March 13, 2008

C.U. Avoids Conflicts of Interest With Acceptance of Donations

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While American universities benefit from government endowments, business corporations and alumni contributions, college administrators are cautious not to relinquish some of their autonomy in the name of donations.
Donations that come with strings attached pose a dilemma to Cornell administrators and professors who receive funding from businesses, governments and wealthy individuals.
Through Cornell’s history, the administration has accepted donations with restrictions. For example, Balch Hall, funded by Allen C. Balch who graduated in 1889, and Janet Balch, who studied at Cornell from 1886 to 88, must remain an all-female dormitory. In addition, Willard Straight Hall, constructed in honor of Willard Dickerman Straight, who graduated in 1901, is not allowed to hold any academic classes. None of the wishes of these contributors, however, interfere with the curricula or course materials set by the school administrators.
Among the faculty, such a complex issue spurs a wide range of reactions. Prof. John Siliciano, law, a vice provost, sees the recent transactions between Marshall University and BB&T Coroporation as very problematic and something Cornell would certainly avoid.
On Jan. 24, BB&T Charitable Foundation announced a $1 million contribution to establish The BB&T Center for the Advancement of American Capitalism at the Lewis College of Business at Marshall University. Under the conditions of the agreement, Marshall University must teach Ayn Rand’s Atlas Shrugged as part of their curriculum.
When speaking with Bob Denham, senior vice president and director of Corporate and Executive Communications of BB&T Corporation, the motive of this bank’s donation was not to promote pro-capitalist philosophy, but to promote discussion about the complexities of a capitalist society.
“The purpose behind these gifts is to encourage a fundamental discussion of the moral foundation of capitalism, to provide students an opportunity to hear from the great philosophic defenders of capitalism, such as Adam Smith, Ludwig Von Mises, Fredric Hayek and Ayn Rand,” Denham said.
Denham also explained that the question that Marhsall University had to answer was not whether the gift was helping to dictate the school’s curriculum, but whether the school would be interested in teaching this topic regardless of the donation.
“The gifts ultimately support professors who have an interest in Rand and her philosophy regarding the morality of capitalism,” said Denham. “All the professors involved in these programs believe this is an appropriate academic endeavor independent of BB & T’s interest. At the end of the day, it is the university’s decision whether to accept.”
Siliciano stated in an e-mail, “Cornell just cannot accept money with those kinds of strings attached because it directly undermines our own responsibility to determine internally what we teach and how we should be teaching it. The problem isn’t really any different from one in which the government sought to specify what should be taught in universities. The fact that this is a private donor rather than the government really doesn’t change the threat that such conditions pose to the academic freedom that is crucial to the effective functioning of universities. Put simply, we don’t sell our curriculum.”
Not only must school administrators determine which funding to accept, but professors also must grapple with the question of which donations to accept to fund their research. Prof. Jeff Cowie, industrial and labor relations, only accepts funding from learning foundations that do not have specific political agendas. As a labor historian, Cowie chooses not to accept funding from either labor organizations like the AFL or businesses, since he feels that doing so would create conflicts of interest.
Besides private businesses and individuals, another key benefactor to Cornell University is the New York State government. New York State helps endow Cornell’s land-grant schools such as the School of Industrial and Labor Relations, the College of Human Ecology, the College of Agriculture and Life Sciences and the College of Veterinary Medicine.
According to Harry Katz, dean of ILR, 15 percent of the school’s funding comes from the state. This endowment from the public sector has some implications in the administration of the schools.
“We aim for at least 60 percent of the students in the statutory college to be from in state. This percentage is not for each college, but all of the land-grant schools in total,” Katz said. “This is not a law, but a verbal agreement.”
To strike a balance between pleasing donors without relinquishing any control of the administration, Katz views the process as a negotiation.
“We try and match the interests of the donor with the interests of the school,” Katz said. “If someone gives us money to study a problem, we make a proposal and then negotiate a plan of action for using this funding. We will accept the funding if the program is one which we are doing or one we would be interested in doing. However, we recently had to deny an offer to study global supply chains because it did not fit the interests of the school. The funding was for the study of the structure of multi-national corporations and business strategies; ILR, however, would be interested in the implications of the supply chains on labor. I redirected them to the business programs like the Johnson School or [Applied Economics and Management].”
Katz said that Cornell University is fortunate that it is not in dire need of money. Since its core activities can survive without donations, Cornell has the luxury of choosing which endowments to accept.
“Cornell has the resources to run its basic operations,” Katz said. “Endowments enable the University to expand what we are already doing. Thus, Cornell is not desperate and can stay true to its principles.”