Chicago business school gets largest ever donation of $300 million
07 Nov 2008
The global economy may be in the doldrums and people losing jobs at an unprecedented rate, but the University of Chicago Graduate School of Business has become the recipient of the single-largest ever donation to any educational institution in the world - a whopping $300 million from investor David Booth, who credits his success to the ''life-changing'' experience studying at the business school.
Booth is the founder and CEO of Dimensional Fund Advisors Inc., with $140 billion under management, according to the investment company's Web site. He received a master's degree in business administration from Chicago in 1971. He said the theories he learned from Eugene Fama, a finance professor at the school, inspired him to start his Santa Monica, California- based company in 1981, and have been instrumental in its success.
Booth recalls that the very first course he took at Chicago was taught by Fama, ''and it was a life-changing event...I remember Professor Fama standing up the first day of class and saying 'This is the most practical course you will ever take,' and it turned out to be true. We built Dimensional Fund Advisors around his set of ideas.''
Prof Fama devised the efficient market hypothesis, which says investors in stocks should not be able to beat the market since there is no way for them to know something about a stock that is not already reflected in the stock's price. Instead, investors are better off buying and holding widely diversified portfolios, or index funds.
The business school, which will be renamed as the University of Chicago Booth School of Business in honour of Booth, may use the funds for any purpose, such as attracting new faculty and expanding its campuses overseas, the university said yesterday in a statement.
University President Robert J Zimmer called the gift a vivid illustration of the power of ideas.
''This gift is extraordinary in both its generosity and its endorsement of the University's mission,'' said Zimmer. ''The relationship between David Booth and Eugene Fama - and the idea that captivated them both - is another example of how groundbreaking theory, rigorous examination, and application of principles come together often at the University of Chicago.''
''Given the profile of our school and its role in the world, it is imperative that the person who names the school embodies its values and, moreover, is a person who is of great integrity and who commands respect,'' said Edward Snyder, Dean of the University of Chicago business school. ''In David Booth, we have a person who exceeds all the relevant criteria.''
''This gift provides our school with a perfectly timed opportunity to move aggressively forward, ensuring that we continue to attract the best faculty in the world,'' said Snyder, who is the George Pratt Shultz Professor of Economics.
Booth earlier gave the school $10 million to help fund construction of the Charles M Harper Center on the school's Chicago campus. His latest gift, from the Booth Family Trust, represents an economic interest in a portion of the trust's shares in Dimensional Holdings, Inc., parent company of Dimensional Fund Advisors. The business school will receive an income stream from the shares and the terminal value of the shares if they are sold.
Before Booth's gift, the largest gift to a business school was $105 million, given to Stanford University's Graduate School of Business in 2006 by Philip Knight, founder and chairman of Nike.
Other large gifts to business schools include $100 million to the University of Michigan in 2004 from Stephen Ross, $85 million to the University of Wisconsin at Madison in 2007 from a combined partnership of 13 alumni, and $60 million to the Darden School at the University of Virginia from Frank Batten Sr., retired chairman and chief executive of Landmark Communications.
