes to our Sponsors
Properly motivated gift giving may not have been the only reason to refuse the Koch gift however. Here’s an opposing view from Professor Marybeth Gasman, author of Envisioning Black Colleges: A History of the United Negro College Fund. “I think it is very important to think about who you are taking money from…that money can do a lot of good for students… But it allows that organization [Koch Industries] to have quite a bit of influence.” Here she is referring to the agreement UNCF made with the Kochs stipulating that the $18 million earmarked for scholarships be disbursed by a committee where Koch and UNCF representatives together control 80% (the Koch’ share is 40%) of the vote with faculty input of 20%. Professor Gasman speaking of the breakdown of stakeholders on the selection committee “[Koch’s influence on the selection committee] is not something we should be okay with… The Koch Brothers have… supported efforts to disenfranchise Black voters… have given huge amounts of money to Tea Party candidates who oppose many… laws that empower African Americans. I urge the UNCF to consider returning this money to the Koch brothers… the cost is too high.
Reading the fine print exposes another potential minefield in the agreement. Scholarships are not limited to students attending or planning to attend one of UNCF’s 37 schools. Students at any of the 250 colleges and universities where the Koch brothers have an existing program are also eligible to apply. This diversion of resources threatens to dilute the value of the gift to UNCF. And the description of the UNCF/KOCH Scholars Program leaves little doubt about the political implications of the grant —“teach students how to develop and apply an entrepreneurial mindset by exploring how the study of entrepreneurship, innovation and economics contribute to well-being for individuals, communities and societies.” Coming from the libertarian end of the political spectrum where free market ideology and anti-government philosophy reside, these scholarships could affect (and infect) a whole generation of African American economists, business owners, and employers. As Richard Fink, a Koch strategist, (who was once heard to opine that raising the minimum wage could lead to fascism) described the Koch/UNCF alliance “Reaching people that are working to add value to peoples’ lives…the other side creation divisions, but we solve problems.
There is No Free Lunch
Koch problem-solving techniques are on display at other institutions that have felt the weight of Koch largesse. At Florida State University, the Kochs have the right to appoint a committee to sign off on faculty hired to staff programs in the economics department created by their 2011 gift. In response, a faculty senate review of the donation agreement concluded that the grant agreement exposed FSU to “undue outside influence.” FSU accepted the gift with no revisions to the agreement.
At George Mason University, which has received a greater share of Koch funds than any other U.S. college or university, the stipulations were calculated to increase Koch influence on policy questions as faculty influence decreased. In the latest round of grant making, the stipulations for a $30 million gift ($10 million from the Koch brothers and $20 million from an “anonymous” donor) included 1) Renaming its law school Scalia law school 2) Retaining the current dean 3) Hiring 12 new professors (to be vetted by Koch brothers or their representative), many at tenured or senior levels.
Koch’s generosity has a long tail. —George Mason University through its Koch-funded Mercatur Center and Institute for Human Studies has become a leading exponent of free-market economics and anti-government political philosophy.
Is there something sinister at work here or is this just a couple of rich guys who want to get a modest return on their investment? What exactly is at stake? Why do even prominent, well-endowed universities feel so vulnerable to financial reverses that they are willing to give up many of their most important administrative prerogatives (e.g. faculty selection, program design) to satisfy donor stipulations. The financial burden on public universities is reaching crisis proportions in many states as public monies are fast disappearing and tuition hikes cannot make up the difference. Private institutions are not insulated from the havoc caused by the economic downturn in 2008 making their fundraising an at times quixotic search.
Opposition aside, UNCF accepted the gift complete with stipulations. Are their larger implications to this gift? Could it be the first salvo in a campaign by right wing interests to preach the gospel of neoliberalism to underserved minority communities, add HBCU graduates to the next congregation of free-market, small government (i.e. no government), social conservatives who hate unions, rail against federal regulations to protect the environment, want to eliminate OSHA, and other environmentally friendly programs like the Clean Air and Water Acts. Whatever their motives, their game plan deserves our attention. “…Universities are just desperate for money and… it has to comes from somewhere…What is left is people like the Kochs…and quite often they provide money that goes toward things that support their interest.” (David A Kravitz, Professor of Management, GMU)
Why We Should Care About 43 Million Debtors
Once again perhaps we are asking the wrong question. Not why did UNCF take the money and run but rather how is it that the present patchwork system of doling out federal money for higher education winds up with 43 million graduates of all races burdened with student loans (2016 graduate with an average $35,000 tab are the most indebted class in history —until they lose that distinction next year) According to Senator Elizabeth Warren, one of the beneficiaries of student indebtedness is the US Treasury. In a September 26, 2015 speech, she noted that “The loans that were put out between 2007 and 2012 … (are) on target right now to produce $66 billion in profits for the United States government.
Colleges and universities are the ones in the spotlight now, but funding shortfalls at all levels of the education system are opening up holes that agenda-motivated private money is rushing to fill. Privatized education on both the elementary and secondary level carries the same danger of unwarranted proselytizing from private charter operators. Are we prepared to hand over the job of educating America’s next generation of citizens and leaders to the very rich with political agendas that glorify achievement, leave little room for those who need support, and consign a substantial portion to life on the margins? The value of education to encourage a wise and informed citizenry takes rhetorical first place in countless numbers of pronouncements from podiums, in inaugural addresses, graduation speeches and campaign promises. Here’s James Madison in 1822: “Learned institutions…throw that light over the public mind which is the best security over crafty and dangerous encroachments on the public liberty.” What we have paid homage to in our musings has not been always been noticeable in the laws we make, the programs we adopt or the financial commitments we agree to accept. That’s where the rubber hits the road — the importance we place on education becomes a function of the money we are willing to spend on it. It takes money to keep schools from primary to post secondary independent and welcoming to a plethora of visions. The train has left the station when it comes to debating whether UNCF should have accepted Koch money. The future beckons. How do we stop the unwelcome intrusion of private money with political agendas into our education system? Are we and the political leaders we vote into office willing to accept the burden of financing an education system that represents the best of our values? Private money with an agenda like the Kochs is betting we are not.
