A particularly audacious element of the Trump administration’s university proposal—the move to dictate endowment spending—has created a potential dilemma for the very benefactors who built these funds. Wealthy alumni and philanthropists who donated millions to institutions like Penn and Dartmouth may now find the federal government attempting to control how their contributions are used, a move that could alienate donors and chill future giving.
University endowments are composed of private donations, each often governed by a gift agreement that specifies how the money can be used. These are legally binding contracts between the donor and the university. The administration’s plan to override these agreements represents a direct interference in this private relationship and a potential violation of contract law.
This creates a serious risk of donor backlash. A philanthropist who endowed a chair in environmental science, for example, would likely be outraged to learn the government is pressuring the university to use that money to fund a conservative think tank instead. Donors give to universities based on trust in their mission and governance; federal interference shatters that trust.
The long-term consequence could be a significant decline in charitable giving to higher education. If potential donors believe their gift could be co-opted for political purposes by a future administration, they will be far less likely to make large contributions. This would harm all universities, not just the nine targeted, by drying up a crucial source of funding for scholarships, research, and academic programs.
University presidents will now have to consider this “donor dilemma” as they weigh their response. Siding with the administration could secure federal funds in the short term, but it might poison the well of private philanthropy for years to come. This adds another layer of complexity to their decision, forcing them to balance the demands of the government against the expectations of their most loyal supporters.