Mike Moritz’s gift to Oxford: a couple of thoughts from me

by Stephen Tall on July 12, 2012

Oxford University was yesterday able to unveil what is probably the largest ever pledged donation towards student financial assistance in the history of any European university. The bountiful benefactor? Mike Moritz, Welsh son of an academic emigre father who fled Nazi Germany, and is now a Silicon Valley billionaire.

As a fundraiser, it’s always fascinating to see gifts that were in the pipeline become real. I was involved when I worked at Oxford in only a peripheral way, but I don’t think it’s betraying any confidences to say that — like any major donation — this was by no means a simple gift to land. Huge kudos are due not only to Mike and his wife Harriet Heyman, but also to the Oxford team that persuaded a donor who is no soft touch to commit such a sum of money.

Two further points:

1) The Moritz ‘triple lock’

Mike Moritz’s gift is branded as a £75m gift — which it is, but with stringent conditions attached. Indeed, he seems to have pioneered his own ‘triple-lock’ to address normal donor concerns. Most potential major donors worry about three things: 1) once they’ve handed the money over they’ll lose their ‘bargaining power’ with the institution, 2) their gift won’t actually influence/assert the institution’s mission no matter what assurances they’ve received, and 3) that the institution will become dependent only on its biggest donors and won’t do enough to encourage all supporters to give what they can.

How has Mike Moritz sought to mitigate these risks to his philanthropy achieving as he hopes it will? Here’s how the University explains the deal:

The total Moritz-Heyman gift of £75m to Oxford will be made in three tranches of £25m. Each £25m will be matched by the equivalent of investment returns from £25m of the University’s own endowment (the ‘match funding’), making £50m in total.

Then there will be a challenge to the collegiate University and its supporters to match that £50m through further philanthropy (the ‘challenge funding’) – making £100m in ring-fenced support for lower-income undergraduates.

Only when the initial £25m Moritz-Heyman donation has led to a full £100m for student support will the next £25m be given. This process will happen three times over, generating an ultimate £300m for undergraduate support, comprising £75m from Moritz and Heyman (for Moritz-Heyman Scholarships); the equivalent of the returns on £75m of the University’s own endowment (for Moritz-Heyman Scholarships); and £150m from other alumni and donors meeting the funding challenge (for similar scholarships but bearing different names).

So, yes, the headline gift is £75m from Mike Moritz… but that full £75m can only be achieved if the University commits an equal amount (£75m) of its own investment income AND can persuade sufficient other donors to match both those amounts combined (£150m). This is a canny way of orientating Oxford’s mission — both its investment and its fundraising strategy — towards addressing what Mike Moritz sees as the big issue in higher education.

But is he right…?

2) The best way to improve HE access? The truth is, no-one knows for sure

Everybody buys into the concept of bursaries, giving young people from poorer backgrounds the means to live life and get on with their studies. But fee-waivers are more controversial within the UK, where the Coalition’s ‘graduate tax’-style system of student finance means your current financial circumstances are irrelevant to your ability to pay for your course. No-one pays a penny until they’re earning at least £21k, and then on a progressive basis with debts wiped out after 30 years. Without a trace of irony, I’ve argued it is the best example to date of how Conservative / Lib Dem Coalition policy-making should work.

Telegraph commentator Daniel Knowles yesterday queried the purpose of the Moritz donation’s funding of fee-waivers:

… the university intends to use it to abolish the tuition fees increase for those students, who will now pay £3,500 in fees, rather than the full £9,000 that their better-off peers will pay. This makes no sense. By all means, provide a bursary for living costs – give every child on free schools meals a personal butler, for all I care. The more, the better. But the whole point about fees is that they are a) payable after graduation, and b) payable out of taxable income. And however impoverished a child’s upbringing was, once he gets to Oxford, he is almost exactly as likely to become a banker or a corporate lawyer as an old Etonian.

Daniel is probably right. The initial official data released by UCAS this week shows that while university applications have fallen back slightly this year there appears to be little differential between applicants from poorer backgrounds and all others; indeed, if anything higher fees seem to deter students from better-off backgrounds rather than the supposedly more debt-averse poor. This is only the first year’s data, of course: we won’t in reality know the impact for at least a couple more years.

But Daniel isn’t definitely right — simply because we don’t know. Not only do we not know the impact of higher fees on applicants from different financial backgrounds yet, nor do we know much about the impact of Daniel’s alternative proposals for the Moritz gift: access programmes, teacher-awareness programmes and summer schools. My day-job colleagues at The Sutton Trust have commissioned independent evaluations of some of their programmes (see here and here, for instance). But across the higher education sector there is a remarkable absence of evidence for what will actually make a difference in encouraging more young people from disadvantaged backgrounds to apply to university. This is in spite of the hundreds of millions of pounds spent on financial assistance, including fee-waivers, by universities (£356m in 2009-10), and the sizeable £38m also spent on access initiatives. For a sector meant to be grounded in research, higher education is scandalously incurious about whether its widening participation money is achieving what universities claim for it.

Let me conclude on an upbeat note, though. After a few months in which philanthropists have been frequently depicted by politicians and the media as venal, tax-dodging egotists with no regard for society or care for their responsibilities, Mike Moritz’s gift is a handy reminder of what actually motivates the wealthy to give to good causes.