Harvard Public Health’s $350-Million Infusion

A transformational gift undergirds a global health agenda.

Dr. Gerald Chan found his life’s course at Harvard School of Public Health; now, his family’s foundation is making a gift that transforms the school’s path and potential.

Harvard School of Public Health (HSPH) has received a $350-million gift from The Morningside Foundation, the philanthropic arm of Morningside Group, a private-equity and venture-capital entity founded in 1986 by the family of the late T. H. Chan. The pledge—representing the largest single gift in University history, and one of the largest in U.S. higher education—was announced by Harvard and by Gerald Chan, S.M. ’75, S.D. ’79, an involved HSPH alumnus (he delivered the school’s 2012 Commencement address, “The Idea of Public Health,” and serves on its capital-campaign committee) and a leader of the family investment and other business enterprises, locally and in Hong Kong.

“The Public-Health Moment”

“On behalf of my mother and my brothers,” Chan said in a statement, “I want to express how pleased we are that the legacy of our late father can be honored by this gift to HSPH. He was a generous man who was a staunch supporter of education. He also wanted to support scientific research to alleviate human suffering. He would be very pleased with…all the good works that this gift will enable.” One way that legacy will be honored is by renaming the school: it is now the Harvard T.H. Chan School of Public Health. A formal announcement event is scheduled at the school at 12:30 p.m. today; it will be broadcast live at http://www.harvard.edu/live-stream.

According to Dean Julio Frenk, the gift, in the form of endowment funds, will support students and faculty members as they address four global health threats:

  • Old and new pandemics, ranging from underwriting basic research on malaria, to exploring innovative institutions and control measures, to understanding emerging diseases like the current Ebola crisis in western Africa
  • Harmful physical and social environments, from air and water pollution to gun violence, tobacco use, and diet- and nutrition-related problems
  • Poverty and humanitarian crises, from war-caused displacement of populations to natural catastrophes, and including efforts to advance health as a human right
  • Failing health systems, and the related challenges of healthcare affordability, efficiency, and accessibility

Frenk highlighted these four overarching research priorities during the celebration of HSPH’s centennial last October and the launch of its $450-million capital campaign; “100 Years of HSPH” provides more detail about each priority, with examples drawn from the work of the school’s faculty members. As reported then, the campaign plan envisioned raising more than half that sum, principally in the form of current-use funds, to underwrite research under the umbrella of the four priorities. This new endowment, complementing those fundraising plans, may enable the school to realize its programmatic and other aspirations more quickly and expansively.

In the news announcement, Frenk hailed the Chan family’s “commitment to education and their belief in the power of public health” as “an inspiration,” and said “their generosity will ensure we have the resources to continue to develop the most innovative solutions that will enable millions of people to live longer and healthier lives, now and in the future.”

President Drew Faust said in the statement that the gift will enable HSPH to “tackle intractable health problems and to translate rigorous research into action and policy worldwide. The Chan family’s generosity sends a signal to the world: this is the public-health moment. We are honored by this gift; it will inspire a new generation of public-health leaders.”

“A Marathon, Not a Sprint”: The Gift in Context—and at Work

A $350-million gift is extraordinary not only in absolute, but also in relative, terms. For example, it represents more than 5 percent of the announced Harvard Campaign goal of $6.5 billion, and is equivalent to more than 1 percent of the Harvard endowment ($32.7 billion as of June 30, 2013, the last reported value).

Still, it looms especially large in the life and potential of the public-health school. As of mid 2013, HSPH’s endowment was $1.13 billion (see page 7 of the annual financial report)—about 3.5 percent of the University total. Among Harvard’s principal academic units, it is uniquely vulnerable to the external environment: in fiscal 2013, it derived 71 percent of its operating revenue from support for sponsored research (government and other grants)—a level of dependency that reached as high as 76 percent in fiscal 2011. Just 14 percent of revenue came from endowment income, the lowest among Harvard schools; student tuition and fees (8 percent), current-use gifts (4 percent), and other sources (3 percent) made up the rest. In prior decades, the school found itself riding the boom and bust in federal funding for research on HIV/AIDS; in the current environment, with federal research funds flat at best—and declining in inflation-adjusted terms—it is challenged anew, just as demand for public-health expertise rises in the developing, increasingly urbanizing world, and in an era of soaring obesity, newly emergent diseases, and other urgent priorities.

A $350-million increment, if realized at once (a hypothetical exercise), would enlarge HSPH’s endowment (as of the 2013 value) by more than 30 percent, yielding, over time, $18 million to $20 million in additional spendable funds annually, under current University distribution policies. That sum that would, of course, be expected to rise, assuming favorable investment returns and growth of endowment principal. The school’s annual budget is approximately $350 million (fiscal 2013 data). Having an infusion of permanent, secure funding obviously changes the entire financial position materially; the flexibility of use accompanying the terms of the gift make the proceeds even more valuable, compared to the strictures of research grants.

In a conversation at his office, Dean Frenk underscored that the gift comprises “unrestricted endowment” funds, and therefore “comes at a great time” and is “strategically important” for diversifying the school’s sources of revenue in a sustainable way. Moreover, given that discovery and real-world progress in public health are “a marathon, not a sprint,” the unrestricted nature of the funds means they are adaptable as priorities change.

For now, he envisions initial applications of distributions from the gift in these areas:

  • People. First, there will be a student loan-forgiveness fund—what Gerald Chan, also participating in the conversation, called “a fabulous way to encourage students to pursue careers that inure to the public good, while taking care of their practical needs” to discharge tuition-related debt. Students who want to work in disadvantaged areas within the United States, or international students who wish to return to their home countries in developing parts of the world, are often constrained by their debt now, Frenk said. The new mechanism, enabled by the endowment gift, will alleviate this problem, and allow the school to further diversify its student body. Second, junior faculty members’ research will be encouraged, before their tenure reviews, with a program of six-month paid sabbatical leaves—a critical investment in the school’s development of intellectual capital.
  • Ideas. The school will initiate seed funding for innovative ideas–subject to rigorous internal review before approval. This kind of risk capital, Frenk said, has been essentially unavailable. In a sense, the school will be able to incubate work at the frontiers of research, at stages before traditional grantmaking institutions are willing to underwrite it, much as the National Institutes of Health has tried to spark innovation through a variety of special grants to exceptionally creative researchers and early-career scientists, and to others working on possibly transformative avenues of inquiry.
  • Resources. Finally, the school will proceed with needed investments in refitting classrooms to adapt to its broad pedagogical reforms (discussed in detail here), in computational infrastructure for big-data projects, and in related priorities.

In higher-education philanthropy, this gift ranks high in size and importance, among such notable pledges as Intel co-founder Gordon Moore’s $600-million commitment to Caltech (2001), with his wife, Betty Moore, and their foundation; the recent $350-million gift to Johns Hopkins by Michael R. Bloomberg, M.B.A. ’66, LL.D. ’14, bringing his total support for his alma mater to $1.1 billion (its public-health school bears his name); and the $350-million gift to Cornell by Charles R. Feeney and the Atlantic Philanthropies, atop two-thirds of a billion dollars of earlier gifts to his alma mater, to kick-start its technology campus on New York City’s Roosevelt Island.

In a separate conversation, Faust underscored the importance of the gift to the school and the larger University. “Public health is a core commitment at Harvard,” she said. “It is a marvelous school,” but it has not always had the resources it needed—because the many beneficiaries of its work are scattered across the world (and often have low incomes), and because public-health professionals primarily pursue service-oriented careers. After a first century during which it helped eradicate smallpox, create the polio vaccine, originate concepts such as designated drivers to reduce alcohol-related traffic fatalities, develop checklists to promote surgical safety, and identify the health risks of air pollutants, she said, the school is poised, “if anything, to have even more effect in its second century.”

Given HSPH’s historical reliance on grants (“soft money,” in academic budgeting speak), the Chan family’s gift by itself allows the school to balance its finances more appropriately. A campaign, she said, aspires to transformative gifts, but this one is truly “dazzling.” And its echoes will be felt more broadly, because “public health is such an important field” not just in the Longwood Medical Area, but encompassing the University broadly, in disciplines from law, government, business and entrepreneurship, and engineering, to Harvard’s most global aspirations. “It’s a lovely kind of recognition of those larger forces in the University,” the president concluded, noting that global health is the largest secondary field in the College, involving more than 250 undergraduates. “We’re thrilled.”

The Chan Family

Chan Tseng-Hsi founded Hang Lung Group Limited in Hong Kong in 1960. During the next three decades, it became a well-known, highly successful developer of real estate, with a diversified portfolio of retail, office, residential, and industrial properties. It first built in the People’s Republic of China in the early 1990s, with large, combination retail-mall/office complexes in Shanghai. A Harvard Business School case study examining the company’s strategy for expansion in China noted that its financial strength enabled it to “enter the market at times in the market cycle when land prices were down (and debt or equity capital might be hard to find),” a successful strategy of maintaining low leverage and developing properties it could own for its portfolio (rather than building to sell to others).

Ronnie Chichung Chan, T.H. Chan’s son, joined the company in 1972, joined the board of directors in 1986, and became chairman in 1991. The HBS case notes his service as an adviser to the development-research foundation of the State Council of the People’s Republic. He is a member of the governing or advisory bodies of Hong Kong University of Science and Technology, University of Southern California (where he earned his M.B.A.), Tsinghua University (Beijing), and Fudan University (Shanghai)—indicating some of his interests and his high-level connections throughout China and Hong Kong.

Gerald Lokchung Chan, Ronnie Chan’s brother, became a nonexecutive director of Hang Lung in 1986, the year before they also co-founded Morningside Group in the United States. Operating as a family private-equity and venture-capital fund (interested in long-term ownership stakes, like the Hong Kong-based real-estate company, rather than the shorter time horizon of investment managers), it has invested in industrial companies; Internet and mobile technologies; dozens of life-sciences and health companies; and a handful of “clean tech” enterprises. Focusing initially on the United States, Europe, and the Asia-Pacific region, it expanded its activities into the People’s Republic in 1992, when the real-estate company also began operating there.

Through its foundation, established in 1996, Morningside also appears to be an expansive philanthropic organization. Its website lists:

  • professorships it has endowed at HSPH, Hong Kong University of Science and Technology, and Hong Kong University;
  • funding 500 scholarships annually, since 1996, at five of China’s premier higher-education institutions;
  • creating Morningside College of the Chinese University of Hong Kong, a residential college modeled on the Oxford-Cambridge system, which began accepting students in 2010;
  • a program of summer music-education scholarships;
  • an honors-scholarship program for freshmen at Zhejiang University, focusing on education in Chinese civilization and global issues, with overseas interships;
  • a program of undergraduate summer-school studies in life sciences for undergraduates from throughout Asia;
  • a center for training Chinese mathematicians under the guidance of Harvard’s Graustein professor of mathematics, Shing-Tung Yau;
  • an international congress of Chinese mathematicians; and
  • other ventures in fields such as historic preservation—notably beginning with the restoration of a garden within the Forbidden City in Beijing.

“From the Gene to the Globe”: Gerald Chan and the School of Public Health

Gerald Chan earned bachelor’s and master’s degrees in engineering at UCLA, and then pursued further education at HSPH. As a graduate student in medical physics, he recalled, he took a required course in radiobiology with John B. Little, now Simmons professor of radiobiology emeritus, who “made biology come alive for me.” He had been “tone-deaf” to the field before, Chan said, following a disappointing high-school experience in Hong Kong. In pursuit of doctoral studies with Little, Chan said, he had to return to Harvard College to take lower-level life-sciences courses. Reflecting on the “difference in studying life science in the School of Public Health versus the Faculty of Arts and Sciences or the [Medical School’s] division of medical sciences,” he said, at HSPH, “day in and day out, I was exposed to an intellectual atmosphere where people thought about the health problems of the world”—and about how “science can be a lever” to address them, alongside other levers as well. For that transformative insight, he said, he was indebted to the school.

Following postdoctoral work in cancer and pathology at Harvard (which resulted in publication in preeminent journals like Nature, Frenk noted), Chan’s path led away from science toward his career at Morningside, for reasons he described as “partly nature and partly nurture.” Recalling his father’s real-estate entrepreneurship, Chan said he dealt in real estate on the side during his HSPH studies (a course of action he does not recommend for current students—although he has been reported, of late, to have resumed real-estate investments in Cambridge). His father’s death following his postdoctoral work prompted him to assume family business obligations with his brother.

In that sense, said Frenk, Gerald Chan in fact was “ahead of his time in creating a third pathway for our graduates,” 40 percent of whom typically pursue science and 60 percent of whom pursue professional public-health practice. That third path, he continued, involves “applying science in an investment and entrepreneurial” way. When Chan spoke on “Science, the Private Sector, and the Public Good” in the Dean’s Distinguished Lecture Series in the spring of 2011, Frenk said, the student audience overflowed the presentation. Reflecting on his own education at the school, Chan said, “Students here are exposed to any problem—not only in a myopic, narrow way, but they see the problem from the gene to the globe, from the molecular level to the population level.” To that end, he encouraged them to take advantage of the full range of University offerings, probing the humanities and social sciences along with their scientific courses.

Thereafter, students selected him to be the school’s speaker for Commencement in 2012. In that address, he expanded on those themes, in a way that could almost be read as a vision for the school.  “The Idea of Public Health” addresses each of those title terms in turn.

On ideas:

I talk about ideas because I see in the communications of today’s society, be they among individuals or the masses, an impoverishment of ideas.…Tweets are great for knowing where your friends are having dinner tonight, but they are not conducive to the generation nor the communication of ideas. If modern communication technology has dumbed down society, it is in its proliferating communications which have no relevance to enriching the pool of ideas found in society. Being flooded with minutiae of everyday life subverts our intellectual life by luring us into, and holding us captive in the present, in what is, such that we have no time and no energy left to consider what might be, or what can be, or what should be. The peril we face in today’s society is that we unwittingly become mere pragmatists, and soon, exhausted realists.…

My first advice to you, graduates, is to enrich your lives with ideas, even big ideas. Read, reflect, and ruminate (the new three Rs). Observe and deduce, postulate and verify, look for connections. Be curious, be open-minded, reframe problems rather than just looking for answers, have the courage to differ from conventional wisdom, do not dismiss your intuition. Discuss, debate and discourse with others. Look into history, watch current affairs; study the sacred texts, observe humanity. These are the mental habits conducive to the spontaneous generation of ideas.  A life is rich when it is rich with ideas.

On public-spiritedness:

When I taught a [winter-session] course in the school this past January, I was struck by how purposeful and how public-spirited the students were. They were troubled by certain unmet needs in society, so they came to the School of Public Health to broaden their skills in order to do something about those needs. One student from Africa was bothered by the long waiting time that patients had to endure before being seen by a physician while the physician’s time was being used inefficiently. Another student from Asia was bothered by the stigma associated with, and therefore the scarcity of healthcare resources devoted to mental health in his country.…These are young people whose consuming passion is not their private interest, but that of the public’s.…

It is ironic that in these times when there is so much cynicism about government that our young people are in fact so public spirited. The result of this discordance is that the public spiritedness of today’s young people no longer resorts to traditional channels to find expression. They take things into their own hands. This is why social enterprises are flourishing. Technology has enabled the surmounting of many obstacles which had previously impeded ideas from being translated into actions, even actions at a large scale.

What this means for our graduates is that many entrepreneurial career paths are now open to them. Serving the public no longer means only to work for government agencies or running for public office. If the students in my class were any indication, many of our graduates will work for the public good in organizations which are private sector in their organization and operation, at once making profits and doing works which were previously consigned to the charitable or the public sector. For them, the goals of making a profit and doing good works are not mutually exclusive. They will raise money not from donors or benefactors, but from investors whose expectations are as commercial as they are benevolent. They will run their enterprises for financial sustainability while being true to their mission of delivering benefits to society.…

Lest my words today, together with my words at the school last year, be construed as my being partisan to the private sector as the locus for effecting public good, I would be remiss not to say that the public sector in this country is ripe for renewal. Historically, the Harvard School of Public Health has produced many graduates who went on to exemplary careers in governments around the world. Among our fellow alumni are a prime minister, many ministers of health, including our current dean, and innumerable public health officers, physicians and scientists. My sincere hope is that this fine tradition of service in the public sector will continue in the years to come. It is only when fine young people such as our graduates go into government service that the public sector can be reinvigorated, and with that, public service once again ennobled.

On the potential of public health:

The experience of the last half-century, a period of astonishing scientific progress, has nevertheless taught us that we must use wisely the tools modern science and medicine have given us, with the understanding and due respect that there are limits to what they can do. Let me illustrate.

In the case of AIDS, progress in our understanding of the disease and developing remedies to treat the disease was nothing less than spectacular. In less than three decades after AIDS was first diagnosed, the causative virus was identified and characterized and more than 20 drugs were approved by the FDA for treating the disease. What was formerly a sure death sentence upon diagnosis of infection can now be managed for survival measured in decades. Vertical transmission from mother to child can now be stopped. As impressive as these achievements are, the global disease burden of HIV infection has continued to rise. In several African countries, the percentage of the adult population that is HIV positive is now in the double digits. A dichotomy has emerged between our ability to control the progression of the disease in a patient and our inability to control the proliferation of the disease in a population.

The same dichotomy is evident if we are to turn from infectious diseases to chronic diseases. Consider obesity and diabetes, probably the most urgent epidemic afflicting developed countries today, and the developing countries are following not far behind. We know how to manage a diabetic patient with medication, but we are powerless in controlling the runaway increase in the incidence of obesity.…Unlike infectious diseases, there is not an exogenous pathogenic agent that we can eradicate with medicine, nor is there a vaccine that can be used as prophylaxis. How do we deal with a disease burden whose biggest risk factor is lifestyle—what we eat, how much we eat, how active or sedentary we are, or in short, how we live? Eating is so very pleasurable; this is undoubtedly hard-wired into human nature. How do we curtail pleasure in order to promote health? This is no longer a medical issue; it is a cultural issue and a behavioral issue. The crisis of obesity is a crisis of culture, culture in so far as it shapes human behavior.…

Experience with both HIV and diabetes showed that although the tools used to control the disease in a patient are medical, the most effective means for controlling the proliferation of these diseases is by effecting behavioral change. For our graduates who will go into public-health work, tools of science and medicine alone will no longer suffice. For the effectiveness of their work, they will have to look to education, community building, mass media, social media, legislation and civic leadership. In keeping with the basic tenets of a free society, they will have to find ways to change human behavior for the good. This task is daunting indeed. How can we be blind to history—that the Enlightenment’s lofty idea of the perfectibility of man has left behind a long string of broken dreams?

Few are the examples of human behavior changed in large scale for a favorable public-health outcome. The poster child here that gives us hope has got to be the public campaign against cigarette smoking in America.  In 1965, 42 percent of adults in America were smokers. A cigarette dangling in one’s mouth was a symbol for being cool, sophisticated, in control.…The idea that such a pervasive and ingrained habit in American life could be changed was hitherto unthinkable, worse yet when that change was opposed by an entrenched industry with a powerful lobbying machine. From the early 1970s, mass media campaigns, education, and aggressive government actions such as imposing label warnings, taxation, a cigarette-advertising ban, and the prohibition of smoking in public spaces succeeded in producing a cultural shift in American society. Smoking became a cultural taboo. By 2002, the percentage of Americans that smoked had been halved and the number of ex-smokers exceeded the number of current smokers. One would like to see this kind of public-health triumph for other diseases which are preventable by the reduction of risky behavior.

Gerald Chan has many other institutional attachments, summarized on his website. At the University, he has judged competitions at the iLab, and he serves on the advisory board for the Harvard China Fund. He has served on the HSPH visiting committee. He plays various roles at UCLA, Fudan University, and the Morningside College at the Chinese University of Hong Kong.

But at Harvard, he said, his primary tie is to the school that shaped so much of his career trajectory and his outlook on life. A 40-year relationship with HSPH preceded this momentous gift, which was shaped by his decades of observing “all the good work that takes place in this school,” especially as “the world has evolved in a way that just highlights the need for public health” in terms of the costs of ill health, the social cost of care, and the kinds of pandemics plaguing societies now. “They all point to the need for public-health intervention for better and more affordable outcomes, fiscally and practically.”

The New Geography of Philanthropy

The Morningside gift to HSPH is only the most recent gift since The Harvard Campaign launched that underscores the rising economic, and philanthropic, prowess of Asia. In fact, three gifts proceed directly or in part from real-estate fortunes arising from the breathtaking growth of China:

And they were preceded, in the years before the public phase of the campaign began, by leadership gifts to Harvard Business School from philanthropic affiliates of India’s Tata Group (for a new executive-education residence) and from the Dr. James Si-Cheng Chao and Family Foundation for a replacement for Kresge Hall (reflecting in part that family’s success in the international shipping business that flourished as China became a world exporter of manufactured goods).

The source and size of the gifts says much about both the globalization of economic activity and of Harvard’s reach. Regarding the passions animating the donors, however, perhaps nothing resonates so deeply as something Gerald Chan said at the end of his graduation remarks to HSPH students, about the mission he hoped they and their school share:

If the track record of perfecting the human race to the elimination of war, crime, hatred and avarice is less than stellar, perhaps we can do better in the improvement of health.

His family’s gift is a remarkable vote of confidence in that possibility.

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