The HBCU Endowment Gap: Why Black Colleges Lag So Far Behind PWIs

While the richest schools with predominantly White student bodies swim in billions, Black schools are far behind. The reason has a basis in history.

In the world of college endowments, the United States sits on top by far.

According to the National Center for Education Statistics, the United States ranks first in the world in terms of educational endowments --- defined as an aggregation of assets created to help a college fund programs in perpetuity --- with more than $691 billion in funds.

A good endowment can be the difference between a college’s ability to be bold, or to have to stand pat, said Denise Smith, a fellow at the Century Foundation.

“Endowments are the lifeline of an institution,” she said. “Endowments are an opportunity. Institutions with healthy endowments have an opportunity to be creative. It allows them to take risks. That's how Stanford became an institution in Silicon Valley. It had an endowment that allowed it to be creative and take risks.”

Harvard University has the largest endowment of any school in the United States with more than $10 billion in funds. When it comes to endowments per student, Princeton University rules the roost at $4.6 million a student, according to the Daily Princetonian. But currently, there is no HBCU with a billion-dollar endowment. The closest to it is Howard University, which has a more than $795 million endowment, according to Bloomberg.

But when it comes to the top 100 collegiate endowments in the United States, none of them are connected to a Historically Black College or University. In fact, despite donations from philanthropists like Mackenzie Scott, who has recently contributed millions to HBCUs, the gap between HBCUs and PWIs when it comes to endowment funding is $100 to $1, HBCU money reports, meaning that for every $100 a PWI gets in endowment monies, an HBCU gets $1.

It's a longstanding challenge that exists for a variety of reasons, Smith said.

“There are moments throughout history where federal policy and public policy has really supported higher education,” she said. “But it has starved HBCUs.”

To find out why this funding gap exists despite the efforts of philanthropists and of the colleges themselves, a trip to the past is required.

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The Funding Gap

To get an understanding of why HBCU endowments are so much lower than those of their PWI counterparts, you must first look at why HBCUs were established in the first place, said Lezli Baskerville, President and CEO of the National Association for Equal Opportunity In Higher Education. (NAFEO)

When President Abraham Lincoln signed the Morrill Act into law in 1862, it established a partnership between the federal government and historically White land-grant institutions. These institutions got lots of money, land, and assistances from both federal and state governments.

When Historically Black Colleges and Universities were established in the 1890s for the purpose of keeping Blacks out of these White universities, they weren’t funded or given land at the same level, she said.

Those baked in disparities continue today, something that impacts endowments.

“Today, the disparities in funding are built into congressional and state legislation, perpetuating the disparities,” Baskerville said. “Because of the gross underfunding of historically Black land-grant institutions and other public HBCUs, with manifest legislated disparities in funding of public [white colleges] and HBCUs in congressional legislation and state legislation, and because of the failure of private entities and individuals to invest in public and private HBCUs commensurate with their outcomes in educating blacks and others of the growing populations of the states and nation, and their failure to leverage HBCUs for their potency in closing the gaps in America and establishing diverse pipelines for all of the growth and high need disciplines the endowments of HBCUs  are  roughly 1/8 the size of the average [historically white college].”

Funding is just one of the advantages that historically white institutions have over HBCUs, Smith said. While the land-grant colleges created by the Morrill Act were given land by the federal government that they were able to sell to raise money for their schools, HBCUs didn’t actually own the land that they sit on and couldn’t make those kinds of moves, she said.

Closing The Gap

As mentioned before, Howard University has the largest endowment of any HBCU. It is followed closely by Spelman University in Atlanta, Hampton University in Hampton, Virginia, Morehouse University, which is also in Atlanta and the Meharry Medical College in Nashville.

Raising the school’s endowment funding has been a combination of investment in such things as bonds, alumni contributions, and foundation help, said Dr Wayne A.I. Frederick, Howard’s president. It takes a lot of work and networking, he said.

“We cultivate a lot of the support,” Frederick said. “We do that being innovative in terms of the programming that we offer. People want to be investing in cutting edge types of things that are going to improve outcomes. So, we get a lot of support through that mechanism. We also get support from, you know, cultivating other types of donors through different channels, you know, yes, some people do come to us, but that's in the minority, I would say of all of the money that we've been raising, I would say it's because of our infrastructure.”

RELATED: North Carolina A&T State University Has Record-Breaking Year Of Fundraising

To help others create infrastructure, NAFEO has created programs that may help, Baskerville said.

“NAFEO has also created a number of private partnerships that are certain to enable HBCUs and PBIs to grow their endowments, enrollments, engage alumni, increase their friend and fund raising exponentially and position their students, faculty, staff, and alumni to access capital, participate in commerce including securing loans for mortgages and businesses, that will lead to wealth building,” Baskerville said.

But closing a $100-$1 gap takes a lot of effort, and fundraising, and foundations aren’t going to be able to do it alone. Some HBCUs have decided to sue the states in which their located for underfunding. The State of Maryland recently settled a lawsuit filed by Bowie State, Morgan State, Coppin State, and the University of Maryland Eastern Shore for $577 million, nonprofit news website Maryland Matters reports.

Getting the states to cough up these funds through the courts might be the best way to close the gap, Smith said.

“There’s a lot of lawsuits popping up,” she said. “Florida A&M university students are suing the state of Florida for underfunding. Tennessee State is finally getting money appropriated to them in the budget that they’ve been owed. It has to be a multi-pronged approach.

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