Harvard's Foreign Billions

Harvard's $2 billion capital campaign is big. In fact, it's the largest such campaign in the history of higher education. And to raise that kind of dough, Harvard will have to look outside the U.S. to the kind of wealthy entrepreneurs who make the cover of Forbes. Many already have connections to the University. But some have raised questions about the influence of...

The adjective used most often to describe Harvard's $2 billion campaign is "University" wide."

"Unprecedented" and "massive" are also used when talking about the largest such campaign in the history of higher education.

But one adjective you don't hear much about -- and one that will be critical to the success of the unprecedentedly massive, university-wide capital campaign -- is this one: "world-wide.

In other words, raising $2 billion dollars is a lot easier when you can draw on a pool of wealthy donors that is global, and not confined to citizens of the United States.

Development officials weren't immediately available yesterday afternoon. They were either in meetings (planning for the campaign), or they were on the road (fundraising).

Still, a multitude of signals point to the fact that Harvard plans to fundraise on a planet-wide scale.

Travel

President Neil L. Rudenstine, during just two years in office, has already traveled to Europe and the Far East.

His recent trip over spring break to Japan was not intended as a fundraising trip, Rudenstine said. But John P. Reardon '60, president of the Harvard Alumni Association, described the trip at the time as "a cultivation process," and said that while traveling Harvard administrators weren't "finishing any deals" or "asking for money," they were trying to involve alumni who might eventually help with the capital campaign.

Staff

In the last two years the University's central development office has hired an associate director for international fundraising and an East Asia development representative. While Rudenstine disbanded an "internationalization" office set up by his predecessor, Derek C. Bok, the new president seems to recognize the power of a specialized staff working on international issues in the fundraising office.

Early Money

Perhaps as result of the new staff, and perhaps as a result of unrelated factors that had already converged in the late 1980s, Harvard has already achieved several well-promoted success on the international fundraising front.

"The Shiseido Corporation of Japan pledged Harvard $85 million over 10 years, beginning in 1989. The money was to be used to build the Harvard Cutaneous Biology Research Center in conjunction with Massachusetts General Hospital.

"Prince Turki bin Abdul-Aziz Al Saud, of Saudi Arabia, endowed a professorship of immunology at Harvard Medical School In October 1990. The amount of the gift was not disclosed, but it usually costs about $2 million to endow a full professorship.

"The Association Francois-Xavier Bagnoud, a Swiss charitable foundation, endowed a new building, center and professorship for the study of health and human right at the Harvard School of Public Health. The gift, announced In December 1992, totaled $20 million.

"Werner Otto, a German mail-order magnate, was the principal donor for the $7.5 million Werner Otto Hall, which houses the Bush-Reisinger Museum and the Fine Arts Library in an addition to the Fogg Art Museum. The building opened in September 1991.

"King Fahd bin Abdul-Aziz Al Saud, of Saudi Arabia, gave Harvard $5 million to support the study of Islamic law. The donation, announced last month, will endow a professorship and fund legal research.

Not all of these gifts will count toward the $2 billion capital campaign. But they represent a trend that Harvard fundraisers undoubtedly hope will continue.

Necessity

Indeed, given the increasingly global distribution of wealth, the case can be made that international fundraising must be successful it Harvard is to reach its $2 billion goal.

Scan a list of the world's 101 riches people (one such list was recently published in Fortune magazine), and only about one quarter of them are U.S. residents, Japan, Hong Kong, Great Britain, Mexico, Germany and Switzerland are all competitive repositories of wealth and they're gaining.

Harvard fundraising traditionally relies on alumni donors, most of them American Citizens. No statistics were available on Harvard's current stream of international cash.

But a federal law re-instead last summer requires colleges and Universities to report to the U.S. secretary of education all gifts of more than $250,000 from foreign countries, people or corporations.

Universities must also report any restrictions or conditions of the gift.

Such reporting requirements came about in part because of concern in Congress and elsewhere that foreign governments were in a position to take advantage of United States universities.

Pearl Harbor?

The issue drew national press attention in December 1991 with the release of a report from the Washington-based Center for public Integrity. The study was alarmingly titled "Buying the American Mind: Japan's Quest for U.S. Ideas in Science, Economic Policy and the Schools," and was released to coincide with the 50th anniversary of the Japanese bombing of Pearl Harbor.

The report sad the Japanese get "obvious benefits" for their money, including "direct access to university science findings, influence over what some U.S. students learn about Japan, and distribution of public policy view that coincide with their own."

Foreign influence on United States universities also was a subject of discussion at January 1992 congressional hearings on the subject of indirect costs for research funding Scandalous over-billing for research overhead at institutions like Stanford University drew the ire of congressional investigators, and one of the most irritating things was that some foreign governments were billed less, or weren't billed at all for the indirect costs, or overhead costs, associated with their research grants.

In other words, the U.S. government was funding high research overhead costs and benefiting foreign governments, who could then compete with American companies using technology developed in United States universities.

Clearly, there is some political mileage in this. Foreign investment has been portrayed by some as "nefarious...an insidious force," said Craig Smith, publisher of the Corporate Philanthropy Report.

Still, foreign companies and governments find it increasingly worthwhile to weather the political criticism and give generously to American higher education institutions.

Among other things, Smith says, foreign donors are looking for prestige, for a way to "buy their way into the club,"

Another factor in foreign philanthropy--an acknowledged one in the case of King Fahd's recent gift to Harvard Law School--is a desire for god public relations. Like Fahd, many donors are hoping to improve their public image.

Is the university selling out by allowing itself to be used for such crass motives? Perhaps not, says Smith, who notes that universities have along history of taking a donor's money and then spending it however they please and sometimes displeasing the donor.

Harvard will have to grapple with the issues of foreign influence more intensely than every during the upcoming $2 billion capital campaign. The size of the campaign makes large foreign donations imperative, and with the increased cash flow will likely come increased scrutiny from both Congress and the media.

Yet while the 1980's boom in the Far East and the increasing internationalization of business make international fundraising something of anew reality, it's worth remembering that, at least at Harvard, raising money overseas (from donors with questionable motives) is a time-honored task.

Notes Smith, "John Harvard himself was a British merchant whose gift to Harvard was designed to reduce criticism of how much money he made off Massachusetts Bay Colony,"