University of California Santa Barbara. VDB Photos/shutterstock

Back in 2016, Warren Buffet’s business partner Charlie Munger committed $200 million to construct a $1.5 billion dorm at the University of California Santa Barbara in Isla Vista, California. It was the quintessential pre-pandemic higher ed mega-gift, reflecting affluent donors’ penchant for splashy capital projects and Munger’s own track record of bankrolling dorms at other schools, including UCSB.

But the billionaire’s commitment veered off-script in one significant way. Munger—an investor and real estate attorney by trade—wouldn’t help pay for the dorm unless he could design it himself. Moreover, his ultimatum came with what he called “one huge catch.” Instead of windows, nearly all of the students’ rooms would have “virtual windows” where residents could manipulate how much artificial light enters the room.

UCSB laid out plans for Munger Hall last year, and sure enough, it called for housing over 4,500 students in 10-by-7-foot rooms without windows. The outrage was as immediate as it was predictable. “No, design isn’t up to billionaire donors,” tweeted New Yorker architecture critic Paul Goldberger.

Late last month, Munger Hall was back in the news when a coalition of local groups repeated their demands that UCSB officials disclose restrictions on Munger’s gift, how they will come up with the remaining funds needed for the project, and how they’ll house students if the project collapses. In response, UCSB attorney Nancy Greenan Hamill stated, “Plans are well underway for the addition of 4,500 additional student beds by Fall, 2025,” albeit without mentioning Munger Hall, according to the Santa Barbara Independent.

While the unfolding saga may seem like a local affair, its underlying dynamics apply to other schools grappling with a shortage of student housing, while increasingly dependent on private donors and their ever-shifting priorities. Pre-2020, advancement officers could rely on donors to fund the construction of new buildings. But the pandemic has compelled alumni to dial back this kind of support in favor of boosting financial aid and addressing the surging student mental health crisis—important needs that exist concurrent with longstanding expenses like student housing.

Billionaire, investor, amateur architect

The 98-year-old Munger is vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett. Often referred to as Buffett’s right-hand man, Munger hasn’t signed the Oracle from Omaha’s Giving Pledge. “I’ve already transferred so much to my children that I’ve already violated it,” he said in a 2019 interview with Yahoo Finance.

Munger has a Forbes real-time net worth of $2.5 billion and a history of bankrolling the construction of residential complexes. In 2011, he donated $20 million to his alma mater, the University of Michigan, to renovate residences for law students. Two years later, he gave the school another $110 million for a new housing complex for graduate students. In 2014, he gave UCSB more than $65 million to build a residence hall for visiting physicists. (Munger’s grandson, Charles Munger III is a UCSB alumnus.)

Munger has no formal architectural training, but that hasn’t stopped officials at schools like UM from accepting his support on the condition they build dorms to his specifications. However, unlike UM’s windowless Munger Graduate Residence Hall, which houses 600 graduate students in their mid-20s and early 30s, the planned UCSB dorm will house more than 4,500 18- to 19-year-olds, crammed into a 1.7-million-square-foot, 11-story complex.

“A social and psychological experiment”

Last summer, UCSB laid out the design of Munger Hall. Students will have their own private bedrooms within fully furnished suites that include shared amenities like an outfitted kitchen, laundry room, and smart TVs, plus access to shared spaces like fitness centers and a café.

In October, Dennis McFadden, an architect who served as a consultant to the project, resigned. Among his many grievances, McFadden pushed back on the lack of windows in students’ rooms, noting that interior environments with access to natural light improve residents’ physical and mental well-being. As the “‘vision’ of a single donor, the building is a social and psychological experiment with an unknown impact on the lives and personal development of the undergraduates the university serves,” read his leaked resignation letter.

Around the same time, we began work on our white paper into higher ed philanthropy. It was immediately obvious that one of the brief’s key takeaways would be funders’ heightened efforts to address students’ growing mental health needs. Munger is perhaps the only donor whose gift could exacerbate this crisis.

In early November, Architectural Record published an interview with Munger—who again, isn’t a licensed architect—in which he called McFadden an “idiot” and claimed that the windowless rooms are “quite endurable, especially with good ventilation.” He also spoke with MarketWatch and shrugged off the familiar charge that billionaires wield too much power. “I’d rather be a billionaire and not be loved by everybody than not have any money,” he said.

Readers seeking out a less smug defense of Munger Hall should check out UCSB’s FAQ here, although I suspect they’ll still walk away wondering why administrators signed off on the building’s design. For Architecture Magazine’s Aaron Betsky, the answer is pretty simple. “The institution’s board of governors, facing a large donation with no offsetting public funding for an alternative, had no choice but to accept the design and the money,” he wrote.

Student housing shortages

When Munger announced his commitment in 2016, UCSB was preparing to accept an additional 750 undergraduate students that fall as part of an agreement between Gov. Jerry Brown and UC President Janet Napolitano.

However, in the intervening years, UCSB failed to build the requisite housing to keep up with its growth, leading to a situation in which current students live in their vans, cars or hotels. “The bottom line is, UCSB needs the 4,500 beds the Munger dorm will supply—with or without real windows—for its relentlessly expanding enrollment,” wrote Carmen Lodise, a former elected official in Isla Vista.

UCSB isn’t alone. A 2021 report from the state’s Legislative Analyst’s Office found that 5% of UC students are experiencing homelessness and 11% face housing instability, meaning they are living in transitional housing or in hotels. For the CSU system, the number of homeless students during the academic year is closer to 10%.

At the national level, 48% of the nearly 200,000 two- and four-year university students who responded to a 2021 Hope Center #RealCollege survey were housing insecure and 14% were homeless at one point. Universities currently struggling to house students include Dartmouth College, the University of Tampa, and Southern Utah University.

To officials’ credit, their best-laid plans to construct new dorms are often hamstrung by restrictive zoning laws, NIMBYism, and tepid public support. In the case of California, John Aubrey Douglass, a senior research fellow at UC Berkeley’s Center for Studies in Higher Education, told me that “state funding has already evaporated for seismic retrofitting, new buildings and maintenance.”

Shifts in alumni priorities

Normally, universities could turn to alumni and top-of-the-pyramid donors to fill the gap. But advancement officers are now navigating a different landscape than when Munger made his commitment in those halcyon days of 2016.

Last month, the Council for Advancement and Support of Education published its report on higher ed fundraising in the fiscal year beginning July 1, 2020, and ending June 30, 2021. It found that alumni giving for the “capital purposes” category jumped 23.4% over the previous year. Most of that increase was driven by a surge in giving for restricted endowments, which are often earmarked for financial aid.

“Alumni are stepping up to the plate to primarily fund scholarships and not buildings,” its author, Ann Kaplan, told me, noting that funding earmarked for property, buildings and equipment was also down over the previous fiscal year. All told, donors have been incrementally dialing back this kind of support over the past three fiscal years.

In light of this data, universities’ plans to construct new dorms suggest that advancement officers will have to make two big asks of alumni. First, they’ll need them to revive their past support for new buildings. They’ll also need alumni to maintain their funding for financial aid—if not increasing it in cases where the university expands enrollment, since it will admit more low-income students.

This will be a heavy lift. Critical top-of-the-pyramid alumni are still doing very well, but at a time when the markets have fallen into correction territory, even their largesse has its limits.

One bright spot is that private equity groups have been pumping billions of dollars into buying and developing on- and off-campus housing. The catch? Most of this development is taking place near larger schools where enrollment remains high. “There are going to be haves and have-nots,” wrote Bloomberg’s Patrick Sisson, effectively encapsulating the state of higher ed in one succinct sentence.

In fact, it’s precisely these “have-nots” with flat or declining enrollments that will need to replace aging dorms and ramp up financial aid to attract applicants who aren’t sold on the benefits of an expensive residential experience.

No experience required

All of which brings me back to one of the many complaints cited by community groups opposing Munger Hall in their recent letter to UCSB.

Subtracting Munger’s $200 million from the total cost, the school still needs to come up with an additional $1.3 billion at a time when administrators can’t count on state legislators, and all the while, alumni are signing petitions to cancel the project. “The money that he (Munger) is offering up and donating is a huge, generous amount, but when you look at the entire project, it’s only 13% of the project cost. But (Munger) wants to take the ball and go home,” Ken Mixon, a local architect told Santa Barbara’s Noozhawk.

Moreover, cost estimates for projects of this nature typically don’t include ongoing maintenance costs, which can be twice as much as the original sticker price. As we’ve noted innumerable times, these costs can be passed along to students in the form of higher tuition, effectively blunting the impact of donors’ encouraging support for financial aid.

Then again, is anyone really all that surprised by what’s happening in Isla Vista? If the past few years have taught us anything, it’s that when officials are unable or unwilling to allocate sufficient funding for core public activities, it creates a vacuum that billionaires are more than happy to fill, even if they lack professional experience in the field in question.

As far as Munger Hall is concerned, Richard Wittman, a professor and member of the UCSB Architectural Historians Group, told the school’s student newspaper that its lack of windows and crushing density compelled him to speak out against the building. “Nobody but a billionaire could propose this and ask the university to invest that much money in it and not be laughed out of the room,” he said.