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The Double-Edged Sword Of White Philanthropy Into HBCUs


“When the white man came, we had the land and they had the Bibles. Now they have the land and we have the Bibles.” – Chief Dan George

Let us be clear, we need the money. Over 95 percent of HBCUs have endowments that are less than $100 million. In 2015, Sweet Briar College, a women’s college in Virginia, abruptly decided to cease operations. It sent shock waves through the higher education world and for many HBCU advocates it was an indirect message to our institutions that the fire alarm for survival for colleges on the financial fringes was not just a drill, but smoke could be seen in the very near distance. Sweet Briar College had an endowment of $75 million, which would put it firmly ahead of over 90 percent of HBCUs currently – and it closed.

It is no secret that the racial wealth gap makes it extremely difficult for African Americans to compete in philanthropic terms with our counterparts. The Federal Reserve in September 2020 reported, “White families have the highest level of both median and mean family wealth: $188,200 and $983,400, respectively. Black families’ median and mean wealth is less than 15 percent that of White families, at $24,100 and $142,500, respectively.” Given these numbers and given how much consistent financial philanthropic efforts are largely correlated with disposable income and wealth, then this certainly can give some understanding to the story of why HBCUs and African American nonprofit organizations (NPOs) in general have struggled. The Black Church (Are African American Churches Derailing African America’s Economic Progress?) being the lone exception to this rule, which has created a domino effect of instability for secular NPO development and infrastructure in our community’s institutions. Simply put, with what little money we do have to give it almost all has for the past three to four decades gone into the black hole coffers of the Black Church and done little to build proper financial infrastructure for other community supporting organizations. Enter white hope and savior.  

2020 has seen unprecedented gifts to HBCUs from white philanthropists starting with Mackenzie Scott, one of the cofounders of Amazon, who at the time of this writing is worth almost $60 billion. She made waves with her unprecedented and seemingly unsolicited gifts to six HBCUs and HBCU supporting organizations that totaled more than $160 million. This was followed up shortly after by Michael Bloomberg, founder of Bloomberg L.P. and worth almost $55 billion himself, with donating $100 million as well to the nation’s four HBCU medical schools. These two donations alone are equivalent to approximately 10 percent of all 100 plus HBCUs combined endowments over their 100 plus year history. Finally in some HBCU circles it was exalted, mainstream America also known as European/White America was “seeing” us and giving us our just due. Paying what was owed to us for so long being mistreated and underfunded. However, that same tune was not being sung or so kind when the Koch brothers donated $50 million between the United Negro College Fund and Thurgood Marshall Fund in 2014 and 2017, respectively. There were some who even called for the money to be returned in both cases so there is an inherent complexity in our organizations being in dire need of funds, but also wanting to be particular about who the donor is. The conversation about HBCUs and European American donors seems to be one that is little discussed and complex in its acknowledgment. But the elephant is there.

In fact, unless something astonishing happens in the rest of 2020 and since HBCU Money has been reporting on the Million Dollar Donations To HBCUs beginning in 2013, three of the seven years of largest donations to HBCUs have come from European/White Americans. There is certainly some historical reasoning behind schools like Hampton, Howard, Morehouse, Spelman, and Tuskegee receiving attention from European American benefactors. These schools have a long storied history and ties with them since their founding. Morehouse and Spelman receiving their names as a result of their generous funding from one John D. Rockefeller, Sr in the late nineteenth century. It is no coincidence that their early proximity to whiteness has allowed them to fair far better financially today than their HBCU counterparts founded by African American interest. But what does it mean when European Americans are the dominant donors of HBCUs and not African Americans? 

The long complex history of European American philanthropy as a social, economic, and political tool of influence seems often remiss in our community. African Americans have a naïve tendency to believe culturally that philanthropy is altruism. This despite us all having a familial experience where one family member lent money to another family member and even if the money is paid back, the lender never seems to let it not be told at Thanksgiving how they saved said family member. Think about European American philanthropy as a tool – missionaries in Africa, seemingly endless aid to Africa through the IMF and World Bank that has been used to create dependency states versus developed (see competitive) economies and you start to realize that philanthropy can have a strategic purpose. It paints a picture that Africans are incapable of empowering themselves and that without European and European American benevolence they simply could not survive. The same picture can be painted for HBCUs and African American NPOs.

It is hard to speak out against European and European American injustice towards the African Diaspora if you are HBCUs and African American NPOs (AANPOs) when that is the hand that feeds you. How can you convince African Americans that African American institutions are the mechanism by which we can empower ourselves as a community if they themselves are unable to find a solution? There have been a number of HBCUs who have come under pressure from wanting to have someone like Minister Louis Farrakhan of the Nation of Islam speak. Whether you agree with his ideology or not, the African American community understands the perch from which he speaks even if they do not agree with it. It should be us who decides who can and can not speak, but that is not how money works. Money garners influence in ways that can make you sit up in your bed uncomfortable at night because you heard something rumbling in the closet, but you live alone. 

Let us be clear, it is not that accepting money from European Americans is bad or unacceptable. There is a fine line between cutting off one’s nose to spite your own face. However, who has the leverage in the donation is vital. Is it money you have to have to keep the doors open or money that just provides icing on the cake? In the former it is the donor who wields immense power and in the latter it is in the institution. HBCU alumni must at least be willing to have the conversation about where our institutions money is coming from and more importantly how can we can ensure non-HBCU donors do not garner influence that moves us off our purpose to serve African American social, economic, and political interest and empowerment.

 

HBCU Money™ Dozen 8/24 – 8/28


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Did you miss HBCU Money™ Dozen via Twitter? No worry. We are now putting them on the site for you to visit at your leisure. We have made some changes here at HBCU Money™ Dozen. We are now solely focused on research and central bank articles from the previous week.

Research

Want to start an #AirQuality project in your community? Videos for best practices l US EPA http://bit.ly/CAMTvid

Amazon said to scale down Fire smartphone team l CIOonline http://trib.al/zVxMwVw

Bikeshare Hawaii Will Let Public Help Choose Preferred Bikesharing System l Clean Technica http://dlvr.it/BzcFk6

Why can’t utilities innovate like startups? They could if regulators let them l Renewable Cities http://ow.ly/RiFHT

This startup can grow metal like a tree, and it’s about to hit the big time l Fortune http://ow.ly/RsKJq

How secure is the hybrid #cloud? l CSOonline http://bit.ly/1NJAj09

Federal Reserve, Central Banks, & Financial Departments

Here’s what top housing economists think about pending home sales today l Housing Wire http://hwi.re/BzcQvK

See how earnings over a lifetime compare for people with different levels of education l St. Louis Fed http://bit.ly/1NF5QxY

What is the secret to being an effective leader? l World Economic Forum http://wef.ch/1KmTmMN

How do members use their mobile banking apps? l CU Magazine http://ow.ly/Rs5Ky

Which economies #export the most? l World Economic Forum http://wef.ch/1KmThIJ

Are we heading towards a jobless future? l World Economic Forum http://wef.ch/1LsaJdH

Thank you as always for joining us on Saturday for HBCU Money™ Dozen. The 12 most important research and finance articles of the week.

HBCU Money™ Business Book Feature – The Everything Store: Jeff Bezos and the Age of Amazon


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The definitive story of Amazon.com, one of the most successful companies in the world, and of its driven, brilliant founder, Jeff Bezos.

Amazon.com started off delivering books through the mail. But its visionary founder, Jeff Bezos, wasn’t content with being a bookseller. He wanted Amazon to become the everything store, offering limitless selection and seductive convenience at disruptively low prices. To do so, he developed a corporate culture of relentless ambition and secrecy that’s never been cracked. Until now. Brad Stone enjoyed unprecedented access to current and former Amazon employees and Bezos family members, giving readers the first in-depth, fly-on-the-wall account of life at Amazon. Compared to tech’s other elite innovators–Jobs, Gates, Zuckerberg–Bezos is a private man. But he stands out for his restless pursuit of new markets, leading Amazon into risky new ventures like the Kindle and cloud computing, and transforming retail in the same way Henry Ford revolutionized manufacturing.

THE EVERYTHING STORE will be the revealing, definitive biography of the company that placed one of the first and largest bets on the Internet and forever changed the way we shop and read.

Office Depot & Office Max Merge – Now They Need To Buy Best Buy & Barnes & Noble


By William A. Foster, IV

In business, the competition will bite you if you keep running; if you stand still, they will swallow you. — Semon Knudsen

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Life between a rock and hard place is a place many individuals and organizations try in principal to avoid at all cost. At the moment the rock and hard place exist on the landscape of the internet and traditional brick and mortar space, with Amazon being the retail rock on the internet and Wal-Mart the retail hard place of brick and mortar. Leaving other major retailers scrambling for cover and being squeezed mercilessly like fresh oranges during a summer morning in the Hamptons.

Office Depot and Office Max in February agreed to a $1.17 billion merger. It was essentially a move for survival. However, if the two assumed this in itself would be enough to survive, then they were simply extending life support not getting off it. To get off and compete they are going to have to be bold to the point of it becoming a great success or great disaster. If they are going to do so they need to act fast because the moment Amazon is able to completely implement its plan to deliver products within hours of online ordering the game is over. Therefore, let us look at the strategic acquisitions that would make sense immediately for this company that could rival Amazon and Wal-Mart’s scale presence.

Barnes & Noble would at the top of my list for the company’s next acquisition. Books are Amazon’s core business still. They are on pace to control almost one-third of the e-book sales market and probably already control at least this much if you combine e-book and print book sales which makes Barnes & Noble a key acquisition. It would give Office Depot/OfficeMax a key foothold onto Amazon’s turf. Currently, Barnes & Noble barely has a market capitalization above $1 billion making it a prime takeover target and affordable. The key part of Barnes & Noble is the Nook, which is the company’s e-reader to rival Amazon’s Kindle. It has struggled to challenge the Kindle primarily because Barnes & Noble simply does not have the R&D or marketing to encroach on Amazon with its current financial situation. Folding it into the new company would allow it to close a number of stores and make other necessary cuts to free up capital it could reinvest into the aforementioned areas. The book inventory of Barnes & Noble would also allow Office Depot/OfficeMax to make real inroads on Amazon’s turf.

The next acquisition will prove to be a bit more difficult but just as vital and that is Best Buy. Their market capitalization is hovering around $10.5 billion and would require Best Buy to be the acquiring company but regardless of how the merger/acquisition happens it needs to happen. Again, we would see a number of stores closed and other cuts. It would also allow the new company to create its own retail front with retail experience that could be reinvented to be more consumer friendly. Now, the new company could feature the Nook even more and block the Kindle’s presence. A move that Wal-Mart has already done to slow down Amazon’s encroachment. Best Buy’s Geek Squad could be further developed as a business service through Office Depot/OfficeMax commercial accounts to integrate customers deeper with the company. The electronics aspect of Best Buy then would have more cross sell opportunities between commercial/retail consumers. Wal-Mart has already established a strong foothold in electronics and Amazon is coming on fast. The casualty that was Circuit City was simply a foreshadow of what will happen to Best Buy if it does not find a dance partner and soon.

An examination of the past five years shows just how bad things are getting for Best Buy and Barnes & Noble as Amazon continues its expeditious growth. In the graph below we see over the past almost five full years Amazon’s stock price has risen almost 300 percent, while Best Buy and Barnes & Noble are down almost 30 percent over the same period. This is saying something given that most stocks have benefited greatly from the quantitative easing of the Federal Reserve as the chart also shows even the S&P 500 up over 20 percent over the same period.

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The proverbial ground is shifting under retail. It is shifting so fast that we may have passed the point of no return but I believe they still have a chance if they can pull off a merger and acquisition of this magnitude. There is no doubt that bringing together four companies, two which are commercial focused and two which are more retail oriented will be no easy task. The possibility of culture clash is heightened in this type of unification. Especially, given that time is of the essence and there is risk for not properly vetting through making sure the t’s are crossed and i’s dotted. However, there is no doubt what awaits this group of companies if they try and remain independent niche companies. Instead of standing still as they are now and in danger of being swallowed whole, maybe they can get into sprint mode and start to bite back at the competition.

Disclaimer: There is no ownership of any companies mentioned in this article by myself, my business, or my family as of this article’s publishing.