Despite questions swirling around colleges and universities, Griffin's $3 billion donation to Carnegie Mellon University is one of many from billionaires to colleges this year

Carnegie Mellon University announced Wednesday that Ken Griffin, the CEO of Citadel, is making a $3 billion donation to the school.

Colleges and universities have seemed at risk of losing their vaunted place in American society over the past few years. Students and families are increasingly skeptical of them. The government attacked them both with rhetoric and by pulling funding. But one prominent group is still betting on these institutions - billionaires.

Carnegie Mellon University announced Wednesday that Ken Griffin, the CEO of hedge-fund firm Citadel, is donating $3 billion to the school, the largest individual gift in higher-education history. The school will use $1 billion of the money to bolster its campus in Pittsburgh, including a $500 million investment in its computer-science school, which will be renamed after Griffin, and $500 million in flexible support for other priorities. CMU will use the other $2 billion of the gift to launch a new campus in Miami, where Citadel's headquarters is located.

"What you're seeing with a gift of this level, that's not just an endorsement of Carnegie Mellon, this is an endorsement of the whole industry," said Michael Harris, a professor of higher education at Southern Methodist University.

Griffin's donation to CMU may be the biggest, but it's one of many from billionaires to schools across the country this year. In September, the University of Oregon announced a $1 billion donation from Nike (NKE) co-founder Phil Knight to launch an engineering school. The gift is believed to be the biggest ever to a public flagship university.

In May, venture capitalist Mark Stevens, who made his name through early investments in companies like Google and Nvidia, and his wife, Mary, gave $175 million to Santa Clara University and $200 million to the University of Southern California. Michael Dell, the CEO of Dell Technologies (DELL) and his wife, Susan, gave $750 million to the University of Texas at Austin in April. Nvidia (NVDA) CEO Jensen Huang and his wife, Lori, donated $75 million to Vanderbilt University to launch a San Francisco campus in July.

These investments in higher education come at a time when other prominent figures in the business community have criticized the environment on college campuses and derided the schools for not doing enough to prepare students for jobs in an AI-driven economy. It also comes amid other headwinds for colleges, including questions from families and policymakers about the amount of debt students take on and whether students and taxpayers are getting enough for their investment.

Griffin said part of the point of his donation was to counter those perceptions.

"We have lost sight of the narrative of just how damn important higher education is to our country," he said at an event at CMU celebrating the gift.

"I am asking the students of CMU to show the rest of our country what is the importance of a great higher education, and to show it by the success stories that you write with your life," he added later.

Why colleges are still an attractive investment for the wealthy

Despite all of the hand-wringing about the challenges colleges and universities are facing, they can be an attractive target for donors because their work can still have major impacts, both on individual students' lives and more broadly through their research and innovation, Harris said.

"If you're thinking about a significant institution to philanthropically support, universities are a great bang for your buck," he said.

Carnegie Mellon students watch a prototype mobile robot move down a hall at the school in 2002. CMU's history of innovation is part of what inspired Griffin to commit so much money to the school, he said at an event celebrating the donation.

In announcing his donation to the University of Oregon, Knight said as much. "To make an audacious dream a reality requires more than a vivid imagination. It also requires the sort of opportunity that our great American universities, both public and private, have historically provided," he said in a statement. " This is no time to abandon them."

Colleges also often drive growth in their region, which may be why this investment was particularly appealing to Griffin, Harris said. The announcement ceremony highlighted this dynamic. In speeches at the event Josh Shapiro, Pennsylvania's governor, and Corey O'Connor, Pittsburgh's mayor, both spoke of the ways developments from CMU have historically benefitted the city and state.

Griffin said he wanted to use the campus in Miami to help drive growth there too. Griffin moved Citadel's headquarters to Miami in 2022 after more than three decades in Chicago.

"Cities anchored by great universities have successfully made it through this moment in time," he said. "Carnegie Mellon will make that dream happen for the people of Miami, just as it does for the people of Pittsburgh."

A Carnegie Mellon campus in Miami is a win both for Griffin and for the school, Harris said. The university's presence in the city can provide a source of talent for Griffin and help to improve the city where he lives and his company operates. And Carnegie Mellon gets an outpost in the South, a region increasingly appealing to many college students, he said.

Opportunity for legacy

A splashy donation to a big-name school, like Griffin's, can also be a good way for philanthropists to generate headlines and help secure their legacy. Look no further than CMU itself, which is named for Andrew Carnegie and Andrew Mellon, some of the most prominent businesspeople of their time who used their money to start the school, as an example of the wealthy using funding for higher education to cement their impact.

Because of this dynamic, major gifts to colleges are often clustered around prominent schools. CMU may not have the headline-grabbing power of say, Harvard University, Griffin's alma mater, but it's still a top-ranked school with resources, including a $3.5 billion endowment.

In some corners of philanthropy this trend is shifting. MacKenzie Scott, the billionaire ex-wife of Amazon (AMZN) founder Jeff Bezos, has directed much of her higher-education giving to schools that may have fewer resources, like Historically Black Colleges and Universities.

And even with a headline-grabbing donation, these institutions may still struggle financially. Colleges' typical sources of revenue are getting squeezed as declining birthrates mean that fewer students will attend; fewer international students, a major source of revenue for some schools, are coming to the U.S.; and the federal government is cutting funding.

The president of the University of Oregon is still staring down budget cuts at the school, despite Knight's $1 billion gift, the New York Times reported.

Phil Knight has been a major donor to the University of Oregon over the years.

"This philanthropic donor interest may or may not be in areas where you have revenue or you need investment," Harris said. "Most donors don't want to give you money just to cover your basic operating expenses. That's the balancing act."

But just the fact of the donation and the vote of confidence from a prominent individual may help schools some. Major business leaders and donors are "in a better position to advocate for higher education than in some ways we are for ourselves," Harris said.

-Jillian Berman