New U.

Scan the rankings of the world’s best universities and you may spot a few patterns. First, you will probably notice that, in every major survey, virtually all of the world’s 20 best schools are located in English-speaking countries. Next, within this elite cohort, it is hard to miss America’s dominance: the surveys usually place about 15 of the world’s top 20 universities in the United States. (Please see the table below.)

And if you look closer, you may notice that, among the American universities, the majority are private schools. The names of the schools themselves are revealing. They are not usually named for cities or states. Often they bear the names of their patrons: John Harvard and Elihu Yale; Ezra Cornell and Johns Hopkins; Leland Stanford and James B. Duke. It is striking that of the top 20 schools on earth, more than half were funded, built, and sustained by wealthy Americans who took it upon themselves to start an institution of higher learning.

The preeminence of these private universities is sometimes easy to overlook, but it represents something extraordinary. Throughout our history, Americans have relied upon private, voluntary action to create institutions dedicated to the pursuit of higher learning. The tradition is older than the United States itself. Harvard University, founded in 1636, celebrated its 150th birthday before a single word of the Constitution had been inked. The American Revolution only accelerated the trend. “No community,” wrote historian Daniel Boorstin of 19th-century America, “could be complete without its college or university.”

The golden era of private initiative in higher education occurred about a century ago. Some donors created new universities out of whole cloth; others radically retrofitted and turbo-charged existing colleges. Three of the world’s finest universities—Stanford, Carnegie Mellon, and the University of Chicago—were founded during the decade from 1890 to 1900. Cornell, Vanderbilt, Johns Hopkins, and Rice were created from scratch by eponymous donors. Paul Tulane took the University of Louisiana private in 1884; James B. Duke transformed Trinity College into Duke University in 1924. Starting in the 1900s, George Eastman’s gifts transformed both the University of Rochester and the Massachusetts Institute of Technology. (For more examples, please see the timeline below.)

In no small part because of these individuals, the story of American higher education is one of constant innovation. (It is also a story of relentless competition—for every Caltech or Grinnell that has thrived, there were far more colleges that never gained traction, that struggled along on a shoestring, or that boomed and then went bust.) The challenges America faces today will demand another burst of innovation. Government simply cannot afford to increase student lending, and families are starting to question whether the credentials their students receive are worth the fees. Paypal founder and Facebook angel investor Peter Thiel argues that college is a bubble—and puts his money where his mouth is, offering fellowships to extremely talented young people to forego college and pursue big ideas.

But other philanthropists are working to bring about higher education’s next golden era. They can see a role for colleges pursuing ambitious cultural goals that a for-profit college would not. They see a role for religious colleges that public universities cannot adopt. They can see the next Rockefeller University, the next Notre Dame, and the next MIT. And they are putting serious resources behind universities that, they believe, will introduce disruptive models, inspire religious faith, and invigorate small towns.

Structural Integrity

The directors of the F. W. Olin Foundation had a problem.

It was the early 1990s. Their founder, Franklin W. Olin, had died four decades before. Before his death, he had begun a pattern of giving to fund academic buildings on college campuses, paying the full cost—including equipment and furnishings. His trustees had continued that practice. It was a straightforward grantmaking operation, requiring minimal staff.

“We were concerned about how we were going to find people committed to continue the grant program, who wouldn’t come in with their own agenda, their own baggage, and try to change things around,” says Lawrence Milas, a lawyer who was president and chairman of the foundation and who is now retired in Florida. “We had really carved out a niche. Nobody else consistently made building grants year after year. We wanted it to continue.”

Finding personnel was just one challenge. “With the escalation of building costs, would we be able to sustain that grant program?” asks Milas. “We were locked into what we had as a private foundation. Would we remain relevant if we couldn’t substantially grow our assets?”

Milas and his fellow board members began thinking through their options. In doing so, they looked first to Olin himself for inspiration. Franklin Olin was raised in upstate New York. As a boy, he didn’t finish school, but he took to mechanics and studied as much as he could. At the age of 22, he passed the entrance exam for Cornell University, where he studied engineering. (He played baseball, too—moonlighting as a professional ballplayer in the summers. He designed his own concave bat.) Olin started his career building powder mills, then, in 1892, opened his own black powder plant, from which he expanded into shells, casings, shot, and other ammunition. His companies boomed, and when Olin died in 1951, the amount he bequeathed to his foundation, together with gifts he made during his lifetime, instantly made the foundation one of the largest in the nation.

“We always had a bias toward supporting science and engineering schools because Mr. Olin was an engineer,” Milas says. Among Milas’ ideas was opening a brand-new college dedicated to engineering. “I was concerned with whether or not this would be consistent with what Mr. Olin had ever considered. I went back and read minutes of board meetings. And sure enough, in the late 1940s, at two or three board meetings shortly before his death, he expressed the idea of starting a new institution.”

Moreover, engineering was a field that was ripe for a new kind of institution. “The skill set and intellectual tools required for engineering in the 21st century are significantly different from those required in the 20th century,” says Richard Miller, the college’s president and first employee. “And yet, higher educational models for teaching engineering haven’t changed much. Even though the students are very smart, they tend to come out as applied scientists ready to investigate the principles behind something—but not necessarily entrepreneurial, creative team players who envision what has never been and do whatever it takes to make it happen.”

In 1997, the board of the Olin Foundation chartered the Franklin W. Olin College of Engineering in Needham, Massachusetts. It committed $200 million to start the fledgling school—at the time a record in higher education. “I got a lot of comments along the lines of, ‘Why a new engineering college? We’re up and running. Why don’t you just give us the money and we’ll do what you want!’” says Milas, his eyes twinkling. “I believed the only way to get it our way was to start our own college. There would be an existing culture at these other institutions that would be difficult to change. We’d have the advantage of a new institution, to make these changes the essence of Olin College. I don’t think we would have gotten anything like the results that we’ve gotten.”

Two years later, Milas hired Richard Miller, then the dean of engineering at the University of Iowa. Miller set to work developing the curriculum and hiring faculty. Olin College adopted a broader concept of engineering education into its curriculum. The new concepts included entrepreneurship, teamwork, interdisciplinary study, and communication skills—elements traditionally lacking in an engineer’s training. The curriculum is project-based; seniors work on teams of about five on a capstone project for which a company pays $50,000 to the college. “It’s a serious project,” says Miller. “There’s a statement of work. There are often non-disclosure agreements, and there’s a periodic design review.”

Milas located Olin adjacent to Babson College, one of the nation’s top-ranked entrepreneurship schools, and 25 percent of Olin students are simultaneously taking classes at Babson or nearby Wellesley. “Part of the vision was to provide more business education to engineering students,” he says. “Today most students going into engineering don’t want to work for big corporations. They want to start their own firms.”

The college opened its doors in 2001 with 30 “partners”—not official students, but pioneers who would help to create the college’s culture in preparation for its first freshman class in 2002. “We have an amazing campus culture,” Milas says. One Olin tradition is that students are on a first-name basis with their professors. “If we’re ‘partners,’ I guess I can call you by your first name,” he recalls a student saying. “That got out of the box that first year.” To help produce a culture of change and innovation, faculty members are untenured.

Olin’s students and graduates are impressive. It admits only about 16 percent of applicants. Even with only 350 students, it’s among the top producers of National Science Foundation graduate fellowships and Fulbright scholarships. Forty-one percent of graduates go on to advanced study—and 22 percent of those attend Harvard, Stanford, and MIT.

But perhaps more impressive is Olin’s zeal to change engineering education. “We set out not to create a college for its own sake, but to be a positive influence in higher education in general,” Miller says. Olin’s mission, he adds, is to be “an important and constant contributor to the advancement of engineering education in America and around the world. Olin is to be different. It was not to be another small school that provides a good education. There are lots of those. Olin has a missionary focus.”

“I’m an engineer, so you’ll have to forgive me,” he says with a laugh. “We have lots of numbers.” Over 100 universities have sent visitors to Olin in the past two years. Nine are beginning to revise their programs along Olin’s lines. At the University of Illinois at Urbana-Champaign, all engineering freshmen are now taking a program that borrows principles from three Olin courses.

Many of Olin’s visitors come from emerging market countries like China and Brazil, where higher education is booming. In these countries, the engineering department is often the pride of a university. With a 2 percent acceptance rate, for instance, the Indian Institutes of Technology (IITs) are the most prestigious higher education centers in India.

Could these changes have been triggered without creating a new model college? Miller is doubtful. “The likelihood of a university choosing to do what we’ve done is very, very small. The National Science Foundation spent around $100 million over 10 years to provoke this kind of change on large campuses in the 1990s. After five or six years, they ended it—concluding that its penetration into universities was disappointing.” He pauses for a moment. “That’s not to say that the model that Olin has now created won’t be inspirational. It may well re-kindle interest in universities to attempt big changes.”

In 2005, the Olin Foundation closed its doors, transferring the balance of its endowment—over $250 million—to the college. Seven years on, the foundation’s former president is pleased. “In my view, it has achieved everything I have ever wanted for the college—and more,” says Milas. “The respect that the college has gotten from its peers has been remarkable. It is seen as a leader in engineering education. My only real disappointment is that we could no longer continue our original idea of making it tuition-free. We couldn’t continue that with the decline in the stock market in recent years, so we give all students a half-tuition scholarship.”

“I view Mr. Olin as a great example of an engineer, innovator, and philanthropist,” reflects Miller. “He was an entrepreneur, he was educated as an engineer, and he was motivated to do things to create opportunities for others. We are doing all that we know how to do to inspire the graduates of Olin to follow along that path.”

“There are very few people with a can-do attitude who are willing to try things,” he adds. “We have an exceptionally high percentage of those people on our campus. That’s how Olin makes things happen.”

Delivering Hope

Tom Monaghan did not like what he was seeing. It was the 1990s, and he found much about Catholic higher education in the United States severely disappointing. “Some of the nation’s most prestigious schools are Catholic in name,” he says, but “precious few are faithful to the church. From a spiritual standpoint, a Catholic family was often better off sending their kids to a non-Catholic school.”

To be sure, Monaghan found about a dozen Catholic colleges that he considered faithful, like Franciscan University of Steubenville and Christendom College (on both of whose boards Monaghan previously served). But these schools tended to be small. “Most of them don’t have big ambitions,” he explains. “They don’t aspire to be internationally known schools. Even if they did, they wouldn’t have the wherewithal. I wanted to create a school that would be a beacon for some of the larger well-known Catholic schools. We took all those schools and just tried to raise the bar.”

The result is Ave Maria University. In terms of funding, Ave Maria is probably the most ambitious religious university start-up in decades. Monaghan has devoted $400 million to the university (and its smaller predecessor institutions), and $95 million to its sister institution (with which is it not formally affiliated), the Ave Maria School of Law. And he and a local partner have built, from scratch, the town of Ave Maria, which encircles the university’s campus in southwest Florida.

Monaghan is no stranger to making things from scratch. Raised by sisters in a Catholic orphanage, he was kicked out of seminary and dropped out of architecture school before starting a pizza joint in Ypsilanti, Michigan. (“I started out in architecture school, and got into the pizza business to pay my way through school,” he chuckles. “The pizza business was losing so much money I never got back into architecture.”) The eventual name of that first pizza place he built back in 1960: Domino’s.

Monaghan’s goal became to make Domino’s Pizza a household name in America, and he successfully franchised the brand, growing from 3 stores in 1965, to 200 in 1978, to 6,250 in more than 20 countries by 1997. Monaghan was a natural: he invented an insulated pizza box that kept the pies warm, and he guaranteed delivery in 30 minutes. It was never easy. In 1969, Domino’s headquarters and supply hub burned down; Monaghan almost lost control of Domino’s a number of times; and he won a hard-fought trademark infringement lawsuit with the owner of Domino Sugar.

“I could start things,” Monaghan says. So, after he sold most of his stake in Domino’s for a reported $1 billion in 1998, he had greater resources with which to get serious about philanthropy. By that point, he wasn’t interested in much else. As his wealth grew in the 1980s, he bought the Detroit Tigers, a massive collection of Frank Lloyd Wright artifacts, a fleet of rare and classic cars, a jet, and a helicopter. In 1989, however, he recounts being stricken by conscience over pride.

“It seemed to be an admirable thing to work hard and play hard and sacrifice to be successful,” he told Philanthropy in 2002. “But why? So I could show that I had more than other people? Even though I don’t commit what most people would think of as mortal sins, I am the greatest of all sinners, because of my pride.” Monaghan sold everything—the cars, the Tigers. He stopped construction on his massive Wright-inspired house. And he began giving away his money. Correction: “It’s not my money,” he says. “I wanted to make sure the success I had would do the most possible good for my fellow man.”

Monaghan’s charitable causes have ranged widely, from pro-life causes to outreach to Catholic business men and women. But he has focused on education, particularly higher education, “because not too many people can start a university. You can have more influence, because people come from all over the country—all over the world—and go back out and make a difference.”

He started near his home in Michigan. In 1998, he founded Ave Maria College; in 2000, the law school. He was very hands on during the early years, and eventually became the chancellor and CEO of the university. “I felt I wouldn’t be able to find anyone in academia who was able to start something,” he explains. “There were lots of good academics out there who can run it after it gets going. It’s pretty chaotic in the early stages.”

The real chaos started in 2002. “We were doing fine in Michigan,” says Monaghan, “but we were running out of space and couldn’t get zoning approvals for our permanent campus.” He and the respective boards decided to move the college and law school to a new site in rural southwestern Florida, near Naples. A local developer donated land for the university and entered into a joint venture with Ave Maria University to develop an adjacent town, also to be called Ave Maria.

They were controversial decisions. Lawsuits were filed, and many parents, faculty, and affected students felt betrayed. The move was an especially bitter pill at the law school, which had quickly established itself as a rising powerhouse, luring star professors like former judge Robert Bork. But according to the Washington Monthly, the school began making plans to move to Florida immediately after securing accreditation, which had “a toxic effect on the school.”Monaghan prefers not to speak about the details. “The move was certainly tough,” he says softly. “I never knew that people could be so vicious. I was detested by a good many of the students, parents, and faculty. I’ve turned the other cheek, gone on, and put it all behind me.”

Monaghan is candid about other challenges Ave Maria has faced. “Our cost estimates for building the campus doubled in three years’ time. To make sure we didn’t run out of money, we had to cut back on some buildings. We didn’t initially build a gym, a second classroom building. We didn’t do everything we wanted to do on the oratory.” (The oratory is the school’s 1,100-seat chapel, part Gothic vaults and part Frank Lloyd Wright, at the heart of Ave Maria’s town center.) Another challenge was the bursting of the real estate bubble, which hit Florida hard. The down market in real estate forced the law school to shelve its plans for a building in Ave Maria town; according to Monaghan, the market value of its current campus in nearby Naples is still far less than what was spent on it.

“But considering everything, Ave Maria’s doing pretty well,” Monaghan says. The university remains on track to have 5,500 students in 20 years. It currently has 1,200 students, about 800 of whom are at the main campus. The faculty includes well-known Catholic academics like Michael Novak and Michael Pakaluk. Monaghan has passed the baton; he handed the presidency over to James Towey, the former president of Saint Vincent College, in 2011. (Monaghan remains chancellor and a board member.) “I tell the new president that he should do things his way,” he says. “I’ve completely let go of those reins.” By necessity, Ave Maria’s funding base has also been expanding beyond Monaghan’s millions. It has at least 10 donors who have given more than $1 million, and 100 who have given at the $100,000 level—which Monaghan notes will give the school a sustainable financial footing.

Monaghan is perhaps most proud of Ave Maria’s strong Catholic identity. “We probably have more vocations to the priesthood and the religious life per capita than any school in the country,” says Monaghan, who notes with pride that many graduates go on to teach in Catholic schools. Ultimately, strengthening the Catholic Church was Monaghan’s principal goal in starting a new college. “Of course, I would love to see Ave Maria become the nation’s preeminent Catholic university. But until then, I’m content to have started a school where the students’ first and foremost goal is heaven, not Harvard Law.”

Helping Harrisburg

“If this town was going to take a step along the path to growth,” says Robert Ortenzio from his office near Harrisburg, Pennsylvania, “it really needed a university.” Harrisburg is a small city—fewer than 50,000 residents. But it’s the state capital, as well as the center of a metropolitan area home to half a million people. Large companies like Rite-Aid and Hershey are headquartered nearby. A number of local employers had staffing needs in health care and technology. Ortenzio would know something about the need for well-trained healthcare workers: he is CEO of one of the Harrisburg area’s largest companies, Select Medical, which operates over a thousand medical rehabilitation facilities, from long-term acute care to outpatient centers.

Ortenzio founded Select Medical with his father, Rocco, in 1996. “We’re a healthcare family,” Robert says. Rocco, now Select’s chairman, is a physical therapist who became an entrepreneur in the 1970s, and Robert joined the family business in the 1980s. Today, Select Medical has 27,000 employees and over $2.8 billion in annual revenues.

In the early 2000s, the Ortenzios joined a group of community leaders seeking to open a new university in Harrisburg. It would be the first new private university in Pennsylvania since Carnegie Mellon. “I became very enthusiastic about it,” Robert says. “It was good for education, and it was good for the region. My family’s two areas of philanthropy have been health care and education, so it hit the sweet spot.”

That sweet spot was the Harrisburg University of Science and Technology (HUST). Opened in 2005, the new university has a niche specialty and a streamlined operating model. With majors like biotechnology, information science, biological chemistry, and digital health, it focuses on current and projected employment needs in Harrisburg. The professors (none of whom have tenure) are not organized into departments; instead of a core curriculum, all students are expected to master eight competencies, such as teamwork, entrepreneurship, and ethics. Three work experiences, such as internships or co-ops, are required for graduation.

For Ortenzio, the focus on the community is HUST’s top feature. He and other area business leaders have built bridges to the university, providing mentoring and internships for students. “That’s one of the elements of the model that I think is really great,” he says. Many local professionals serve as “corporate faculty” at HUST. The result: of the few graduating classes so far, more than 90 percent of alumni are employed in their field of study upon graduation.

HUST is nonprofit, but it has studied and learned from some of the best for-profit colleges. It focuses on its own core competency—teaching—and outsources services like housing and cafeterias. It runs classes year-round. It supplements downtown facilities with instruction space at area businesses. “The campus is integrated with the city,” Ortenzio notes. “They don’t have sports teams, and they don’t have tenured faculty.”

Harrisburg represents a relatively small philanthropic effort. Unlike Olin and Ave Maria, HUST does not seek a national reach. But it has reached deep in its philanthropic support: since 2006, HUST has raised nearly $50 million in charitable gifts, including its largest donation, a combined $5.2 million from Rocco Ortenzio; Robert and his wife, Angela; and Select Medical. Starting up a university is hard, Robert says. “When you’re starting something new, there are no alumni to turn to, so you have to turn to the community to get seed money and capital, as we’ve done here. To get on the kind of footing where tuition supports the institution takes a number of years, so you have to bridge that gap.”

Whether large or small, start-up universities can play a role in strengthening cities and regions. “Pennsylvania is rich with colleges,” says Ortenzio, “but Harrisburg is carving out a strong niche.”

“Not Just Money”

What is the future of today’s start-up colleges? The great universities created a century ago had different purposes, but they had one thing in common: they were launched and sustained by private philanthropy. The majority of private colleges created throughout American history have folded over time. Those that have thrived did so because of dedicated and generous patrons—both at their founding and ever since.

Often, a donor will start out as a primary mover—a Tom Monaghan or an Olin Foundation—taking charge and ignoring criticism from competitors. The bigger the gift, the more dedicated the donors, the better chance the college will have of making it. But broad-based philanthropy can work too, especially for a locally focused college. “Unless you’re a donor with unlimited resources, it will probably need to be a community-wide effort,” says Robert Ortenzio. “It takes a lot—not just money but support.”

The next Stanford probably won’t emerge overnight. But with wise leadership, strong academic programs, and steadfast philanthropic initiative, today’s new colleges may well become tomorrow’s household names.

This article was originally published in Philanthropy magazine’s spring 2012 issue.

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