To: Alumni, Parents, and Friends
From: President Robert J. Zimmer
Subject: Department of Economics Gift
Date: November 1, 2017
Today, I am pleased to announce that the Kenneth C. Griffin Charitable Fund intends to make a new $125 million gift to support the Department of Economics in expanding its leadership in education and research with wide-ranging public impact. The new gift will support new generations of faculty and students and the impact their work can have on fundamental societal challenges. This latest gift will bring Ken Griffin’s total giving in support of UChicago Economics to nearly $150 million. In recognition of his giving, including the second-largest gift in the history of UChicago, the Economics Department will be renamed the Kenneth C. Griffin Department of Economics.
The new gift will help advance a number of department initiatives, including expanded resources for faculty, increased financial aid for undergraduate and graduate students, and a new research incubator named the Kenneth C. Griffin Applied Economics Research Incubator, which will focus on new strategies to strengthen the understanding and impact of economics.
It will also support scholarships for third-year and fourth-year students in economics through the University’s Odyssey Scholarship Program and provide stipends to graduate students and support for graduate research.
Griffin, who joined the University’s Board of Trustees in 2014, has supported the Economics Department and other areas of the University through past gifts. Griffin’s philanthropy includes gifts to the University to further research to improve K-12 education through the Chicago Heights Early Childhood Center, the University of Chicago Laboratory Schools, and the University of Chicago Charter School.
With the gift, the Department of Economics joins other named programs at the University, including four schools and two other academic departments.
We are deeply grateful to the Kenneth C. Griffin Charitable Fund for its generous gift in support of impactful scholarship and education in the field of economics.
Now the Department of Economics will be known as Kenneth Griffin Department of Economics. I didn’t even know that you could get naming rights to an academic department.
If Laurene Powell Jobs donates $500 million to Stanford CS department, will it change the name to Steve Jobs Department of Computer Science ? Or Page & Brin Department of CS if the Google founders donate the same amount?
I am just wondering if anyone can enlighten me on this topic. What is a typical budget for a social science department? For sure it cost much less to run an Economics Department than a Physics or Chemistry Department. In other words, how big really is this $125 million gift?
For a guy whose net worth approaching $8.5 billion, $125 million seems to be a dirt cheap price to buy the naming right of a world class academic department.
@85bears46 at #3 - he could afford to donate some spare change, eh?
$125 mill seems very large to me. Booth got more than 2X that but it was a huge deal - and Booth is a significantly larger and more costly institution. Econ gets about 20-25 grad students a year (guessing here) and the number of faculty - while expensive on a per person basis - is pretty small. They aren’t going to use the money to purchase more instructors for undergraduate, of course. They’ll use it to hire away top faculty from Princeton, Harvard, Yale, Stanford, MIT or Cal. Then they’ll set up scholarship programs to lure in the best grad students. Bingo on the overall cost simply not being what a chem or physics dept. would cost. Blackboards are fairly inexpensive. The biggest outlay will be to purchase human capital, not plant and equipment. And they already have their “new” space so nothing needs to go to that.
So - how to use the funds? Well, a 4% return on 125 mill is around $5 mill. Say they divide it 80/20 so that the grad program only gets a paltry $1 million per year. With a five-year time horizon till graduation, you’ll want to allocate about $200,000 per year for grad student stipends. Assuming 20 students per year, that’s an additional $10,000 per student per year (over and above their current stipend).
Now for the faculty. You can easily hire four top dogs each for $1 mill per year (maybe more than four - not sure how much academic economists at UChicago actually make). One thing about the current famous faculty there is that they are aging. Over the next 10 years more several should go emeritus or at least step down from departmental decisions. Not sure how their status or salary changes but if it does that may also loosen up some dough to help hire more top dogs.
But of course these are just details. We KNOW that it’s a big amount because the donor’s name is now on the dept.
I think Stanford could name their CS dept for Brin but the number has to be in the half billion to a billion range.
Stanford’s pricing is not too far from UChicago but it is at a premium. Phil Knight donated 100 million to Stanford Business school and got a the business school buildings named after him. Harper donated $75million for the building naming rights at Chicago Booth.
$5M a year (based on a 4% return on the $125M donation) is a huge amount of money for a non-STEM department. Being able to offer, say, an additional $10-15k a year stipend to a potential grad student moves the needle. Say you get a $20k stipend at Harvard, and $33k at Chicago - this can shift talent around.
Also, it can lead to changes in faculty hiring. Maybe the econ profs read all that talk about Harvard and Stanford being the new epicenters of econ, and got Griffin (a Harvard grad) to shift that balance of power.
Again, while some may doubt the importance of rankings, I don’t see how this doesn’t shift Chicago out of its current #7 (#7!) rank in US News econ back into the very tippy top of the ranks.
All this being said, I wonder how the back-and-forth negotiations went. $125M for naming rights at the signature Chicago department actually seems like a little bit of a “steal.” I was thinking maybe $200M would be nice (especially given that the donor is the richest person in Illinois, and worth close to $10B). But, don’t look a gift horse in the mouth!
@Cue7 are you suggesting that UChicago has undervalued its signature department? That would be embarrassing. Wondering how his position on the BOT and his other donations to the university all play into this negotiation?
I think $125 million is a steal for someone as well off as Griffin. You can argue simply based on reputation for layman, the Department of Economics is the crown jewel of U of C. David Booth donated $300 million when his net worth in 2014 was $1.3 billion according to Wikipedia. So Booth was donating st least 20% of his net worth. For a guy as rich as Griffin, 20% of his net worth will be close to $1.7 billion. He is not even paying 2% of his net worth and he gets his naming right to Dept. of Economics. I think U of C sells it too cheap.
The negotiation must have been very genteel, but the only real issue in the end must have been the price of affixing a name to a department. We have gotten used to seeing this for schools, and of course it has been standard for buildings right from the beginning. I have not heard of it for Departments. In my mind that has an unseemly feel about it, unless perhaps the name is that of a great scholar in the field. Wouldn’t you as a student or prof in Economics at Chicago now be a bit sheepish in trotting out the full moniker for the program in which you are studying or teaching? Doesn’t it make a field of learned scholarship sound rather like a ball field? Yet we know that all things are fungible, and we now know what a willing purchaser will pay a willing seller of a name for a Department of Economics. It would be interesting to see whatever documents papered this transaction.
This rather brings home to me the nameless generosity of the College alumnus known only as “Homer” who gave $100 million about ten years ago to fund the Odyssey Scholarsips for all College kids, whatever their field of study.
Does anyone know of another academic department with a “name” attached to it? Drawing a blank here. Of course, perhaps at one point naming the professional schools was considered unseemly but now there is a race for $$$'s. Still, the trend does seem to skip over most if not practically all the top med and law schools, for some reason.
Perhaps UChicago is just being honest about the need for money. The big question is how much Mr. Griffin will meddle in the direction of research going forward. Perhaps all those details were worked out beforehand(?). Much harder to sway a professional school with it’s myriad departments, faculties and research teams. The econ. department is much smaller and perhaps more vulnerable. Will Mr. Griffin have a say in future hiring decisions, for instance?
I don’t think donors have much direct say nor are involved in much of the day to day running of a department. It is not really why they dip into their pockets. What may happen, however, is there may be a change in the academic culture based on perceived likes of the donor. I know of one institution established by a donor where much of the faulty meetings were based on second guessing the perceived desires of the donor without that donor having any direct involvement in the running of the place - in fact their absence was a real issue as the donation was time limited and the long-term future of the institution was up in the air. I am guessing that this won’t be the case in this instance.
I wonder also, from the donor’s perspective, if Chicago is starting to represent the best “value” for their dollar. By this I mean, at Chicago, you could rename the signature department - probably one of the most influential departments in any subject, anywhere, for $125M. Could you get the same - for the same price - at Stanford CS, or Harvard econ, or MIT robotics, etc.?
I doubt it - because Chicago “needs” the money more than these other schools. Obviously, $125M moves the needle at any school, but it probably means more to Chicago than it does to, say, Stanford. Stanford can raise $125M in about a month or so. In years past, $125M would be about 40% of Chicago’s fundraising for an entire year.
Finally was able to check with my economist acquaintances about this gift. Of course they were very much aware of it. Seems that at least a few of them think it’s a huge number “for a department of 30 faculty and maybe 80 students in any given year”. So maybe economists are just cheap. One of them gave me this interesting quote: “the university isn’t doing it’s job if there remains a blackboard in some classroom without a name designated to it.”
No doubt there’s a contract somewhere about the name. I’d love to know whether they have really committed to that name in perpetuity, or whether it has just been rented for a generation. Like with sports arenas.
I would say John Harvard and Elihu Yale got pretty good value for their philanthropy. I think Harvard left the college most of his wealth, which was not likely all that much, given that he was 30 and had only lived in America for about a year. Yale gave his local college building fund the profits on nine bales of goods, and a library of a few hundred books.
@JHS - if only you could get the same value today! I imagine a young John Harvard-type, seeking to give all his wealth to an institution, would not find the same outcome now.
I wonder how the donor feels re value?
On a practical front, $125M means the dept could engage in some fairly awesome experiments.
@kaukauna at #18 - Fletcher is, for the most part, a professional school unless I’m missing something. Tepper has the Econ dept. but is itself the school of business with several departments so that’s consistent with other “named” b-schools (Wharton, Sloan, Booth, Kellogg, etc.). Those two are part of the trend for contained degree-granting bodies within the university (typically professional) to sell “naming rights” to the highest bidder.
? Or Page & Brin Department of CS if the Google founders donate the same amount?