Why Are HBCUs Not Becoming College Towns Where African American Businesses Thrive?

As a leader, you must consistently drive effective communication. Meetings must be deliberate and intentional – your organizational rhythm should value purpose over habit and effectiveness over efficiency. – Chris Fussell

In the world of economic development and real estate development there are fundamentals that allow for development to take place. One of those fundamentals is what is known as an anchor. According to Janover Commercial Real Estate, “An anchor tenant is the largest or most prominent store in a retail commercial real estate development, intended to help draw customers into the area. In strip centers and power centers, anchor tenants are often big-box stores or grocery stores, while in shopping malls, they’re more likely to be department stores.” Anchors can be a myriad of things such as neighborhoods, megachurches, downtowns, boarding schools, and yes (but not limited too) colleges and universities. 

It is a simple question really. What good is African America’s $1.6 trillion in buying power if all of it goes into companies owned by non-African Americans? From the FAMUAN Online, “Studies say that the average lifespan of the dollar is approximately 28 days in Asian communities, 19 days in Jewish communities, 17 days in white communities — and just six hours in Black communities.” Yet it seems there is no actual intentionality on changing this. No thought to why it is happening and certainly no thought to solutions. One major issue of course is that everything African American institutionally operates on an island. There is virtually no interconnectivity between African American institutions or intentionality on creating it. The real question begs, do we understand what it would take to actually increase the African American dollars circulation? 

There are a plethora of independent Black owned coffee shops in every city where an HBCU is located and yet HBCUs are more excited to bring Starbucks to their campus. Texas Southern and Prairie View A&M University could feature The Breakfast Klub on their campus, but instead Sodexho, a French owned company, dominates their food services and many other HBCUs. An opportunity to create a food hall of locally owned African American food businesses both on and near our campuses is missed, ignored, simply not considered. The opportunity to have African American banks and credit unions present on or near our campuses – again, missed, ignored, and simply not considered. Many have argued that HBCUs banking needs are too big for African American owned banks. Despite, Florida Memorial University and Roxbury Community College, an HBCU and PBI both banking with OneUnited Bank. Albeit they are smaller HBCUs, this claim that HBCUs financial needs are beyond that of African American owned banks is not actually founded in any real assessment. Even if one were to go with this notion (as faulty as it is) this does not remove the institutions ability to ensure African American banks and credit unions have access to their faculty, staff, and students to open accounts and build relationships. What about the Divine 9, student organizations, and the like? Do we believe they too have to “complicated” of financial needs to not bank with an African American owned bank or credit union? Even if just the faculty, staff, students, and low level organizations with the campus banked with African American owned banks it would be enough to double the size of them alone. This lack of intentionality is painfully screaming at us. Opportunities for HBCU/African American health providers like dentists, doctors, therapists, etc. to be given space on or near HBCU campuses could be highly proactive in addressing and preventing many of the health crises we find the African American community facing. 

What happens if we become intentional? What happens if we become proactive and not reactive to trying to circulate the African American dollar using HBCUs as the anchor? These small businesses grow first and foremost. With this growth come jobs and interns for our students, new wealth for the owners of the businesses and an opportunity for HBCUs to build sponsorship and endowment relationships with them. Our students working for these African American firms are now using their intellectual capital to build more African American institutions, reducing their own student debt loads while in college, and maybe just maybe be an early employee that received stock options that make them a millionaire of the next Google, FedEx, Microsoft, Dell, Nike, SNL Financial, or any of the other major companies that we may or may not realize were started on college campuses and in college towns. Except in this case, they are companies that are HBCU Alumni/African American owned. Those banks and credit unions would then be able to open multiple branches and put predatory financial services in our communities out of business. They would have the deposit bases to offer more small business loans for HBCU entrepreneurs and mortgage loans for HBCU homeowners. This is not even to speak of the implications of such an increase in the tax base in those areas that the K-12 schools that often surround HBCUs would significantly benefit. K-12s that are usually filled with African American children who could one day be HBCU students. The multiplier effect due to the intentional circulation could be hard to measure because there are so many social, economic, and even political ramifications of our intentionality when it comes to the African American dollar, but to say it would be a profound paradigm shift would be an understatement. 

HBCU Money™ Turns 11 Years Old

By William A. Foster, IV

“The happiness of your life depends upon the quality of your thoughts: therefore, guard accordingly, and take care that you entertain no notions unsuitable to virtue and reasonable nature.” – Marcus Aurelius

As we embark on our 11th year here at HBCU Money, we are not slowing down with the work we have before us. Our desire to continue to be a strong monetary and fiscal voice for the HBCU community is ever present. Covering the HBCUpreneurs who are growing amazing businesses, the business schools who are shaping tomorrow’s African American private sector leadership, HBCU economists who become the first to ever sit on the Federal Reserve board, and so much more. Our community has a voice and stories that need to be told, discussions that need to be broaden, and the hard questions that need to be asked. We have been there for it all and will continue to be there for years to come.

Thank you to everyone who has been there since the beginning and who has come to rely and trust that quality will always come first. In this day where sensationalism seems to be ruling over substance, HBCU Money and sibling blogs will continue to stand firm that there are those who desire and want to have their intelligence valued. That thinking beyond the headlines has not become a lost art.

Holding true to the saying, it is a marathon and not a sprint.

Football Not Required: Most Powerful Colleges Who Dominate Financially Without Athletics

I can’t change the direction of the wind, but I can adjust my sails to always reach my destination. – Jimmy Dean

There seems to be an acute misconception among many HBCU alumni these days that a college or university simply can not be successful or powerful without football. The craze created by the “success” of Deion Sanders at Jackson State University and the thought of replicating it at Bethune-Cookman University with Ed Reed has sent the athletic debate into a piranha like feeding frenzy. Despite realities that every college with a major football program all spend more on research than they do on athletics, something not true at many football crazed HBCUs is perpetually disturbing. The University of Texas which many hold up as an example of how much money can be made on sports spends approximately $310 million annually on auxiliary enterprises (i.e. athletics), but spends $610 million annually on research. The thirteen institutions that comprise the University of Texas system spend $686.2 million on auxiliary enterprises, but spends $3 billion on research. If the priority is not clear, then it should be. But many will and have argued that they are able to do that because of football (of which there is no data to support the notion). It leads many HBCU alumni to believe that without athletics and football on the Division I level in particular that a college or university can not succeed financially. So we took a look at America’s most powerful colleges who have no football team or Division III football, but are among the nation’s largest endowments and research spenders. Based on the theory held by most HBCU alumnus, none should be financially well off. However, actual correlation between endowments and research expenditures of colleges and universities would say otherwise.

Massachusetts Institute of Technology (Division III Football)

Endowment: $27.5 billion

National Rank: 6th

Research Expenditures: $949.0 million

National Rank: 29th

Washington University in St. Louis (Division III Football)

Endowment: $13.5 billion

National Rank: 13th

Research Expenditures: $989.2 million

National Rank: 25th

Emory University (No Football)

Endowment: $11 billion

National Rank: 15th

Research Expenditures: $852.9 million

National Rank: 31st

New York University (No Football)

Endowment: $5.6 billion

National Rank: 26

Research Expenditures: $1.1 billion

National Rank: 23rd

Williams College (Division III Football)

Endowment: $4.2 billion

National Rank: 29

Research Expenditures: $4.9 million

National Rank: 417th

Carnegie Mellon University (Division III Football)

Endowment: $4.0 billion

National Rank: 32

Research Expenditures: $402.4 million

National Rank: 70th

California Institute of Technology (No Football)

Endowment: $3.8 billion

National Rank: 36

Research Expenditures: $438.6 million

National Rank: 62nd

Amherst College (Division III Football)

Endowment: $3.8 billion

National Rank: 37

Research Expenditures: $213.8 million

National Rank: 115th

Wellesley College (No Football)

Endowment: $3.2 billion

National Rank: 43

Research Expenditures: $6.3 million

National Rank: 387th

University of Rochester (Division III Football)

Endowment: $3.2 billion

National Rank: 44

Research Expenditures: $409.3 million

National Rank: 67th

Again, these ten institutions either have no football or play football on the Division III level, which is the lowest of the NCAA levels. Yet, all ten institutions constitute a presence among America’s Top 50 college and university endowments. Each institution by itself has an endowment larger than all HBCUs combined. It is safe to say that their lack of emphasis on athletics has provided the use of those funds for investment in building their infrastructure of research and entrepreneurship. The Kaufmann Foundation in 2016 highlighted just how impactful MIT’s focus on research and entrepreneurship has been. At the time of the report Kaufmann found that, “MIT alumni have launched 30,200 active companies, employing roughly 4.6 million people, and generating roughly $1.9 trillion in annual revenues. That revenue total falls between the world’s ninth-largest GDP, Russia ($2.097 trillion), and the 10th-largest, India ($1.877 trillion), according to 2013 data on those and other countries from the International Monetary Fund.” Those revenues in 2016 are greater than African America’s buying power ($1.6 trillion) today. The number of those employed by MIT alumni companies alone would be equivalent to over 20 percent of African America’s labor force.

The reality that all of these ten schools have larger endowments than all HBCUs combined and four of them have larger research budgets than all HBCUs combined, but also that all ten of them spend less than HBCUs do on athletics combined is telling. Because athletics is what we see the most it is the thing that we equate with the most power and fortune, when in reality it is often what you do not see that is actually the most powerful and provides wealth. There is a stark difference between rich and wealthy and there are no wealthy athletes either individually or institutionally. Our continued use of limited resources chasing low hanging fruit that we think is high is a detriment to our long-term sustainability. With colleges and universities in far better financial condition than many HBCUs closing down there is an overdue reckoning coming to higher education institutions and those who do not have their financial houses not just in order but are focused on the fundamental building blocks that are necessary for an institution to remain relevant and add value to society is acute. Whether we like it or not, athletics is a luxury and an entertainment, and for institutions with the limitations in resources that we have it is potentially one of the most reckless uses of those limited resources. These schools are models of what is possible of success and power when institutions of higher learning – imagine that – focus on the development of a people’s mind. Minds that can solve problems, create intellectual property, form companies, and more to the benefit of the HBCU ecosystem far longer than a body can and at much greater impact.

Source(s): NACUBO, NSF

The Love Is GONE: 2022’s HBCU Million Dollar Gifts

We must accept finite disappointment, but never lose infinite hope. – Martin Luther King, Jr.

Arguably, there are not enough donations in 2022 to even warrant an analysis but we are going to give it a try. The acute analysis is that HBCUs and alumni are going to have to prioritize creating wealthier alumni and using their alumni associations to leverage more aggressive investment vehicles which may otherwise be out of bounds for the institutions themselves. It also speaks to giving real thought to policies and strategy that can assist in that wealth creation. Reducing student loan debt loads, reducing time spent in maturation, increasing financial literacy requirements, and more need to be among serious conversation in order to help alumni get on the footing to wealth in both speed and probability. Years like this have been far too many in the midst of also battling underfunding by state and federal government. Not to mention the outright assault PWIs have launched in recent decades of trying to out HBCU HBCUs for African Americans and other minority groups. Of the three companies (pictured above) responsible for the wealth that allowed these individuals to give their Million Dollar Gifts – none were African American owned firms and their combined market caps were over $600 billion – an amount that is almost 40 percent of African America’s entire buying power. Something else that needs to be strongly considered in the wealth development conversation among alumni and administrations. Why are our alumni not creating more firms that can lead to transformative wealth and what can we do to assist?

Overall donations to all colleges and universities were down significantly in 2022 dropping under 300 Million Dollar Gifts given for the first time since 2010. This seems to be a fairly direct correlation to the economy and stock market’s rough 2022. Given that most wealthy donors have major investments tied to business ownership and investments and the Federal Reserve putting forth monetary policy in 2022 that many argued slammed the brakes on the stock market, it is no surprise that wealthy donors deemed themselves quite skittish. And per usual, when America/PWIs get a cold, then African America/HBCUs get pneumonia as seen by only 3 Million Dollar Gifts finding their way to HBCUs. None from HBCU alumni. The median donation was 2 to 1 in terms of donor value and the average donation was 4.5 to 1 in terms of donor value between PWI MDGs and HBCU MDGs. 2022 also provided the very first $1 billion donation to a college or university with Stanford University receiving a $1.1 billion pledge from John and Ann Doerr (both whom are Rice University alumnus).

This is a concerning trend going into uncertain financial times for the U.S. economy in particular. Colleges overall do tend to pick up more students during recessionary times with people losing jobs many see it as an opportunity to go to school or back to school. Unfortunately, tuition revenue is already too much of what HBCUs rely heavily upon and those new students are not likely in any position to give Million Dollar Gifts in the near future. HBCU philanthropy as it pertains to Million Dollar Gifts operates largely on a lottery like reality both relying on hope and depending on those outside of the culture and outside the alumni bases. With the changing sands of higher education shifting beneath our feet the resources to see tomorrow grow urgent with every passing day.

$1 Million Plus Donations To All Colleges: 275

$100 Million Plus Donations To All Colleges: 14

$1 Million Plus Donations Value To All Colleges: $7.1 Billion

$1 Million Plus Median Donation To All Colleges: $10.0 Million

$1 Million Plus Average Donation To All Colleges: $25.9 Million

$1 Million Plus Donations To HBCUs: 3

$100 Million Plus Donations To HBCUs: 0

$1 Million Plus Donations Value To HBCUs: $17.0 Million

$1 Million Plus Median Donation To HBCUs: $5.0 Million

$1 Million Plus Average Donation To HBCUs: $5.7 Million

HBCU Percentage of Donations To All Colleges: 1.1%

HBCU Percentage of Donation Value To All Colleges: 0.2%

1. Arthur M. Blank (pictured) – $10.0 million
Recipient: Spelman College
Source of Wealth: Home Depot

2. Reed Hastings & Patty Quillin – $5.0 million
Recipient: Tougaloo College
Source of Wealth: Media & Entertainment

3. Kenneth Chenault & Kathryn Chenault   – $2.0 million
Recipient: Howard University
Source of Wealth: Education

Source: Chronicle of Philanthropy

It Was Nice While It Lasted: 2021 Million Dollar HBCU Donations Drop By 73 Percent

The results of philanthropy are beyond calculation, but they are calculated. – William A. Foster, IV

After 2020 gave us unprecedented major giving to HBCUs, the fairy dust wore off just as quickly come 2021. Had this year been not followed by 2020, then arguably it would be a good year by normal standards. Instead, it is a harsh reminder that HBCUs rarely on any level receive an equitable share of funding both by state and federal governments and private giving to colleges and universities. 2020’s giving it could be argued was a response to the protests and social unrest that spilled over from the death of George Floyd. However, as we stated previously that is neither sustainable and questionably moral. This year’s list while significantly smaller looks much the same as last year in that it is buoyance is upheld by donors outside of the African American community.

HBCUs were able to pull in three percent of the million plus donations to all colleges and universities, which constitutes their makeup in the overall landscape of the higher education system. However, the value of those donations amounted to less than one percent of the overall donation value to colleges and universities. A significant drop off from 2020’s astounding 15 percent of donation value. Very interested to note that PWIs saw donations of $100 million plus double from 2020 to 2021 going from seven to fourteen. No HBCU has ever seen a nine-figure donation and there are only a handful of African Americans capable of doing so. This once again leaves the fate of African American NPOs in the hands of other community’s wealth and generosity. It also begs the question for the survival of HBCUs in particular long-term. Despite 2020’s gifts, we would be remiss to act as if one year of donations can rectify over one hundred plus years of negligence and fiscal hostility.

MacKenzie Scott continued to be HBCUs’ best friend with two of the ten donations on the list coming from her philanthropy. Mr. and Mrs. Tyler’s donation is one of the largest alumni gifts (if not the largest) ever to an HBCU. Worthy of a conversation itself is that HBCUs are still not producing a pipeline of wealthy alumni. Something critical to increasing the probability of transformative donors into HBCU coffers. With only two known HBCU billionaires among all of its alumni, the question of “Can HBCUs Produce Billionaires?” remains not only a relevant question, but an absolutely necessary conversation that must be had between HBCU alumni and administrations.

$1 Million Plus Donations To All Colleges: 316

$100 Million Plus Donations To All Colleges: 14

$1 Million Plus Donations Value To All Colleges: $8.1 Billion

$1 Million Plus Median Donation To All Colleges: $11.1 Million

$1 Million Plus Average Donation To All Colleges: $25.5 Million

$1 Million Plus Donations To HBCUs: 10

$100 Million Plus Donations To HBCUs: 0

$1 Million Plus Donations Value To HBCUs: $66.7 Million

$1 Million Plus Median Donation To HBCUs: $4.0 Million

$1 Million Plus Average Donation To HBCUs: $6.7 Million

HBCU Percentage of Donations To All Colleges: 3.2%

HBCU Percentage of Donation Value To All Colleges: 0.8%

1. MacKenzie Scott  – $20 million
Recipient: Charles R. Drew Medicine
Source of Wealth: Technology, Retail

2. Calvin E. Tyler and Tina Tyler (pictured bottom right) – $20 million
Recipient: Morgan State University
Source of Wealth: N/A

3. S. Donald Sussman  – $6 million
Recipient: University of the Virgin Islands
Source of Wealth: Finance

4. Eddie Brown and Sylvia Brown (pictured bottom left) – $5 million
Recipient: Howard University
Source of Wealth: Investments

5. Anonymous Donor – $5 million
Recipient: Howard University
Source of Wealth: N/A

6. Shervin Pishevar and Sarah Pishevar Haynes – $3 million
Recipient: Howard University
Source of Wealth: Technology, Finance, Transportation

7. Frank Garrison and Amy Garrison – $2.5 million
Recipient: Fisk University
Source of Wealth: Finance, Real Estate, Law

8. Anonymous Donor – $2.2 million
Recipient: Alabama A&M University
Source of Wealth: N/A

9. MacKenzie Scott – $2 million
Recipient: Meharry Medical College
Source of Wealth: Technology, Retail

10. Mark Malveaux and Dawn Malveaux (pictured top) – $1 million
Recipient: Southern University System
Source of Wealth: Law

Source: Chronicle of Philanthropy