Category Archives: Editorial

The Billionaire Families Of Harlem Nights’ Club Sugar Ray’s Empire

Posted on April 15, 2024 by | Leave a comment

“Good morning, Revolution: You’re the very best friend I ever had. We gonna pal around together from now on.” – Langston Hughes

The year is 1938 in Harlem, New York and an entrepreneur and his son are about to make themselves and their six lieutenants’ families 86 years later the wealthiest African American families that nobody has ever heard of. Their fortune as a group is estimated to be worth a minimum $4.4 billion and upwards of $36 billion. How did it happen you ask? Some would say it was the result of a robbery 86 years ago and others would say it was restitution due.

IMDb’s summary of Harlem Nights goes as follows: “Sugar” Ray is the owner of an illegal casino, who contends with the pressures of vicious gangsters and corrupt policemen who want to see him go out of business. In the world of organized crime and police corruption in the 1930s, any dastardly trick is fair.” A bit more detail to the story (spoiler alert) is that as the European American mafia uses violence and police corruption to destroy “Sugar” Ray’s club, he then gets revenge by robbing the betting houses of the mafia and blowing up their most profitable club in the process. “Sugar” Ray promises each of his six most trusted employees turned lieutenants $50,000 a piece (equal to $1.1 million in 2024 dollars) for their participation in the caper. The group initially believes that there will be approximately $750,000 (equal to $16 million in 2024 dollars) in those betting houses, but through a bit of misdirection on the group’s part they get the mafia boss himself to unexpectedly add another $500,000 (equal to $10.7 million in 2024 dollars) of his own money into the stash for a total of $1.25 million (equal to $26.7 million in 2024 dollars). Beyond the group, there are two additional participants who play a vital but small role in the caper and are handsomely rewarded for it. It is not clear on how much, but just to keep the numbers clean let us assume they gave each a lesser amount and yet still quite significant of $25,000 a piece (equal to $532,500 in 2024 dollars). Enough to ensure their full silence forever on the matter certainly. With the robbery/restitution complete, exactly how does that turn their family lineages into billionaires 86 years later?

The Club Sugar Ray 8 consist of “Sugar Ray” Brown (Richard Pryor), Vernest “Quick” Brown (Eddie Murphy), Bennie Wilson (Redd Foxx), Vera Walker (Della Reese), Willie (Ray Murphy), Jerome (Robin Harris), and Jimmy (Charlie Murphy) who have $1.2 million left among them. As promised by “Sugar Ray” and “Quick” each of the six receive $50,000 a piece and the remaining $900,000 (equal to $19.1 million in 2024 dollars) is retained by father and son. The group decides to form the Sugar Hill Trust, an ode to the African American neighborhood in Harlem that was the heartbeat of the Harlem Renaissance during the 1920s, and deposits half of each of their proceeds into it which amounts to $600,000 (equal to $12.8 million in 2024 dollars) to be invested into the 15 year old S&P 500 which ended February 1939 trading at 281.79 (as of March 9, 2024 it was trading at 5,123.69). They agree that Sugar Hill Trust will invest in this and reinvest all dividends. By doing so, by February 2024, that initial $600,000 is now valued at $4.4 billion (see above) and producing annual dividends for the Sugar Hill Trust of $58.5 million. The next phase of their wealth follows the advice of Sugar Ray from dinner one evening when he says, “Yeah, you know that’s where its at – the gambling. If we make that move we should concentrate on that. Give up the joy houses, after hours spots, concentrate on gambling.”

This leads to the creation and founding of the Harlem Nights Corporation (ala Las Vegas Sands). According to Forbes, “Las Vegas Sands Corp. engages in the development of destination properties. Its properties feature accommodations, gaming, entertainment and retail, convention and exhibition facilities, celebrity chef restaurants, and other amenities. It operates through the following geographic segments: Macao, Singapore, and United States. The Macao segment handles the operations of The Venetian Macao; Sands Cotai Central; The Parisian Macao; The Plaza Macao and Four Seasons Hotel Macao; and Sands Macao. The Singapore segment includes the Marina Bay Sands. The United States segment consists of Las Vegas Operating Properties and Sands Bethlehem.” As of March 9, 2024 market close, Las Vegas Sands had a market capitalization of approximately $39 billion. The Adelson family, which founded the company, currently controls and owns 57 percent of the firm and has a net worth of approximately $32 billion controlled by its matriarch, Miriam Adelson. Instead of the company being named Las Vegas Sands and controlled by the Adelson Family, it is instead aptly named Harlem Nights Corporation and controlled by the lineages of the Sugar Hill Trust bringing its value to $36.4 billion when you include the $4.4 billion of S&P 500 holdings. In addition, Harlem Nights Corporation annual dividend pays Sugar Hill Trust $342.6 million which combined with their S&P 500 dividend gives the families an annual income of $401.1 million among them. The complexities by which the family may access that income is far too complex to get into in this article, but it is worth reading up on the strategy called ‘Buy, Borrow, Die’ if the reader should be so inclined.

In the years following, Bennie marries Vera and they become the patriarch and matriarch of the eight, “Sugar” Ray marries Annie, and “Quick” marries Sunshine who have children and begin the foundation of the legacy that transforms African American institutions near and far. They are a quiet force that is felt, but rarely heard. “Sugar” Ray and A.G. Gaston are friends and their friendship and business dealings together help A.G. Gaston’s bank, Citizens Federal Savings Bank, transform over time into one of the nation’s largest banks, which leads to African American homeownership skyrocketing after World War II despite African American soldiers being largely left out of the G.I. Bill. There is massive entrepreneurship expansion, African American towns like Rosewood and Tulsa are able to rebuild after long hard fought roads from their attempted massacres, HBCUs having endowments that are among the largest in the country, and ultimately a stability in African America that seems almost unimaginable to many of us today. It simply takes a few to be committed feverishly to the building of the institutions and the empowerment of a people. To imagine such a world would be as “Sugar” Ray Brown’s last words before leaving New York, “sweet as sugar.”

Bonus History: In one of Harlem Nights’ last scenes where “Sugar” Ray and “Quick” enter an abandoned bank building there is a sign above that says Dunbar National Bank as they enter. Sergeant Phil Cantone, a crooked cop who works for Bugsy Calhoun, ask “Sugar” Ray and “Quick” why they were breaking into a bank that has been closed for five years. According to Harlem World Magazine, “The Dunbar National Bank was the first bank in Harlem to be managed and staffed by African-Americans. The Dunbar National Bank was funded by John Davison Rockefeller Jr., specifically for the population of Harlem. The president of the Bank was Joseph D. Higgins, 36 years a banker, onetime Federal Reservist, former vice president of the American Exchange-Irving Trust Company.”

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Would Huey & Riley Freeman Attend An HBCU?

Posted on February 29, 2024 by | Leave a comment

“There is a place in God’s sun for the youth “farthest down” who has the vision, the determination, and the courage to reach it.” – Mary McLeod Bethune

It is no secret that desegregation crippled just about every African American owned institution from neighborhoods to businesses to HBCUs – and many would argue the foundational institutions of Black marriage and African American families themselves. African American institutional ownership was faced with having to compete for human capital of the very people whose interest they were built to serve and the institutional ownership that all other non-European American groups envy. In turn, our institutions experienced a mass exodus as African Americans believed that the grass was truly greener and ice colder on the Eurocentric side. Fast forward to today, many African Americans believe they live in a pseudo-meritocracy, a dystopian like post-racial world where even having African American institutions of our own is somehow un-American and participating in our own institutional spaces is a sign of being the “not quite good enough negro” as many of us attempt to impress the European American gaze. This despite other demographics firmly having their own such as Notre Dame for the European Catholics, Brandeis being a secular European Jewish institution, and of course Harvard the flagship WASP institution, so on and so on. Never mind that the majority of the HWCU/PWIs that tout “diversity” often have less than 5 percent African Americans on their campus – and the majority are often there only to play sports.

Case in point, the University of Texas who is one of the most profitable athletic program in the country has a less than 5 percent African American population on its campus. The numbers are even starker when it comes to African American males who make up less than 2 percent of overall campus population, but comprise around 70 percent of the football and basketball teams. HWCU/PWIs have shown one thing to be true, and that is they want the best and brightest of our young women and the fastest and strongest of our young men. HBCUs have been unable to compete due to misperception of inclusion and the reality of the resource/wealth gap between our communities that desegregation and the GI Bill largely caused. Many HBCUs go decades before they can raise enough funding for new facilities or scholarships. Harvard’s endowment in one year can lose more money than the amount all 100 plus HBCUs have combined and still be one of the largest higher education endowments in the world.

In an environment where higher education is getting more and more expensive, African American students who come from the group with the lowest median net worth and income in the country often make college choices based on financial needs more than most. The result, continued exodus and plummeting of African Americans choosing HBCUs due to the lack of scholarship and aid available and the ever present belief that white is right and better.. Currently, less than 10 percent of African American going to college are choosing HBCUs over HWCU/PWIs. A detriment to alumni sizes, social networks, donations, and most dire – HBCU endowments. Just increasing the 10 percent to 25 percent could stave off many of the financial woes facing HBCUs and start to bring circulation of intellectual and financial capital into African American institutions. So how can HBCUs recruit in “Woodcrest”? How do you recruit African Americans who have become immersed in non-Black communities to HBCUs? How do you recruit African Americans who are in African American communities that are impoverished and are only looking to get out? How do you recruit middle class and affluent African American families who have the financial resources African American institutions so desperately need? How do you get African Americans to care more about African American institutionalism than we do African American individualism?

Two of America’s most beloved animated characters of the past 20 years are Huey and Riley Freeman voiced by the regal and benevolent Regina King. The Boondocks first premiered in comic form in 1997 and by 2005 would find their way to television and into our hearts. Huey, the tormented revolutionary and his younger brother Riley, the wanna be thug/hustler and athlete who shows glimpses of artistic genius. Their grandfather, voiced by the late great John Witherspoon, has moved them to a predominantly European American suburb away from the Southside of Chicago’s predominantly African American community at the most formative time in their life. Grandpa Freeman is also part of the Civil Rights generation and is a friend of Dr. Martin Luther King, Jr.’s as it turned out in an episode called ‘The Return of the King’. A controversial episode, but poignant of what happens when children, in this case Riley, are removed from cultural immersion of our own community. Riley has no idea who Dr. Martin Luther King Jr. is and often refers to him as “Morgan Freeman King” in the episode. The irony should not be lost on the Morgan Freeman dig who himself believes Black History Month and being identified as African American is an insult. In another episode, this one more focused on Huey, entitled A Huey Freeman Christmas, Huey convinced his European American teacher to let him write and direct the Christmas play. Naturally, Huey being who he is makes Jesus Black and makes a very Afrocentric production that was ultimately seen by no one as parents of Huey’s European American classmates boycotted the play since their kids were not in it, appalled by its Afrocentricity, and ultimately had the teacher fired for being “irresponsible” highlighting how European Americans will put down one of their own to maintain institutional power. The school was named the J. Edgar Hoover Elementary after all, named for the notorious FBI who infiltrated, spied upon, and sought the destruction of everyone from Dr. Martin Luther King, Jr., Malcolm X, Black Panthers, and every other African American individual and institution he even remotely viewed as a threat to the European American institutional power structure.

Riley ignorant of his cultural identity, Huey militantly attempting to push his Afrocentricity into an Eurocentric institutional space, and Grandad feeling as if he has “made it” because he is able to eat cheese with The Man. This is the family you have to convince that an African American institution and space is the best place to be. There also is the influence of the community on Huey and Riley. Tom DuBois who is married to a European American woman, Uncle Ruckus who rails against all things Black – while being the darkest character on the show, Tom’s daughter Jazmine whom you are never quite sure how she identifies and that probably is the point, and countless others who throughout the show push against anything and everything that would empower African American institutionalism at all turns. In fact, there is no exposure or presence of any Black institutions on the show. The Boondocks one could argue was actually the forerunner to Blackish, but that is another article for another time. With so much pushing against Huey or Riley choosing an HBCU and their grandfather allowing them to attend an HBCU, how do we overcome such an obstacle? Is it possible? Is it even worth the energy?

The answer of course is – it is complicated. How do you win a war most of your population does not know it is in? Another part is turning every other cheek to be included and a proverbial peace that means its erasure? Those that do know they are in a war are fighting with antiquated strategies, equipment, and/or resources? HBCUs have limited resources and manpower to dedicate to recruiting. HBCUs one advantage is being an African American space, an African American institution dedicated to African American empowerment, or at least they were. Many HBCUs see making recruitment of African Americans a secondary objective in favor of more ethnic diversity – ignoring African American and Diaspora diversity as they attempt to parrot their PWI counterparts, declines in African American faculty and research geared towards African American interests becoming ever more pervasive – institutional gentrification by our own hands. In other words, many HBCUs are trying to become a watered down version of a PWI. This makes their case for recruiting even harder because of the aforementioned issues of limited resources and manpower. If a college student is going to choose a PWI versus an HBCU posing as a PWI knockoff, then usually they will go with the one who is the real thing so to speak. For those HBCUs trying to hold the line it is rough. They have to convince an African American population that does not want to live in or build African American communities, bank with African American banks, and see their ancestry as starting at slavery more than they see it internationalized with the Diaspora as Malcolm X and so many other Pan-Africanist have desperately tried to connect to little avail. That being educated by African Americans in an African American space as something valuable, worthwhile, and imperative to the African American community’s empowerment. A small task it is not.

How do we even get to students like Huey and Riley? Their geography is world’s away from any African American institution, their socialization will largely save for trips back to Chicago sparingly be within the confines of European American institutions and spaces, education will be firmly European American with a likelihood of an European American perspective on diversity being from European American majority ideology, and certainly it would be remiss to say that neither of their possible love interest are African American girls. Jazmine, the daughter of Tom and Sara DuBois, who is biracial and fits the cultural aptitude that often comes with those who have African American fathers and European American mothers where the mother drives the cultural nourishment and almost certainly are reared with an anti-Afrocentric value system. Riley’s probable love interest that is Cindy McPhearson, an European American girl, who shares a lot of the same interest and often similar toxic behaviors as Riley. One could argue they make even more sense should it play out than Huey and Jazmine from a qualitative level. All which was described, virtually none of it sits within an African American space or possibility. Yet, these are exactly the African American students you could argue we are in large part trying to recruit to HBCUs. This is the group that you need more than any other if you want to increase the African American rate choosing HBCUs to increase from 10 percent to 25 percent.

If African Americans are going to continue to not be proactive in the development of African American communities and empowerment of African American marriage and families then this entire conversation maybe for naught within a few generations as we will have self-gentrified ourselves out of existence. The question of how we get our talents and resources to prioritize the building of new African American institutions, supporting of existing African American institutions, and the empowering of all of our African American institutions is the central question for our survivability and furthermore our success as a people.

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Without Hyperactive Alumni, HBCUs Will Bear The Brunt Of The Building Tsunami Of College Closures And The End Of Their Blackness

Posted on February 9, 2024 by | 1 comment

“95 percent of colleges are tuition driven.” – Robert Franek, The Princeton Review

HBCU alumni and their alumni associations need to demand immediately to see the financials of their HBCU – this is of course assuming their alumni associations house is in order but that is another article for another day. At public HBCUs this is bit easier because of them being a state institution, but private and especially religious-based private HBCUs that effort can prove to be a lot more complicated. However, you do not need to wait until you see fire to call the fire department if you already smell smoke. The fire is there you just cannot see it yet. This is the harsh reality for America’s college business model and this should be the terrifying reality for HBCUs. Far too many colleges in America have unsustainable businesses models and nothing highlights how glaringly broken the model is like their acute reliance on tuition revenue and paltry or nonexistent endowment revenue.

How did we get here? For HBCUs this issue started at desegregation when well over 90 percent of college bound African Americans would matriculate through HBCUs. The Civil Rights Movement fundamentally changed that and struck a death by a thousand cuts to not only HBCUs, but African American owned and operated institutions in general over the past 50 years. We all know the saying about “their ice is colder” so and so forth. African American neighborhoods slowly collapsed, African American owned and operated hospitals have gone from 500 to 1, African American owned banks were at over 50 just 25 years ago now are at 16 – and falling, African American boarding schools once a mighty 100 now only have 4 remaining. HBCUs have not been spared either with the closures of St. Paul’s College, Knoxville College, Bishop College, and Lewis College of Business being the most recent closures over the past thirty plus years.

The reality of what started then for HBCUs saw its fuse lit for PWIs in 2008 amidst the Great Recession when the world economy and capitalism as we know it almost collapsed. As most of African America/HBCUs know, when European America/PWIs catch cold, we catch pneumonia, COVID, Spanish Flu, all while having no insurance or African American doctors. The Great Recession’s effects were many, but perhaps its greatest impact is that many families moving forward simply have chosen to opt out of having children. In the years following, America’s peak high school graduation class is set to graduate in 2025 (see chart below) and forecast of graduating classes thereafter begins a precipitous decline. This poses an extremely bleak outlook for African America whose 2024-2025 and 2025-2026 classes are nominally equal to the African American graduating classes of 2009-2010 and 2010-2011 where in all four graduation years the number of graduates was north of 470,000. The stark difference is that it has taken 15 years to recover to that nominal number all while the percentage of African Americans graduating peaked in 2009-2010 and 2010-2011 when African American high school graduates accounted for 15 percent of American high school graduates. Since 2010-2011, percentages have been declining and will struggle to reach 14 percent of American high school graduates in 2024-2025 and 2025-2026.

In contrast, the two groups who are seeing the most precipitous increase are Hispanic America and Asian America, both who by 2025-2026 will have seen their percentages increase for 27 years without interruption. It poses the question and conversation of whether or not HBCUs can remain predominantly African American for another day, but that day is sooner than later especially given that HBCUs only get roughly 10-12 percent of the college bound African Americans that graduate from high school. USA Today reports, “Yet while 67% of white high school graduates went directly to college in 2020, the most recent year for which the figure is available, 54% of Black high school graduates did, the National Center for Education Statistics reports. That’s down from 66% in 2010.” Needless to say African American education from Early Childhood Education through Graduate School simply does not appear to be trending in any positive direction. Taking 54 percent of approximately 470,000 leaves us with around 254,000 college bound African Americans for HBCUs and based on the 10-12 percent we recruit it means that only 25,000 are likely to find their way to the 100 HBCUs or 2,500 per school. The math as they say is not going to math if this holds true, especially given the reliance on tuition revenue.

According to Appily, “In the United States alone, there are more than 6,500 postsecondary Title IV institutions. Of these institutions, 2,189 of them are Title IV non-degree-granting. The rest are degree-granting, with 1,485 being 2-year colleges and 2,828 being 4-year colleges.” Our number to focus on is the latter number of 2,828 4-year colleges. Of that 2,828 we know approximately 100 are HBCUs or 3 percent. Appily also states that there are approximately 1,626 public degree-granting universities and 1,202 private degree-granting colleges. That means that overall, almost 58 percent of American colleges are public and 42 percent are private. For HBCUs, it is essentially a 50/50 split down the line when it comes to public/private. From a geographic standpoint, 331 4-year colleges are located in the Mid-Atlantic, 495 4-year colleges in the Northeast, and 457 4-year colleges in the Midwest according to CollegeSimply. This accounts for 45 percent of the 4-year colleges in the entire country. On the contrary, HBCUs are highly concentrated in the Southeastern part of the United States which is something of a doubled edged sword. Birth rates in the aforementioned PWI geographic strongholds post-Great Recession are where the highest concentration of concern are so this is a plus, but HBCUs while not predominantly located in those areas are located in predominantly in the Southeast where high school gradation rates are the lowest among all regions in the country and where the states with the highest poverty rates are concentrated. So while the population demographics may not be an issue the ability to afford college most certainly will be and with HBCU endowments being what they are that will be even more magnified. The real question then becomes who is most at risk.

It would be far too elementary to say that simply having a large endowment is an indicator, but as a starting point let us see where that takes us. NACUBO’s 2022 Endowment Study reports 136 public/private colleges/universities in America with endowments over $1 billion – there are no HBCUs. We could even go a step further and look at endowment value per full-time student (see below) gives us a bit more insight. It shows that a university such as Princeton for instance that cost around $85,000 per year to attend that the university would need an endowment of $1.7 million per student to allow a student to attend for free. As we see, Princeton’s endowment value per full-time student is almost $4.1 million which far exceeds the coverage needed. Spelman College is the leading HBCU in endowment value per full-time student at $218,792 (see below) but based on their almost $50,000 per year cost of attendance it needs approximately $1 million per student to allow a student to attend for free. So we see the stark difference in endowment coverage for its full-time students between Princeton and Spelman, the leading PWI and HBCU, respectively.

It is also worth noting the drop between Princeton and Harvard is a 51 percent drop while Spelman to Howard is over 65 percent highlighting just how scarce the resources per student even within the top HBCUs versus their PWI counterparts. This is vital to note because endowments fund far more than student scholarships. They fund professor salaries, research, utilities, and so much more. Endowments returns are also rarely fully available to the operations side of the university to use. Most universities, especially the larger endowments, reinvest a significant amount of their endowment returns back into the endowment. A controversial practice for many who feel like multibillion dollar endowments should be used to battle the college inflation cost. That though requires an institution to have a multibillion endowment to argue about. Again, no HBCU has even $1 billion let alone multiple.

Like most African American individual and household statistics the outlook and trendlines look bleak, but most of us do not know or interested in what the data says. African American institutional outlooks and trendlines are not immune and given institutions weight on individual and household outcomes their trendlines tend to be the vanguard or foreshadow of the future. However, all hope is not lost. HBCU alumni and alumni associations must realize this is an emergency. It was an emergency yesterday, it was an emergency ten years ago, and it was an emergency fifty years ago the moment the seed of desegregation was planted. Waiting on the benevolence of ‘The Double-Edged Sword of White Philanthropy’ is not a sustainable answer or strategically sound. The question now is what is the strategy and possibility ahead.

HBCUs and their proxies lack targeted and developed pipelines that A) are improving the K-12 outcomes of African American students B) ensuring that those that do graduate are coming to HBCUs. For HBCUs that still care about being dominant African American institutions there is a roadmap they can follow. The directory from Black Minds Matter list 461 African American owned schools that span K-12 that provide at the very least a starting pool to develop. This means HBCU alumni must invest to ensure that these schools thrive and that students ultimately find their way in a pipeline that ends in both HBCU undergraduate and HBCU graduate schools. Donating to these K-12 African American schools has a myriad of echo effects: more HBCU teachers hired, develop the curriculums and institutional learning of tomorrow that prioritizes attending HBCUs, purchase supplemental equipment like new technology, ensuring our children are properly nourished, and more. All of this investment and engagement should ultimately lead to moving the African American selection of HBCUs above and beyond the paltry 10 percent we now have of African American bound college students and perhaps can reignite the high school graduation rates.

The other conversation we need to have, albeit a very uncomfortable one is HBCU mergers, creation of HBCU systems, and new institutional formations that may allow us to be more financially sustainable. For instance, Fisk and Meharry are quite literally across the street from each other. Public HBCUs in each state merging underneath a joint system while the campuses remain separate. Or at the very least creating shared foundations, i.e. The (insert state) HBCU Investment Foundation that would manage the endowments and institutional development of all the HBCUs in that state collectively. For once we have to be aggressively proactive and not wait until crisis is upon us and be our usual reactive. Far too many of our HBCUs simply will not survive and those that do will be left on islands and in a collectively weaker state to battle external forces that we know would prefer African American institutions go away all together.

In order for HBCUs to survive for another century enrollment has to start trending upward and hyperbolically. We must also make some hard choices about what we are choosing to spend our limited institutional money on. Should our athletics move down a division to save millions? Probably, especially if that money can be used to strengthen our endowments, reduce student loan debt so our graduates can build wealth faster, and invest in the K-12 pipeline. This and many more hard conversations need to be debated and discussed among HBCU alumni immediately. We are late, but we are not too late. Decisive actions need to be taken to put far more of our schools on sound financial footing and increase the pipeline of students coming in and the endowment value per full-time student. Otherwise, we maybe seeing a lot of HBCUs being read their last rites.

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HBCU Money™ Turns 12 Years Old

Posted on February 3, 2024 by | Leave a comment

By William A. Foster, IV

“History shows that it does not matter who is in power or what revolutionary forces take over the government, those who have not learned to do for themselves and have to depend solely on others never obtain any more rights or privileges in the end than they had in the beginning.” – Carter G. Woodson, The Mis-education of the Negro

Last year, I said this was a marathon and not a sprint. However, at this moment a year later it does feel like we are picking up speed. Over the years there have been setbacks and bumps and ascending moments. Moments where I believed we were set to takeoff and moments where it felt like this was going to crash. It is truly amazing that 12 years in throughout everything, HBCU Money is still here and it is still strong.

There is nothing that I desire more than to see it expand, to see it be part of the fabric of representing the information of the HBCU nation and community. That we maybe empowered to shape our own narrative and that African America one days truly sees the value in our own institutions as others do. My goal is and continues to be that HBCU Money be part of the fabric of an ecosystem of HBCU Alumni Owned media that shows just how powerful we can truly be when we take ownership into our own hands.

As HBCU Money continues its path along with our sister blog HBCU Politics and more waiting in the weekends it will soon see the long transformation from caterpillar to butterfly – with a sting like a bee.

Keep your eyes on the horizon and know that the sunrise of our day is still upon us.

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HBCUs Have A $1.6 Billion Annual “Cost Of College” Deficit – And A Crisis Is Looming Because Of It

Posted on May 24, 2023 by | Leave a comment

“When you face a crisis, you know who your true friends are.” – Magic Johnson

Nobody ask African American institutions to do more with less than African Americans themselves. We ask Liberty Bank & Trust, the largest African American owned bank by assets, with just over $1 billion to be able to do the same things that J.P. Morgan can do with almost $3 trillion. We ask Howard University with an endowment of less than $1 billion to do the same thing Harvard can do with an endowment of over $50 billion. The perplexing insanity of expectation that we have for African American institutions while European American institutions who get virtually 100 percent of their community’s buying power and over 90 percent of African America’s buying power against African American institutions who get virtually 0 percent of non-African American buying power and less than 10 percent of our own community’s buying power is so often lost on us it is infuriating. We really do give little thought to how much of our educational value both economically and intellectually we pour into non-African American institutions. The intellectual value would require a study of its own, but the economic value we can actually measure rather quickly on the higher education level at least.

According to the Postsecondary National Policy Institute, “In 2020, 36% of the 18–24-year-old Black population were enrolled in college compared to 40% of the overall U.S. population. Since Fall 2010, Black student enrollment has declined from 3.04 million to 2.38 million, a 22% decrease: Undergraduate enrollment declined from 2.67 million to 1.99 million, a 25% decrease.” Next the Education Data Initiative’s reports, “The average cost of college* in the United States is $35,551 per student per year, including books, supplies, and daily living expenses.” Combine those two statistics together and you have a working “cost of college” revenue for African America that is approximately $84.6 billion annually. Unfortunately, HBCUs and their approximately 214,200 students would be valued at only $7.6 billion or less than 9 percent if HBCUs “cost of college” was comparable, but it is not. HBCUs “cost of college” lands around $28,064 annually meaning African Americans at HBCUs value is approximately $6 billion or 7 percent. Beyond building your own intellectual institutions that represent your intellectual interest to the world, just economically it makes more sense for African Americans to choose HBCUs. Unfortunately, the discount is not just based on African American families being economically poorer, but also because African America socially devalues African American institutions so much that they are forced to offer a discount to attract those who economics face the highest uphill battle. This would explain in large parts why HBCUs in general have such acutely high percentage of Pell Grant students. HBCUs may be on a race to extinction without increasing its percentage of African Americans choosing them for college or seeing parabolic growth in their endowments.

The economic model as it stands is simply not sustainable. An institution can not both fail to garner massive support from its community and be cheaper. Unfortunately, because African American households are economically poor and psychologically devalue African American institutions, then being more expensive than the norm is not an option. This harsh reality that HBCUs just to close the approximately $7,500 gap or $1.6 billion in cost would mean attaching an endowment of $150,000 per current HBCU student or $32.1 billion or increase African American students from 214,200 percent (9 percent African American HBCU students) of those attending HBCUs by approximately 57,000 to 271,200 (11 percent African American HBCU students) – an over 25 percent increase from current. The cost to obtain those 57,000 new students (infrastructure aside) according to Nova AI, “the National Association for College Admission Counseling, the average cost per student recruited by a four-year private college was around $2,433 in 2018-2019” would be $138 million. Many HBCU stakeholders would question whether or not most HBCU campuses could handle a 25 percent increase in their African American student bodies when the infrastructure (housing, faculty, etc.) is already a struggle. However the $32.1 billion options is worth noting since current HBCU combined endowments are just a little over $2.5 billion. There are also 23 European Americans with net worths more than $32 billion and 0 African Americans. If the path to survival seems like a gauntlet seems suicidal, then you would be correct.

Increase African American students by 25 percent (and all the infrastructure cost it would entail) or come up with $32 billion seems like being kind to call it between a rock and a hard place of a decision. A pipe dream solution would be that the top 100 PWI endowments valued at almost $600 billion would take 5 percent ($32 billion) and reallocate it to HBCUs with each PWI giving proportional to their endowments. But hell has a better chance of freezing over given our recent piece on “Tone Deaf: Harvard Launches A $100 Million Endowment To Itself To Study Its Ties To Slavery – An Amount Greater Than 99 Percent Of HBCU Endowments”. Trying to squeeze the Federal government for it seems just as foolish given African America’s lack of political power let alone HBCUs lack of political power. All of this without even considering the decline in African Americans going to college, which is likely a correlation with the African American high school graduation rate where African American boys are struggling to finish. There is also the real consideration that many African Americans are seeing less incentive to go to college given the student loan debt and lack of opportunity thereafter. It leaves the question how many HBCUs remaining can survive to the next generation.

Ultimately, the solution will likely and largely lie with HBCU alumni associations and their ability to become more than just social organizations, but truly engaged of the business of group economics. We have discussed previously the “12 Things Your HBCU Alumni Association/Chapter Needs To Do To Be Financially Successful” and the sentiment remains true and urgent. Making HBCU alumni associations financially stronger would also allow HBCUs to be far more competitive for African American students and work towards that increased enrollment while being able to build the infrastructure along side it. The question remains though, can HBCU alumni transform their alumni associations into financial powerhouses in a manner that would allow them to achieve such a goal? You never know until you try, but one thing is for sure you miss 100 percent of the shots you do not take and the consequences here are the institutional death of HBCUs as we know them.

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