As the richest President in history “sits in the Oval Office” and his tentacular cabinet of billionaires grip many federal agencies, the issue of domestic financial inequality has begun to crest. An analysis by Oxfam finds the eight richest multibillionaires have a combined fortune of $426 billion. Half the planet’s population, over 3.6 billion people, have a combined wealth of $409 billion. Of the eight men, six are American, and their average age is 68.5 years old — that number weighed down heavily by cherubic Mark Zuckerberg.
Over the next decade, it is estimated that over $2,860 billion will be donated or passed down to the next generation. What this aging group of billionaires does with its wealth will become the subject of great interest and debate, as that massive transfer will influence society at large.
Philanthropy has become a growing trend among billionaires, with 56.3% of billionaires and 98.4% of high net worth households giving back significantly to educational institutions and other charities.
Optically, donating to educational institutions is the best use of ultra-high wealth — it boosts personal reputations while tangentially helping students develop professionally and enhance their economic mobility. In the United States, education provides opportunity in the form of better jobs, higher incomes, better health, and a decreased chance of substance abuse. It is a fundamental indicator of success. To that cause, some of the most famous billionaires — Gates, Buffett, Bloomberg — have pledged to donate over fifty percent of their wealth to vaguely help “save the world,” in an unspecific and arrogant application of trickle down economics. But, the pledge ultimately acknowledges that wealth and education are the primary measures of prosperity in the United States, and that those measures should be distributed a bit more equally across the population.
However, many billionaires outside the lights and glamour can keep their intentions more opaque. Just 1% of 1% of Americans (26,783 individuals) accounted for about one quarter of all political donations to candidates in 2010. All contributed at least $10,000. Wilbur L. Ross — Commerce Secretary and the richest billionaire in the Trump cabinet, worth $2.5 billion — is still indistinguishable in a line-up, but personifies the problem with ultra-rich charitable giving: Ross served as a trustee on Trump’s fundraising committee during the campaign. He personally gave the maximum allowed individual donation of $5,400 to Trump, and another $139,145 to the Republican National Committee, according to the Center for Responsive Politics. Ross’ company, WL Ross & Co., donated an additional $336,635 to the Republican National Committee and $5,400 to Trump.
Two weeks ago — with Ross as confirmed Commerce Secretary — the President revealed that he would end the hypothetical “War on Coal.” Ross’s funds control 1.2 billion tons of coal reserves. He is the Chairman of International Coal Group, Inc., whose parent company Arch Coal is the second largest supplier in the U.S., supplying fifteen percent of the domestic market.
In the 1980s, Donald Trump found himself in financial trouble as three of his Atlantic City casinos were under foreclosure threat from lenders. Ross, then senior managing director of Rothschild Inc., represented investors in the casino and convinced bondholders to strike a deal with Trump that allowed him to keep control of the casinos.
Charitable donations to colleges hit a record $40.3 billion in 2015 — of which $11.56 billion went to just twenty colleges. There were eight gifts of $100 million or more last year, for a total of $1.44 billion — which went to just four universities. Capital-purpose gifts, which tend to be major gifts like endowments, increased 15.1 percent. In that same time, itemized charitable deductions from donors making less than $100,000 declined by 34 percent. And fewer alumni are donating than ever: in 1990, 18 percent of college and university alumni gave to their alma mater, according to the Council for Aid to Education. By 2013, that number had been cut in half to less than 9 percent.
Elite colleges, like government, are becoming extensions of personal power and privilege for a handful of families, as fewer people donate more money and inflate donation statistics. Education has become a philanthropic market that the average citizen can no longer enter; only the extremely wealthy have political access to the fundamental vehicle that creates opportunity in our society.
The senescent super-rich have found a way to disseminate their ideals to a privileged group of students which bypasses government, is financially inaccessible to the public, and is tax deductible. Ultra-top-heavy philanthropy is a danger to higher education at large, as it forces colleges to rely on appeasing a small number of huge donors — billionaires, specifically. They donate an average of nearly $110 million in their lifetime and in some cases, put conditions on donations, granting them power over the university’s agenda. In return, their political desires are aided by the institutions.
In 2011, Yale received a gift of $25 million from Thomas Steyer and his wife Kathryn to launch an Energy Sciences Institute. In 1987, Steyer, who received his bachelor’s degree from Yale, approached the university’s endowment to allocate funds for his own company, Farallon, to manage. After Yale’s initial investment proved to be lucrative, Farallon began managing much of the university’s endowment. Stanford University also had millions invested with Farallon, and Steyer has personally gifted $7 million to Stanford for the establishment of the “Steyer-Taylor Center for Energy Policy and Finance.” Thomas and Kathryn Steyer are both Yale and Stanford alumni.
Now retired, Steyer was the single largest contributor during the 2016 election cycle with $87,057,853 in funds donated exclusively to liberal candidates — including $20 million into efforts to get millennials to support Democratic candidate Hillary Clinton. Steyer said these efforts would target more than 200 college campuses, hopefully mobilizing 2 million young voters in eight swing states to boost support for Clinton. Yale and Stanford were included.
Alternatively, T. Boone Pickens has donated $500 million to Oklahoma State University — of which $265 million has been marked for OSU athletics. In 2005, Pickens made an unmarked $165 million gift to Oklahoma State University. The New York Times reported that “the money spent less than an hour on December 30 in the account of the university’s charity, O.S.U. Cowboy Golf Inc., before it was invested in a hedge fund controlled by Pickens, BP Capital Management. Pickens is on the board of the O.S.U. Cowboy Golf Inc.
Pickens has made over $5 million in political donations to republican causes. He was a hesitant early backer of former Florida Gov. Jeb Bush, pledging only $100,000, before looking to Carly Fiorina, for whom he hosted a fundraiser in Dallas in 2015. He later reached his final decision, which secured our current President additional funding and secured Pickens a cushy new position: one of Trump’s top advisors on energy policy. Pickens gave Trump advice throughout the campaign and remains willing to give counsel to the President and Secretary of Energy, former Governor Rick Perry.
As charity is intrinsically subjective, billionaires are obviously allowed to choose where and how to invest their money. But they are now shopping around for educational institutions that are most willing to offer political return on investment, meaning more funding for elite schools (and students) that are beloved by the super-wealthy.
And with private political access to education, which directly determines success in our society, the economic divide splitting our nation widens.
If unchecked, private education will become an independent, sacrosanct political action committee controlled by a few wealthy donors that directly molds the ideologies of future generations. Like our government, oligarchic tendencies are beginning to prevail.