‘The Path to a Better Life’

Photo courtesy of Blackstone

One fundraising surprise in 2018 was how the Massachusetts Institute of Technology secured a $350 million gift for a new computing college from a nonalumnus who says he doesn’t even use a computer regularly. For MIT’s president, Rafael Reif, the path to that big gift started by listening to a pitch rather than by making one.

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The contribution came from Stephen Schwarzman, co-founder of the private-equity firm Blackstone, whose $390 million in total giving during 2018 landed him at No. 4 on the Philanthropy 50, the Chronicle’s ranking of the top donors of the year.

Schwarzman and Reif met a few years ago at the World Economic Forum in Davos, Switzerland, as the Wall Street veteran was launching Schwarzman Scholars, a master’s-degree program at Tsinghua University in China that is modeled on the Rhodes Scholarship. At the time, Schwarzman pursued every opportunity to meet with presidents of elite institutions and promote his eponymous scholarship program. Reif and Schwarzman hit it off and continued to meet socially in New York City, where Blackstone is based.

A year ago, Reif shared with Schwarzman the institute’s plan to expand its computing program and add a greater focus on artificial intelligence. Through conversations with top tech leaders in the United States and China, Schwarzman had already developed a growing interest in such new technologies, in part out of concern that bad actors might master them first.

By last summer, MIT had drawn up plans for the new effort, at a total cost of about $1 billion. Schwarzman agreed to provide $350 million; a new MIT building will house the Stephen A. Schwarzman College of Computing. The college will hire 50 new faculty members — about half of whom will have joint appointments with other departments as the institute seeks to create more “bilinguals” who know how to use technological tools even in traditional academic fields.

“This is the new math of the day,” Reif says. “If you’re a social scientist, you have to understand how to use these tools.”

Schwarzman is not an MIT alumnus — he graduated from Yale University. Even Reif knows the financier is using MIT in pursuit of larger goals. “He felt this was a way to help the country,” Reif says.

In describing his approach to giving, Schwarzman says: “I like to do big things and create new structures that change paradigms.”

With the MIT gift, Schwarzman says he hopes to start an arms race among universities and perhaps even kick off a Sputnik moment — inspiring the federal government to support artificial intelligence and quantum computing so that the United States can stay ahead of other countries.

“This is something where you do not want to be second,” he says.

‘Easy Target’

Schwarzman is a polarizing figure, given his $13 billion fortune, his role as an informal economics adviser to President Trump, and his conspicuous spending. (His 70th birthday party in 2017 featured trapeze artists, two camels, and a Gwen Stefani set.)

Even his philanthropy is heavily scrutinized, in part over his naming gifts, including a $25 million contribution last spring to help renovate his alma mater, Abington High School, in suburban Philadelphia. The gift agreement, approved by the school board, called for changing the public school’s name to Abington Schwarzman High, but the name change angered some parents and alumni. Amid the uproar, Schwarzman agreed to make the gift without the name change.

“I wasn’t looking to create problems,” he says. “I was asked to help and was pleased to do so, given the school’s impact on my life. It was never about naming — it was about helping Abington students succeed.”

Notwithstanding the Abington controversy, the recent acceleration of Schwarzman’s philanthropy is helping soften an image that hit a low around the time of the financial crisis. A 2008 profile of Schwarzman in the New Yorker described him as an “easy target for critics of Wall Street greed” — listing trophy homes that he had purchased in Manhattan, the Hamptons, and Florida for a combined $90 million. The profile suggested that his giving didn’t match his wealth but also hinted that a major gift was on the horizon.

A month later, Schwarzman committed $100 million to the New York Public Library to jump-start a larger transformation. In 2013, he gave $100 million to Tsinghua University to launch the Schwarzman Scholars. In 2015, he gave $150 million to Yale for a state-of-the-art campus center.

Schwarzman’s lifetime total for gifts and commitments now exceeds $1.1 billion, according to his advisers. He uses his private foundation, the Stephen A. Schwarzman Foundation, primarily as a pass-through; he doesn’t leave substantial assets there for long. The $350 million gift to MIT suggests the bar may be rising for future gifts. He has not signed the Giving Pledge — a commitment to give the majority of one’s wealth to philanthropic causes — but he suggests that most of his fortune will go to philanthropy.

“My current plans are to take care of my family, and then the rest of it will ultimately be given away,” he says.

Life-Changing Education

Education is likely to remain a strong focus. “Education is the path to a better life,” Schwarzman says. “I’ve been a great beneficiary of that fact.”

Schwarzman’s parents moved from Philadelphia to the city’s suburbs when he was young. His experiences in the Abington School District helped prepare him for Yale, he says. “The education was amazing, and it changed my life,” he says.

Yale led to Harvard Business School and a career on Wall Street — primarily at Lehman Brothers — before he and Peter Peterson left to form Blackstone in 1985. As the private-equity firm prospered, both became billionaires. (Peterson, who died last year, contributed much of his wealth to a foundation focused on securing the country’s fiscal health.)

Peter Salovey, Yale’s president, says that nearly all of Schwarzman’s large gifts reflect his interest in education.

“Steve understands that education is fundamental to the American dream,” Salovey says. “He is someone who traces the roots of his success to the education that he received, and he wants to make sure that that opportunity is available to many, many others as well.”

Schwarzman says he endured a “pretty lonely” freshman year at Yale — “I knew no one” — and spent a lot of time reading in one of the buildings that is now being renovated, thanks to his $150 million gift.

When the new Yale center opens in fall 2020, it will drive students for the first time toward the center of campus for eating, socializing, and cultural events, Salovey says.

Mark Schiefelbein/AP Images

Transformation Agenda

Aside from his interest in education, Schwarzman brings no agenda to his philanthropy, according to Amy Stursberg, his closest philanthropic adviser. Schwarzman digests input from his wide network of connections in business, public policy, and higher education, Stursberg says.

“People ask me, what’s his area of interest?” says Stursberg, who oversees both the Schwarzman Scholars and the Blackstone Charitable Foundation. “He’s interested in transformation. If you told me five years ago he would give $350 million to MIT for A.I., I wouldn’t have believed it. He connects the dots — through his philanthropy, business, and public service — and is able to identify opportunities for positive disruption.”

Schwarzman’s interest in China stems from his travels and business relationships. China’s sovereign-wealth fund invests in Blackstone’s funds, and it bought shares in Blackstone when the company went public in 2007.

Schwarzman says he donated $100 million to start Schwarzman Scholars at Tsinghua because he feared the rising tide of populism in the United States would ultimately lead to a backlash against China. His goal was that the scholars would be like interpreters — helping explain Chinese culture and policies to the rest of the world, and vice versa.

“I knew that ultimately in the U.S., people would run out of targets for their frustrations — and the next target would be China due to the relative economic success it was having,” Schwarzman says.

He didn’t expect the backlash this soon. “I thought it would take longer,” he says. Schwarzman declined to comment on the current trade war and on whether President Trump has played a role in inciting ill feelings among Americans toward China.

Schwarzman Scholars receives more than 2,800 applications a year for fewer than 150 slots, and the program now has a $579 million endowment, bolstered by numerous donations from multinational corporations.

Schwarzman: A Decade of Giving

Inner-City Scholarship Fund

New York financier Stephen Schwarzman has given at least $797.5 million over the past decade. Below is a sampling of some of his biggest donations since 2008 from the Chronicle’s database of gifts.

$350 million

in 2018 to the Massachusetts Institute of Technology to establish the Stephen A. Schwarzman College of Computing.

$150 million

in 2015 to Yale University to renovate a historic building to house a high-tech student-life and cultural center.

$100 million

in 2008 to New York Public Library to renovate its flagship building and for other programs.

$100 million

in 2013 to Tsinghua University to endow the Schwarzman Scholars program.

$40 million

in 2015 to the Archdiocese of New York to endow the Inner-City Scholarship Fund. He also gave the fund $5 million in 2008.

$25 million

in 2018 to the Foundation for Abington School District for renovations and to build its new Science and Technology Center.

$10 million

in 2015 to the John F. Kennedy Center for the Performing Arts to expand its campus.

$10 million

in 2018 to the National Library of Israel to establish the Stephen A. Schwarzman Education Center.

$5 million

in 2018 to Harvard Business School to establish the Schwarzman Research Fund to analyze the implications of artificial intelligence on industries, business, and markets.

$5 million

in 2008 to the Inner-City Scholarship Fund to endow scholarships for needy children to attend Catholic Schools in New York.

$2.5 million

in 2017 to the USA Track & Field Foundation to support track and field athletes training for the World Championships and Olympic Games.

Alina Luk, a Stanford University graduate now working at Facebook, was among the first group of Schwarzman Scholars in 2017. Luk, who grew up in Hong Kong, says Schwarzman’s commitment extends to alumni of the program: In the past year, she has participated in all-expenses-paid alumni summits in Washington, D.C. (about U.S.-China relations), and Oxford, England (for an exchange with Rhodes Scholars about global leadership).

“If anything, the current climate highlights the need for a program like this,” Luk says.

Schwarzman serves on an advisory board for Tsinghua’s School of Economics and Management with Jack Ma, co-founder of Chinese tech giant Alibaba. A conversation with Ma and other technology executives during a bus trip in China spurred Schwarzman’s interest in — and concern about — artificial intelligence.

In September, just weeks before the announcement of the MIT gift, Schwarzman gave $5 million to Harvard Business School to support the development of case studies exploring the implications of artificial intelligence on businesses and markets.

“These technologies have an unimaginable power and influence,” Schwarzman says. “This is something that needs to be explored and developed before the technologies themselves just get introduced to the world.”

Schwarzman is listed as the sole donor for most of his megagifts, but his wife, Christine, whom he married in 1995, has collaborated with him on others. The couple made an endowment gift worth $40 million to the Inner-City Scholarship Fund in 2015; the fund provides tuition assistance to help children from low-income families attend Catholic schools in New York City. Christine Schwarzman visits many of the schools, writes letters to scholarship recipients to encourage them to keep their grades up, and recently arranged an event at Blackstone’s offices for 100 of the students.

Smaller giving opportunities also remain important to Stephen Schwarzman. A track and cross-country athlete in high school, he has in recent years provided a total of $2.75 million to USA Track & Field to support about 25 aspiring Olympians who juggle work with rigorous training.

Last spring, he and his wife sponsored “Heavenly Bodies: Fashion and the Catholic Imagination,” a special exhibition at the Metropolitan Museum of Art.

But it’s the large-scale transformational gifts that get him most excited — and he hints that other announcements may be coming soon.

“Because of the scope of what we do at Blackstone — as well as my global political involvement and my interactions with a lot of people in the not-for-profit arena — I’m seeing more and more opportunities to give to important areas,” Schwarzman says. “I’m able to do that, and I enjoy it.”