Netflix CEO’s $120 million donation to historically black colleges highlights inequities in college funding

At a time when the nation is focused on systemic racism in our society and institutions, Hastings and Qillin said in a statement that they hoped the gift would encourage others to pour money into HBCUs, “helping to reverse generations of inequity in our country.”

Netflix CEO Reed Hastings and his wife announced Wednesday that they would donate $120 million to HBCUs.

Ore Huiying/Getty Images for Netflix

The donation is record-breaking and many leaders in the HBCU community hope it will be precedent-setting. But it also highlights the decades of disparity in resources between schools that educate mostly white students and black higher-education institutions.

“Would a even an Ivy appreciate a gift of this amount? Sure, but would that gift likely stand the test of time for decades, even generations to come? Likely not,” said Crystal DeGregory, a research fellow at Middle Tennessee State University’s Center for Historic Preservation. “Fortunately for the benefactors and for their brand, this is a history-making gift.”

She added that it’s a “very, very appreciated gift in the PWI experience is maybe a once in a lifetime institution experience for the HBCU landscape.”

That discrepancy shows up in the data. Of the 73 donations of $40 million — the amount Hastings donated to Spelman and Morehouse — or more given to higher-education institutions between fiscal years 2010 and 2019, none went to HBCUs, according to data from the Council for Advancement and Support of Education, which tracks donations to colleges.

Ten of those gifts went to Harvard University, nine went to Stanford University, six went to University of California-San Francisco, and five each went to the University of Chicago and the University of Oregon.

‘A little too soon to declare victory’

Michael Sorrell, the president of Paul Quinn College, a historically black college in Dallas, Texas, said he was “thrilled” to hear about Hastings’ and Quillin’s gift. Still he said it’s too early to tell whether historical trends in giving might change as a result of it.

“We would hope that it is a signal that the marketplace is coming to acknowledge the good that our institutions do and the outsized importance that they play in many sectors in our society,” Sorrell said. “Until we see multiples I think it’s a little soon to declare victory.”

HBCUs face a variety of obstacles raising jaw-dropping funds that aren’t as much of a challenge for their predominantly white peers.

The racial wealth gap plays a role in this dynamic. Given that black families have less wealth to draw on, a large share of the student population served by HBCUs may struggle to afford college. That, combined with well-documented labor market discrimination, means that once students become alumni, they may not have as much of a financial cushion to donate to their alma mater.

“Wealth begets wealth,” Sorrell said.

In addition, he noted there’s a dearth of HBCU alumni and boosters in the kinds of high-powered spaces, like corporate board rooms, where the relationships that can draw large donations tend to be built. Finally, a focus in the media and elsewhere on the financial challenges that some HBCUs have faced, can make donors hesitant to invest in the sector, he said.

“If everywhere you turn around, you’re being fed a narrative of financial instability it’s not going to motivate you to give it’s going to disincentivize you.”

Historic disparities in access to resources

For some HBCUs those financial challenges are real and they have to do with historic disparities in access to resources. HBCUs saw the sharpest drop in federal funding per full-time student between 2003 and 2015, according to the American Council on Education, a higher education lobbying organization. Private HBCUs saw those funds drop 42% during that period.

In addition, HBCU endowments are smaller on average than those of their predominantly white peers; the median HBCU endowment is $15.7 million compared to a median of $36.8 million at non-HBCUs, according to UCNF.

“Looking at the funding structure of higher education, like every other big sector, these racial inequities are baked in and have been baked in from the beginning,” said Luke Frederick, a Ph.D candidate at Georgetown University, whose work focuses on the link between slave traders, law enforcement and mass incarceration. He also studies the disproportionate impact of student debt on black borrowers.

One of the reasons why black students tend to struggle more with their debt is because HBCUs’ historical lack of access to resources means that they have less scholarship and grant money to provide to their students. At the same time, systemic inequity in the kindergarten through 12th grade education system, combined with admissions metrics that often correlate with whiteness and wealth have meant that black students’ access to wealthier institutions that could provide generous financial aid have been limited.

‘An impenetrable barrier’

Both and Morehouse will be using the funds to provide 200 students each over the next 10 years with scholarships that will ensure they graduate debt-free. Those two schools have also netted some of the largest donations to go to HBCUs in recent years, including a headline-grabbing gift to Morehouse last year from billionaire Robert H. Smith who announced at graduation that he would pay off the student debt of the class of 2019.

To bolster the finances of the HBCU sector, “there has to be something very robust,” Frederick said that likely goes beyond donations to those schools, given their relative sound financial footing.

Monique Dozier, Morehouse’s vice president of institutional advancement, said she’s hopeful the Hastings’ donation will inspire more philanthropists to give to HBCUs broadly, not just Morehouse. “Fundraising for all institutions is very important, but it’s critical for HBCUs because they lack so many resources the other schools have been able to build up over many, many years.”

Over the past couple of years her team has been “intentional” about its strategy to make sure “people know Morehouse,” she said. At Spelman, officials have worked over the past few years to highlight student and alumni success in the news and on social media as well as with their trustees — one of whom made what was then a record-breaking $30 million gift to the school in 2018 — to help highlight the school’s robust results for its students, said the school’s president Mary Schmidt Campbell.

That’s helped Spelman start to break through “what felt like many times just an impenetrable barrier to having private philanthropy regard us in the same light as majority serving private institutions,” she said. “In the past three years, for example, I’m seeing that more people are stopping to hear the story — to hear it and to step forward with an investment.”

Michael Lomax, the chief executive officer of the United Negro College Fund, said the donation is “a potential game changer” for HBCUs, not just because it could encourage people to think differently about their philanthropy to higher education institutions, but to causes more broadly.

“There’s been a huge disparity between the philanthropy that has been directed to historically black colleges that serve low-income black people and students and the philanthropy that is directed to social enterprises that also serve black and Latino kids, but are often times run by white social entrepreneurs,” he said.

Lomax has worked with Hastings for 15 years on the board of directors for the KIPP Foundation, a charter school network, he said. Hastings has been a major supporter of the education reform movement, which includes support for charter schools.

This approach to changing the kindergarten through 12th-grade educational landscape has been controversial and historically opposed by teacher’s unions. In recent years, it’s faced criticism from some leading Democrats. The technology website ReCode reported Tuesday that Hastings is quietly funding the construction of a retreat center to be used by educators and others aligned with the education reform movement.

During their time on the board together, Lomax worked to convince Hastings and others that donating to HBCUs is an extension of that work. “If you believe in charter schools you should believe equally in historically black colleges, they’re the next stop for our graduates,” is a refrain Lomax said he’s put forth “more often than I care to acknowledge.”

Those efforts culminated in the news of Hastings’ and Quillin’s donation.

It will likely take more of them to repeat what Sorrell described as a “wonderful gift,” he said. What the donation “means is the CEO of Netflix had a great relationship with people who were advocates at these schools,” Sorrell said.