How much influence should universities give their donors?

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Some of the most powerful people in business have targeted universities for their responses to the Hamas terrorist attack on Israel and accusations of anti-Semitism.

Marc Rowan, CEO of Apollo Global Management and a major donor to the University of Pennsylvania, has He called for the resignation of the school president. and its president. Former ambassador Jon Huntsman stopped donating to the school and Ron Lauder, heir to Estée Lauder cosmetics, said he was “reexamining” his financial support.

Donors accuse Penn of inconsistently applying its free speech values. Clifford Asness, chief investment officer at AQR Capital Management, wrote this week in a letter to the university’s Wharton School that he had “long been dismayed by the move away from true freedom of thought” and would not consider donating until “ significant change will be achieved.” evident.”

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.

Large donors to universities have long expected special treatment, such as preference for their children’s applications. But these demands aim to shape the fundamental values ​​of universities and overthrow top leaders.

Universities helped create the expectation that donations carry influence. Like most nonprofit organizations, American universities foster relationships with some donors by offering them board seats. The job comes with real power: Trustees vote on decisions such as tenure and the selection of the university president. For smaller donors, schools sometimes offer membership in alumni councils or advisory circles, which carry no fiduciary responsibilities but provide a platform to influence decisions.

The question is how far the influence of individual donors should extend. “The job of the president of a college or university is very difficult because, on the one hand, he has to keep the trustees happy, because they are big donors and because they can fire the president,” said Edward Rock, a law professor. said New York University who specializes in corporate governance. “At the same time, it must ensure that the academic mission of the university is not compromised by external forces, whether political or economic forces.”

This potential conflict is not new. In 1995, Yale returned a gift of 20 million dollars from a billionaire alumnus after he demanded the selection of professors in the Western Civilization program he funded. Penn faculty senate leaders argued in a letter this week that donors who pushed for the university’s president and provost to resign over a Palestinian literature festival held on campus, which donors said featured ideas anti-Semites, had also gone too far.

“Academic freedom is at the center of our educational and research missions,” they wrote. “And we demand that it remain free from internal or external pressure or coercion.”

Even the best-funded universities work to retain big donors. The endowments of elite universities are as large as those of some of today’s best-known funds. Penn has an endowment of $21 billion. harvard has 50 billion dollars. Even with these large coffers, the apparent exodus of money is significant, experts told DealBook.

Reviews from well-known businesspeople could influence smaller and future donors. And often, donor contributions are earmarked for specific programs, meaning colleges have less money to spend freely than the top sums might imply.

“No matter what happens, your operating fund is going to be affected,” said Larissa Reece, a consultant with Ashley Rountree and Associates who advises schools on fundraising. “Even Harvard, with its resources and endowments, still requires an annual fund to keep the basics of some things going at the university.”

Not all of Penn’s big donors are willing to withdraw their support during the current debate. Blackstone Group CEO Jon Gray, who, along with his wife, donated $55 million to Penn to Cancer research and 10 million dollars for supporting low income childrenHe said this week that he would continue to support the university despite Rowan’s campaign.

“Those are long-term missions for us,” Gray told Bloomberg. “The decision about its future,” she added, referring to the university president, “lies with the Penn Board of Trustees.” —Lauren Hirsch

Rep. Jim Jordan is not running for speaker of the House of Representatives. After the far-right Ohio lawmaker failed to win election as president for the third time on Friday, Republicans voted to eliminate him as a candidate. There is no consensus among Republicans on an alternative candidate, as the House remains paralyzed.

Netflix shares rise on strong subscriber growth. The streaming giant reported better-than-expected profits on Wednesday, despite strikes in Hollywood that nearly paralyzed film and television production. Netflix added approximately nine million new subscribers last quarter, even as it stepped up its crackdown on password sharing. Investors also cheered the news that he will raise prices on some subscription plans.

Jay Powell leaves the door open to more interest rate increases. The chairman of the Federal Reserve noted on Thursday that the central bank was willing to leave rates unchanged at its November meeting but could raise them later if data showed the economy was getting too hot. Powell said authorities were also closely monitoring geopolitical tensions. Unrest in the Middle East has driven up oil prices in recent days, which could raise inflation and hurt growth.

The US deficit doubled last year. The Treasury reported a $1.7 trillion deficit for fiscal year 2023, which ended Sept. 30, but the total actually reached $2 trillion once the president’s student loan plan is taken into account. Biden and his disappearance. Republicans have blamed the deficit on excessive federal spending; Democrats point to Trump tax cuts. The big culprit there appears to be less tax revenue not related to those cuts.

Amy Edmondson, a management professor at Harvard Business School, is an expert on what makes teams and organizations successful. Her latest book, “Right Kind of Wrong,” argues that a crucial piece of that puzzle is the willingness to fail.

DealBook spoke with Edmondson about why failure can be useful if done right. The interview has been condensed and edited.

You call one of your concepts “intelligent failure.” How is that different from a mistake?

For there to be an error there must be a recipe to use and it was not used. A smart failure is one that occurs in new territory in pursuit of a goal, where you had good reason to believe that what you tried could work.

You have written 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 take no risks. Let’s go for good enough. This is safer compared to stretch goals, so it is much safer and more natural to do so. But no innovation ever came that way.

How do business leaders avoid creating an organization that encourages people to gamble so as not to lose?

Organizations penalize people for things that go wrong instead of rewarding the well-intentioned, thoughtful, and intelligent efforts that represented those failures. Countless managers at all levels have told me, “You were trying something new, you were innovating, our team learned a lot from it,” only to later, in their annual performance review, hear something like, “Well, we see you made this mistake.” here and we take it against him.”

How does your previous work on “psychological safety” influence how managers can create an environment where it’s okay to fail?

Psychological safety is an environment where people believe that interpersonal risks can be taken, which means talking honestly about what is really happening. And they believe they will not be penalized, punished or humiliated for that kind of candor. And that’s important both for innovation and for encouraging people to take risks.

It is also crucial to prevent avoidable failures. I’m all for preventing as many failures caused by bugs in known territory as humanly possible. And that can only happen when people are willing to express their concerns or questions about something and ask for help when they need it.

Is there an example that illustrates the wrong type of failure?

Sam Bankman-Fried offers one of the most visible stories of business failure in the news today. The massive failure of his company cannot be considered intelligent. Yes, it was new territory; Yes, I had done my homework and had a deep understanding of technology and markets; and, yes, it was driven by a goal. But the magnitude of the failure is far from useful in providing valuable new insights into Bitcoin. And, instead of sincere experiments and genuine innovation, lies and deception were built into the business model for a long time.

Thank you for reading! See you on Monday.

We would like to receive your comments. Email your ideas and suggestions to dealbook@nytimes.com.

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