Some of the most powerful business figures have targeted universities over their responses to Hamas’ terrorist attack on Israel and allegations of anti-Semitism.
Marc Rowan, CEO of Apollo Global Management and a major donor to the University of Pennsylvania, has called for the school’s president and chairman to resign. Former ambassador Jon Huntsman stopped donations to the school, and Ron Lauder, the heir to Estée Lauder cosmetics, said he would “reconsider” his financial support.
Donors accuse Penn of inconsistently applying its free speech values. Clifford Asness, the chief investment officer at AQR Capital Management, wrote in a letter to the university’s Wharton School this week that he has “long been dismayed by the departure from true freedom of thought” and would not consider donating until “a meaningful change occurs”. apparently.”
At Harvard, Israeli billionaire Idan Ofer and Victoria’s Secret founder Leslie Wexner cut ties with the school after student groups signed a petition blaming Israel for the Hamas attack.
Major donors to universities have long expected special treatment, such as preferential treatment for their children’s applications. However, these demands aim to shape the core values of universities and topple the leadership.
Universities have helped create the expectation that donations have influence. Like most nonprofit organizations, U.S. universities maintain relationships with some donors by offering them seats on the board of trustees. The job comes with real power: Trustees vote on decisions such as tenure and the election of the university president. For smaller donors, schools sometimes offer membership in alumni councils or advisory groups, which have no fiduciary responsibility but provide a platform to influence decisions.
The question is how far the influence of individual donors should extend. “The job of a college or university president is very hard because, on the one hand, he or she has to make sure the trustees are happy — because they are big donors and because they can fire the president,” said Edward Rock, a law professor at the University New York University, who specializes in corporate governance, said. “At the same time, he or she must ensure that the academic mission of the university is not threatened by external forces, whether political or economic.”
This potential conflict is not new. In 1995, Yale returned a $20 million gift from a former billionaire after he challenged the selection of professors for the Western Civilization program he funded. Penn faculty senate leaders argued in a letter this week that donors calling for the university’s president and chairman to resign over a Palestinian literary festival held on campus that donors said contained anti-Semitic ideas were also going too far had gone.
“Academic freedom is at the heart of our educational and research missions,” they wrote. “And we demand that it remains free from internal or external pressure or coercion.”
Even the best-funded universities struggle to retain major donors. Elite university endowments are as large as some of today’s best-known funds. Penn has a net worth of $21 billion. Harvard has $50 billion. Despite these large coffers, the apparent cash outflow is significant, experts told DealBook.
Criticism from well-known entrepreneurs could influence smaller and future donors. And often donors’ contributions are allocated to specific programs, meaning universities have less money than the totals suggest.
“No matter what happens, it will be a crisis for their operating resources,” said Larissa Reece, a consultant at Ashley Rountree and Associates, who advises schools on fundraising. “Even Harvard, with its resources and endowment, still needs an annual fund to keep the foundations of some things going at the university.”
Not all of Penn’s major donors are willing to withdraw their support in the wake of the current debate. Blackstone Group CEO Jon Gray, who along with his wife has donated $55 million to Penn for cancer research and $10 million to support low-income children, said this week that he would continue to support the university despite Rowan’s campaign will support.
“These are long-term missions for us,” Gray told Bloomberg. “The decision about their future,” he added, referring to the university’s president, “rests with the Penn Board of Trustees.” —Lauren Hirsch
IN CASE YOU MISSED IT
Representative Jim Jordan has dropped out as a candidate for Speaker of the House of Representatives. After the far-right Ohio lawmaker failed to win the election for speaker for a third time on Friday, Republicans voted to drop him as their nominee. There is no consensus among Republicans on an alternative candidate as the House of Representatives remains paralyzed.
Netflix shares are enjoying strong subscriber growth. The streaming giant reported better-than-expected profits on Wednesday, despite strikes in Hollywood that brought film and television production to a near standstill. Netflix added around nine million new subscribers in the last quarter, even as the company tightened its crackdown on password sharing. Investors also enjoyed news that prices for some subscription plans will be increased.
Jay Powell leaves the door open for further rate hikes. The Federal Reserve chairman signaled Thursday that the central bank was willing to leave interest rates unchanged at its November meeting but could raise them later if data showed the economy was too hot. Powell said policymakers would also closely monitor geopolitical tensions. Unrest in the Middle East has pushed oil prices higher in recent days, which could drive up inflation and weigh on growth.
The US deficit doubled last year. The Treasury Department reported a $1.7 trillion deficit for the 2023 fiscal year that ended Sept. 30, but the total actually reached $2 trillion when taking into account President Biden’s student loan plan and its failure. Republicans blame excessive federal spending for the deficit; Democrats point to Trump’s tax cuts. The main reason appears to be lower tax revenues, which have nothing to do with these cuts.
The right way to fail
Amy Edmondson, a management professor at Harvard Business School, is an expert on what makes teams and organizations successful. In her latest book, Right Kind of Wrong, she argues that a crucial piece of this puzzle is the willingness to fail.
DealBook spoke with Edmondson about why failure can be useful when done right. The interview has been shortened and edited.
You call one of your concepts “intelligent failure.” How is this different from a mistake?
To make a mistake there must be a recipe to use and it wasn’t used. An intelligent failure occurs when you are breaking new ground in the pursuit of a goal and you had good reason to believe that what you were trying might work.
They wrote that a healthy relationship with failure allows people to “play to win” rather than “play not to lose.” What do you mean by that?
When we play not to lose, we don’t take any risks. We go for good enough. This is safer compared to the stretch goals and therefore much safer and more natural. But innovation has never happened like this.
How do business leaders avoid creating an organization that encourages people to gamble so as not to lose?
Organizations punish people for things that go wrong rather than rewarding the well-intentioned, thoughtful, and smart efforts that represented those failures. Countless managers at all levels have told me, “I tried something new, I innovated, our team learned a lot from it,” only to later hear something like this in their annual performance review: “Well, we see. “You made this mistake here and we blame you for it.”
How does your previous work on psychological safety impact how managers can create an environment where it is okay to fail?
Psychological safety is an environment in which people believe interpersonal risks can be taken, which means speaking truthfully about what is really happening. And they believe that they will not be punished, penalized or humiliated for this kind of openness. And that’s important both for innovation and for encouraging people to take risks.
This is also crucial for preventing avoidable failures. I’m in favor of preventing as many errors as possible caused by errors in known areas. And that can only happen if people are willing to raise concerns or questions about something and ask for help when they need it.
Is there an example that illustrates the wrong kind of failure?
Sam Bankman-Fried delivers one of the most visible corporate failure stories in the news today. The massive failure of his company is not an intelligent endeavor. Yes, it was new territory; Yes, he had done his homework and had extensive knowledge of technology and markets. and yes, it was driven by a goal. But the scale of the outage is anything but helpful in gaining valuable new insights into Bitcoin. And instead of sincere experimentation and true innovation, lies and deception were built into the business model for a long time.
Thank you for reading! I’ll see you on monday.
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Source : www.nytimes.com