How these HBCU presidents fixed their colleges’ financial futures

Post-pandemic, colleges nationwide are facing an imperative: Change trajectory. Enrollment is down and falling, and Pew’s 2023 Parenting in America survey found that only 41% of parents say it’s important for their children to have a college degree – down from 94% in 2012. Even before COVID-19, smaller colleges from Green Mountain to Mount Ida already were closing or being bought out by larger institutions that wanted campus real estate but not their professors or students.

But for the 101 accredited Historically Black Colleges and Universities in the United States, this moment is particularly portentous. Undergrad enrollment is up 2.5%, compared with a decline of 4.2% for colleges overall – one of the only bright spots noted in the 2022 National Student Clearinghouse. While the pandemic dealt blows to some colleges that have never recovered, HBCUs say they were able to make use of the shared relief to do everything from covering lost wages to forgive their students’ debt. 

And although HBCU funding is not a monolith, several presidents interviewed for this story say, their schools are used to creating their own success recipes in the midst of the larger issue of systematic underfunding on the state and federal level since their founding.

Some say this contrasts with predominantly white institution counterparts, which have received a disproportionate share of government funds and an abundance of private and philanthropic donations. What’s different today, they say, is that people outside of HBCU circles are starting to notice the inequities. And new support from alumni and non-alumni alike is beginning to help some schools dig out of a long history of being overlooked financially.

“You should be giving them more money,” says Marybeth Gasman, associate dean for research in the Graduate School of Education at Rutgers University, and an HBCU researcher.

“I think what happens for some funders and some lawmakers is they have this idea that HBCUs should be grateful for what they get, and things have shifted on the part of HBCUs where they are saying, ‘We’re not going to just take scraps.’”

Receiving “scraps” has had a wide-ranging negative effect for decades. A 2022 Forbes Magazine study found that 18 HBCUs, mostly in Southern states, were underfunded by almost $13 billion compared to their counterparts. That data covered the period between 1987-2020, the earliest record available. Land grant HBCUs, which states are mandated to fund, didn’t start receiving state funding until the 1970s, nearly a century after some of them were established. This neglect compromised research, academic scholarships, faculty recruitment, and physical facilities maintenance and construction, the study found.

Fifty years later, the COVID-19 infusion provided more in a two-year time span than HBCUs had received from the government in the previous 10 years combined, a report from the United Negro College Fund found in 2022. HBCUs received $6.5 billion in pandemic aid – split more than 100 ways. The schools used that money to cover technology support, augment distance learning, make up for lost revenue, relieve student debt, and provide laptop computers to students who didn’t have them.

“That still is a drop in the bucket if you’ve been underfunded since inception,” says Lodriguez Murray, senior vice president for public policy and government affairs at the United Negro College Fund, a nonprofit that has raised billions in scholarships for students to attend HBCUs, as well as for the institutions themselves. 

After the murder of George Floyd by Minneapolis Police in 2020, HBCUs faced both a record number of bomb threats and a wave of financial support. Many schools saw historic fundraising years and increases in corporate partnerships and philanthropic donations.

MacKenzie Scott, former spouse of Amazon founder Jeff Bezos, made front-page headlines when she pledged hundreds of millions of dollars to HBCUs, citing a desire to spend her money where there was the most need.

Looking at the data

One of those HBCUs was Dillard University in New Orleans. Former Dillard President Walter Kimbrough says the significance of Ms. Scott’s $5 million gift was that it was unrestricted money for their endowment. He used $4 million to restore campus buildings damaged after Hurricane Ida wiped out power for a week.

“That’s the money that just sits and builds on interest and then you spend a portion of it every year to do whatever you need to do, but we have a lot of HBCUs that have hardly any endowment, less than $5 million,” Dr. Kimbrough says.

Dr. Kimbrough knows about endowments. He raised Dillard’s from about $50 million to $105 million, from 2012-2022 during the years he served. He also increased alumni giving from 4% to 23%.

He built interest in Dillard by sharing its story.

“When I first got to Dillard and I found out Dillard was No. 2 in the country for producing African Americans who get undergraduate degrees in physics, I told that everywhere,” he says. He was featured on a podcast hosted by journalist and author Malcolm Gladwell. And that first year alone, he traveled to 17 cities to introduce himself to alumni.

“I didn’t really ask them for anything,” he recalls. “I just wanted to say, ‘This is who I am, this is what I see, and here is what we’re going to focus on. I need your support.’”

“We have to tell data-driven stories,” Dr. Kimbrough continues. “My criticism has always been that HBCUs lean into their platitudes of ‘we’re a family environment, your professor knows you, or we turn lemons into lemonade,’ but it’s time to show that lemonade. If you did something, we gotta show it, and that will get people excited and make people want to donate and be a part of something.” 

Applying business principles

Cheyney University also has a story to tell. It was the country’s first Black institution of higher learning. Its founding in 1837, when the majority of the United States’ Black population was enslaved, was a challenge to the country’s ethos. The Fugitive Slave Acts put its Pennsylvania students in the crosshairs, 25 miles away from the City of Brotherly Love.

More recently, it faced financial ruin: After an earlier administration mismanaged funds, it owed $35 million to the state of Pennsylvania. Enrollment was down.

Then in 2017, Aaron Walton arrived as president after 40 years in the corporate world. Faced with a $7.5 million deficit, he made several tough decisions. Among them: Eliminating the football team, saving almost $2 million, and getting rid of open admissions, which had resulted in hundreds of students in remediation. He also secured grant money to demolish four buildings the school was not using but was paying to maintain.

Today, the budget has been balanced for four years and counting, and enrollment is up from 469 at the end of his first year to 707 students. The state has forgiven the $35 million.

“I’m not a person that wants to depend on other people for my fate,” Mr. Walton says in an interview. “There’s some basic business principles that you have to apply to an institution because you’re running a small company.”

Mr. Walton says his business background, and the fact that he didn’t hail from academia, is what helped him implement a strategy for incremental growth at Cheyney, which includes profit-sharing agreements with corporate tenants who occupy unused buildings on campus and rental agreements from others. He has a mandatory condition for those who want to do business with Cheyney: Each company has to provide internships to students. Companies on campus include cancer research, agriculture, biotech, pharmaceuticals, solar panel management, and 3D printing.

“That’s actually the perspective that we came to Cheyney with in terms of, how do we monetize the assets that Cheyney has and change the trajectory of where we’re going?’” he says.

The first $1 billion HBCU

Other presidents see things similarly. Howard University President Wayne Frederick has worked tirelessly to raise money for the school. He leveraged university-owned property into lease agreements and fostered an environment where faculty and students seek research dollars. He also says that it is in his best interest to engage Congress to secure funding annually. In 2022, Howard set a record, raising $122 million in research funding. (In the interests of disclosure, this reporter is an alum of Howard, from before Dr. Frederick was president.) 

“Having friends who show up and give you a $20 million dollar gift or a $40 million dollar gift is important, and part of the reason they do that is because of the excellence they see. We received $40 million from MacKenzie [Scott], but an undertold part of that story is that MacKenzie Scott was once a teaching assistant for Toni Morrison, so her familiarity with Howard University is very strong. Toni Morrison won’t get credit for alumni giving, but her excellence led to an impression that I’m sure she left with MacKenzie Scott,” Dr. Frederick says.

In 2020, Howard raised $170 million in private donations, which was a record, and Dr. Frederick believes it was from the work that Howard students have done throughout the world, which he considers a part of alums giving back, whether they can write a large check or not. For his part, Dr. Frederick wants that work to count. He plans to start a day of service on Juneteenth for students and alums.

“People take that ‘truth and service’ motto seriously. I think our alums go out into the community doing some kind of service, and I would say that is just as important, if not more important, than the dollars,” he says.

Dr. Frederick expects Howard, whose endowment is currently around $900 million, to be the first HBCU to hit the $1 billion mark in the next 12 to 18 months.

Additionally, Howard just started a $785 million campus building and renovation project. The school has already secured $300 million in bonds for this. Howard also wants to replace its hospital, which will cost $600 million, and Dr. Frederick says $100 million of that has been secured.

As his tenure closes, Dr. Frederick says his intention all along has been to put the school in a better position financially by raising its credit rating, managing debt, and operating efficiently.

“I would say it’s a potpourri of different funding types. But it means that you have to fundamentally block and tackle in all quarters when you’re Howard University, because of the complexity of this campus, and what we’re doing to get there is we have to lead with excellence.”