Bill Ackman’s Clash With Harvard Over Stock Gift Reveals the Messy World of Big Donations

The strings that fund managers Bill Ackman and Ross Stevens attached to sizable donations to Harvard University and the University of Pennsylvania, respectively, show the degree to which wealthy benefactors expect to have an ongoing say in administrative matters.

This inevitably causes chafing at universities, which pride themselves on resisting outside pressures in their unfettered pursuit of higher learning. The delicate relationship between schools and their biggest donors has contributed to their continuing clash over addressing antisemitism.

Ackman, who has been calling for Harvard to oust its president over its handling of free speech and antisemitism on campus, took to X, formerly Twitter, on Tuesday night to criticize the university for not abiding by the terms of a 2017 gift he gave it to recruit star economist Raj Chetty.

As he tells it, Ackman was in the middle of a divorce and had little cash on hand, so gifted the school $10 million of shares in Coupang, a Korean e-commerce company that was privately held at the time. It came with an unusual agreement: If the value of the shares rose above $15 million when Coupang went public, Ackman could allocate the surplus to his preferred Harvard-related cause.

A few years later, Coupang was nearing a blockbuster IPO and Ackman said the value of his gift had ballooned in value to $85 million. The hedge-fund manager started making plans to fund a new building designed by architect Norman Foster for Harvard’s economics department.

He was shocked to learn the school had sold the shares in March 2020 for $10 million without telling him.

Ackman, who said he would have bought the shares back had he been offered them, complained he never received an apology from Harvard leadership, even after he wrote to its governing board. He still expects the university to allow him to allocate $70 million and hinted he might see a use for it addressing the issues he has been agitating about. (Still, he claims his disappointment over the Coupang shares is unrelated to his current campaign.)

Harvard didn’t respond to a request for comment.

While most sizable donations from prominent donors are carefully negotiated and come with stipulations that can make for future disagreements, stock gifts in particular can be thorny. Stock in a private company run by the donor gives the benefactor even more leverage.

That was true in the case of Stevens, who made a donation to Penn’s Wharton School in 2017 to fund the Stevens Center for Innovation in Finance. The gift, now valued at about $100 million, came in the form of units in Stevens’s financial firm, Stone Ridge Holdings Group.

Stevens used the terms of those units as a bargaining chip to try to oust Penn President Liz Magill over her handling of antisemitism on campus. The gift bound Penn to Stone Ridge’s limited partner agreement, which allows Stone Ridge to retire such units if it decides that holders of them violate laws or rules that result in damage to Stone Ridge’s business or reputation.

Lawyers for Stone Ridge alerted Penn leadership last week in a letter that the university’s stance on antisemitism on campus gives it grounds to retire the units Stevens donated. Stevens and Stone Ridge would give Penn the chance to fix the violations of its limited-partner agreement once Penn replaces Magill.

Magill, one of three college presidents who testified in last week’s now-infamous congressional hearing, resigned over the weekend, as did the chairman of Penn’s board of trustees.

Some donations have more offbeat stipulations. Billionaire investor and Berkshire Hathaway Vice Chairman Charlie Munger, who died last month at age 99, donated hundreds of millions of dollars to build student housing at schools including the University of Michigan and the University of California Santa Barbara.

One condition for Munger’s gifts was that recipients had to accept his input on architectural design. His idiosyncratic preferences included external hallways and staircases as well as bedrooms that lack windows. His proposal for a UCSB dorm featured installing artificial windows modeled on the portholes on cruise ships.

Write to Peter Rudegeair at peter.rudegeair@wsj.com