update: Dr. Dietrich passed away on the 6th of October, 2011, just days after his gifts to the community as mentioned in this blog post. Like Carnegie, Mr. Dietrich left only a modest amount of money to his children, and gave most if it away. He said “that his time at Princeton University made him uncomfortable with inherited wealth“, which was mentioned in his obituary.
Record-breaking gifts were donated by a Pittsburgh native and Mt. Lebanon resident, and announced over the last few weeks. This story is of interest to me since Pittsburgh is my hometown and I was raised in Mt. Lebanon. I grew up spending weekends near the University of Pittsburgh and Carnegie Mellon University in a section of Pittsburgh called Oakland, playing handball and socialising at the Pittsburgh Athletic Association with my Father. The Club sits accross the street from the towering Cathederal of Learning, the towering structure at the heart of the University of Pittsburgh, which was founded in 1776.
Carnegie Mellon University received a $265 million pledge and the University of Pittsburgh a $125 million pledge from steel magnate William S. Dietrich II. The former is 14th on the list of the largest private donations to higher education compiled by the Chronicle of Higher Education. Carnegie Mellon has mentioned that this is larger, in present dollar terms, as the original gift by Andrew Carnegie himself to launch the University. This is the largest gift for the University of Pittsburgh ever in its 225 year history.
The reason he is giving so generously to these universities is that he believes they are the most durable institutions of the City, and those with the greatest impact on the economic development of the region. Moreover, he believes that CMU has the potential to become of the the few true global universities. In addition to bright students from all over the world — about 11,00o total now, CMU now has campuses in Silicon Valley, Qatar, and soon, Rwanda.
“In a news release, the school said this fund — which will become operational upon Dietrich’s death — “will serve as a catalyst for the university’s global initiatives and for its fusion of left-brain and right-brain thinking, such as studies connecting technology and the arts, as well as support future academic initiatives across the university, including undergraduate and graduate programs, scholarship, artistic creation and research.”
“A gift that enhances educational opportunities creates a multiplier effect for our communities and our country — in other words, it is a mode of giving that leverages a gift to achieve its maximum effectiveness,” Dietrich said. “Serving as a trustee of Carnegie Mellon convinced me that Carnegie Mellon is not only a great university, but that it is an important driver of the future success of this region and its citizens. I have seen first-hand how Carnegie Mellon has maintained the same ‘can-do’ spirit and multi-disciplinary approach to problem-solving that was part of its founding, and that it is one of a handful of universities in the world that has the potential to become a truly global institution. All of this makes Carnegie Mellon a great investment.“
After selling the steel business that his father started for $146 million, William S. Dietrich II established a foundation. He invested the capital in alternatives such as hedge funds and grew the assets to approximatey $515 million. From what I can tell the gifts will activate upon his passing. While I don’t yet see him on the Buffet Pledge website, I believe that he would qualify as a member. ( Chuck Feeney, another entrepreneur and generous giver to higher education including my alma matter is on the list I see.)
Dr. Dietrich earned his doctorate from the University of Pittsburgh and his dissertation was about the lack of smart government intervention into the technology economy in the USA. Mr. Dietrich is lightheartedly pictured in his Pitt jersey getting ready for the Football game last Saturday after the announcement of his gift. His alma matter was Princeton University. As of yet, I have not found any press about a gift to Princeton, although this may be forthcoming.
Both Carnegie Mellon University and the University of Pittsburgh have a history of good education and entrepreneurs as well. Through helping these universities beef up their programs, hire good faculty, and attract good students, the potential for more high technology and innovation in the region is increased. However, the full potential is a long way from being realized. My father, who still lives in the City and I talk about the braindrain issue, for instance. Pittsburgh of course is not alone in this regard as we see the same in Edinburgh, and, some would argue, even Silicon Valley to some extent these days. The Academic Entrepreneur states “What Pittsburgh needs now is more entrepreneurial infrastructure, from incubators that know how to help companies grow to law firms that understand how to do start-up law the way WSGR does in Silicon Valley (and are willing to take on such business models). In addition, there is a relative lack of angel and venture capital, causing the entrepreneurs who are developing high potential technology firms to flee to regions such as Silicon Valley, Route 128 (Boston), New York City, the Research Triangle and Austin, Texas. The State of Pennsylvania, as Mr. Dietrich himself might agree, needs to revisit its role and make sure its policies are as start-up friendy as possible. There is still a lot of work to be done on both the infrastructure, intervention and capital supply sides“. As a followup to this article, The Academic Entrepreneur will cover the incubation scene in Pittsburgh with a short article.
On a final note, The Academic Entrepreneur finds it interesting how the money has cycled from the manufacturing industry and the steel boom, through the financial services industry and the hedge fund boom, to the higher education sector which is a key part of the knowledge economy and boom as we move into the Third Wave as described by Toffler. We’ll see the continuation of this trend as other first, second and third wave entrepreneurs give back in the spirit of Buffet.