Philanthropy and Academic Freedom at Florida State University

Writer Brendan Behan once remarked, “There’s no bad publicity except an obituary.”  I am an economics professor at Florida State University (FSU), and my department has been getting lots of publicity this week.

Our run in the spotlight started with an op-ed on May 1 in the local newspaper, The Tallahassee Democrat, in which the writers were criticizing a grant my department received from the Charles G. Koch Charitable Foundation because, the writers argued, we gave up our academic freedom to get the money.  The story was picked up by the St. Petersburg Times, and seems to have gone viral after that.  I could pick and choose a few links to share, but when I just Googled “Florida State University economics Koch” Google returned 211,000 results.  You can see for yourself what people are saying.

I don’t object to the investigative reporting that is being done on this issue.  As a government-run institution, I am happy to have our activities scrutinized and for the press to inquire into our funding sources, and how we are spending our money.  In this case, however, I think the press coverage has distorted the facts.

The money from the Koch Foundation was intended to fund faculty positions, to provide money for graduate student stipends, and to fund some undergraduate programs.  All of the negative publicity has been with regard to the faculty positions.  The contract with the Koch Foundation says that a committee that includes a representative from the Foundation will screen and approve any hires on that money, that the Foundation will get annual reports on the activities it funds, and that it can withdraw its support at any time if it is dissatisfied.  The money is coming as annual grants to support one year’s spending.  None is going into an endowment.  FSU is being criticized for allowing the Koch Foundation to have a say in who we hire.

Here are some facts about our accepting this money.  We recognized at the outset that we didn’t want an outside organization telling us who we could hire, and agreed we would only take the money if the Foundation agreed to support candidates we wanted to hire.  If there were no mutually acceptable candidates, we would not take the money.

Further, if you look at the three faculty we added with the Koch money, only one of them actually went through the screening process described above.  In two out of the three hires, we identified a candidate we wanted to hire without any Koch Foundation screening, we presented the candidate to Koch, and they said they would fund the hire.  They aren’t telling us who we can or cannot hire.  If the Koch Foundation turned down a candidate we wanted (and, they have turned down none of our suggestions), we could always hire them with our own money (which means, money taken from Florida’s taxpayers).

The university also agreed that if during the grant period the Koch Foundation decided to withdraw its annual appropriation to support those hires, the university would fund the positions.  The Koch Foundation could not determine who we hired, or whether someone would be terminated.  They could only determine whether they would pay for a hire.

This seems reasonable to me.  More than a decade ago I wrote a book (which is for sale through the Independent Institute) describing the way that philanthropic donations often end up supporting causes that the donor would have found abhorrent.  Donors always make donations with the intent of furthering ends with which they agree, whether it is funding cancer research, or supporting a symphony orchestra… or the teaching of the virtues of the market system in an economics department.  Once the money is given, especially if it is in the form of a bequest, or goes into an endowment, there is always the risk that the money will be spent for things which the donor would not approve.

In our grant from the Koch Foundation, they protected their interests both by only agreeing to provide the money if it was spent on something we saw as our mutual interest, and by having the right to stop their payments to us if they were dissatisfied with how they were using them.  On our end, we protected our interests by agreeing (within our department) that we would only hire on those lines if the candidates were people we would have chosen anyway, and (as a guarantee from our university administration) that if the Foundation did withdraw their funding mid-way through the contract, the university would fund those positions.  Does this constitute giving up our academic freedom?

In addition to being able to hire three faculty in tight budgetary times—at no taxpayer expense—we are also supporting several graduate students and undergraduate programs with money from the Koch Foundation.  Nobody in the department objects to the hires we made, and we are happy to have the financial support for our students.  But, understandably, there are some faculty who are upset about the negative publicity the Koch money has brought us.

Perhaps one source of hostility toward this agreement stems from the fact that Charles Koch is well-known for supporting libertarian causes, and the publicity is intended as an attack on Koch.  As a faculty member in the Florida State University economics department, I may be too close to the situation to give an objective judgment.  The agreement was signed and the Koch money began coming to our department in 2009, and after two quiet years, all of a sudden this week the subject is getting a lot of press.

Randall G. Holcombe is Research Fellow at the Independent Institute and DeVoe Moore Professor of Economics at Florida State University. His Independent books include Housing America: Building Out of a Crisis (edited with Benjamin Powell); and Writing Off Ideas: Taxation, Foundations, and Philanthropy in America .
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