Many in the African American community believe that colleges and universities are simply there to educate a student so that they can go on to get a job. However, colleges and universities more than any part of our society are institutions of power and wealth creation more so than any other institution. I’d touched on some of the economics of universities previously in the article “Can African American Muscle save African America?” This is mainly because they, more than any other institutions, can touch all three parts of the SEP (social, economic, political) development model. Through their teaching they can influence the social aspects of a community by providing strong cultural identity. Through research they can create economic opportunities, and their research can also influence policy in local, state, and national governments.
The social development of students to serve their community can be seen in a university like Brandeis, a Jewish institution, which has a MBA program in Jewish studies. This program identifies potential Jewish leadership and hones their skills to run Jewish institutions in the community handling the social, economic, and political aspects of these institutions. Per their website it states “This innovative program prepares future Jewish community executives with the full complement of MBA/non-profit skills and specialized knowledge of Judaic studies and contemporary Jewish life.” They also offer a program called the MPP-MA in Jewish Professional Leadership which states “By preparing professional leaders with a full array of policy analysis and development skills, as well as specialized knowledge of Judaic studies and contemporary Jewish life, it trains students to design and implement innovative solutions to the Jewish community’s most critical problems, and to analyze and reform existing practices.” As you can see the university is catering to the core demographic that it was founded to serve. It is ensuring that their institutions that serve their community are well equipped with leadership that understand the historical & cultural (social), economic, and political aspects that the Jewish community face and will allow it to prosper and protect itself.
Next, let’s look at the economics that colleges and universities can produce for a community. What do Google, Time Warner, FedEx, Microsoft, Facebook, and Dell have in common? They were all founded on college campuses. Google founded at Stanford, Time Warner & FedEx at Yale, Microsoft and Facebook at Harvard, and Dell at the University of Texas. The six companies whose wealth value as measured by their market capitalization (except Facebook who has a private valuation are measured by a stock’s share price times number of company shares outstanding) is worth an estimated $530 billion. To put it in perspective these six companies wealth alone is 63% of African America’s buying power which is valued at an estimated at $850 billion.
Economically-speaking, colleges & universities primary driver of funding is research. Research in many instances is turned into businesses. These businesses tend to hire and have its initial investors come from the very university and nearby communities they are launched from. The wealth these businesses generate comes back to the university and community in the form of larger endowments, more research dollars, and more scholarships. These scholarships allow its students to graduate with less debt, which allows for early accumulations of wealth instead of paying down student loan debt. These businesses by hiring primarily from the institutions they sprung from help the employment of the demographic they serve. In the case of University of Michigan their research that will be transformed into business ventures will attempt to transform Michigan’s economy to one less dependent on the auto industry and its appears more into bio-tech businesses which should drastically improve Michigan’s unemployment rate (presently at 12.9% vs. National of 9.2%) in the years to come. The state of Utah’s UStar program (using taxpayer dollars) through its two state universities Utah and Utah State is focusing on the spillover industry from Silicon Valley. UStar’s mission stated on their website is stated as “UStar created a number of research teams at the University of Utah and Utah State University. Spearheading these teams are world-class innovators hungry to collaborate with industry to develop and commercialize new technologies.” BP in 2007 gave $500 million to the University of California-Berkeley to “develop new sources of energy and reduce the impact of energy consumption on the environment.” This $500 million is more than ALL HBCUS research budgets combined ($440 million) according to the National Science Foundation tracking of college and university research budgets.
Individually speaking we can see how this wealth has culminated into the hands of people at the universities who were fortunate to be a part of these founding companies. Facebook’s 1st investor Eduardo Saverin was a fellow student of Mark Zuckerberg at Harvard. His $15,000 investment, had he actually held onto it, today would be worth $7 billion. Google’s initial investors were professors from Stanford where Page & Brin founded the search engine. Same goes for Microsoft where Bill Gates initial investor and partner was classmate Paul Allen whose current net worth is $13.5 billion primarily in part to his Microsoft holdings. Dell Computers founded by Michael Dell in his University of Texas dorm room also has his primary investors from UT.
We have also seen the philanthropic power of this wealth to impact communities at work as well. Mark Zuckerberg recently donated $100 million donation to Newark, NJ school system. T. Boone Pickens four years in 2006 ago set a record with a $165 million donation to Oklahoma State University which, as has been reported, “surpasses the $100 million Las Vegas casino owner Ralph Engelstad gave the University of North Dakota in 1998.” The two donations by Pickens and Engelstad together are equal to over 25% of all HBCU endowments combined and over 50% of HBCU research budgets. T. Boone Pickens donation alone could put 412 African American students a year through undergraduate DEBT FREE or 110 African American doctors through medical school DEBT FREE at HBCU medical schools Charles Drew Medical School in California or Meharry Medical School in Tennessee. Graduating debt free could allow these doctors to be more likely to choose working in hospitals in African American communities as opposed to chasing a high paying job they need to pay down the massive student loan debt they occur. How would that be for improved medical care to our community?
The power to influence political policy is evident at Rice University’s Baker Institute for Public Policy. Their current areas of focus are Arab media & politics, conflict resolution, drug policy, energy, health economics, homeland security, international economics, religion & culture, science & technology policy, space policy, tax & expenditure policy, the Americas Project (Latin America policy), the Transnational China Project (Chinese culture & policy), urban studies (African American policy), and the U.S.-Mexico Project (border policy). They have also recently sponsored an organization for the Iraq Study Group. Even our beloved Barack Obama’s cabinet is infected with Ivy Leaguers as noted in the article “Barack Obama taps into the Ivy League revolution with his cabinet” which notes that 22 of the 36 cabinet members are from Ivy League universities. Universities that still hold less than a 10% African American population. While Obama has a diverse cabinet the probability of this happening if he himself were not African American is highly unlikely (see previous 43 cabinets). It goes on to say “Even in Obama’s Washington, money and surnames matter.” The reality is people in power tap into those whom they know and who are qualified (or not) more than they tap those who they don’t know and are qualified. The old adage “Its who you know not what you know” speaks to a large part of the social networking importance of colleges and universities.
The question is then how do we improve our HBCUs to become the vehicles that can serve our SEP interest? First realize that these institutions are more than just a place to get a degree. As you can see their depth is possibly the greatest vehicle of development our community has at its disposal and that their existence is for the very thing we seek and that is to help uplift our community today and for generations. Secondly realize every mind and body has a value. This IS capitalism people. EVERYTHING has a value. For American college and universities each warm body generates an average of $33,000 in tuition revenue per year. HBCUs only get $6 billion of the $54 billion in African America’s annual tuition revenue pie meaning $48 billion is leaving our community to predominantly European American colleges & universities in tuition revenue alone. This forces our 95 HBCUs to operate on an average of $63 million per HBCU to have very little in the way of improving facilities, recruiting talented faculty, and expanding their research budgets, which could influence the SEP of our communities. To put that $63 million in perspective Ohio State University’s ATHLETIC department operates on $107 million per year (primarily funded by African American muscle). The fact that only a roughly 10-12% of African American students who can attend college choose to go to HBCUs limits these institutions from improving themselves as they are always strapped for operation revenue meanwhile being asked to compete from the perspective of: Howard v. Harvard, Charles Drew Medical v. UCLA Medical, or even Prairie View A&M vs. Texas A&M in the areas of SEP development and leaves us at the mercy of someone else’s institution solving our problems who has no real interest in doing so.
We must redirect our charity giving. A blog on African American giving I read recently said of our $11 billion we give annually to charities, $7 billion goes into churches. By making a concerted effort to redirect $2 billion of this would vastly improve the state of our HBCUs and should not dampen our religious institutions. Because while I’m all for saving our souls it is high time we invest in improving the fate of the bodies which house our souls and the institutions that were created to serve them and our communities. Too many of us faithfully pay our tithes and give little thought to our secular institutions like HBCUs. Their fate I dare say will be our own and without our own institutional power to combat institutional power of other communities we will be forever at the mercy of others awaiting them to bless us with their leftovers. It is time to once again do for self as all others do and as we use to do. Operate like a nation or become a destroyed people.
Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & CEO of Sechen Imara Solutions, LLC. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.