How can I compare donations to universities over time?

QUESTION:  I wish to compare the relative value of several large donations made to American universities between 1829 and 2015. Most of these were bequests and the funds were used for both operating expenses as well as the construction of new facilities. There is no indication of the relative “split” and clearly it will vary with the individual circumstances of the receiving institution. If it cannot be determined what the bequest was used for — which is the case here — what criteria should be used to determine the best method to use?

ANSWER:  You supplied several examples; let’s concentrate on just three:

  1. James Smithson to found the Smithsonian Institution gave $500,000 in 1829.
  2. Stephen Girard bequeathed $2,000,000 to a number of education causes in 1831.
  3. John Hopkins gift of $7,000,000 in 1873 was used to found a University bearing his name.

A price index would not be very useful since the commodities bought then and now are so different.  If we knew how much of each was used for construction costs, then using one of the wage series might provide a useful comparator.

Because the gifted funds were used to purchase both consumer and producer (capital) goods, the two choices I would recommend are 1) the income value (using the relative GDP per capita) and 2) the economy share (relative share of GDP).  The first is a more general measure of how the gifts compare to the average earnings of the day. The second shows their relative value to the economy at the time.

For Smithson, the relative value in 2018 for each of those two values is $420 million and $11 billion.

For Girard, they are $1.6 billion and $39 billion.

For Hopkins, they are $2.1 billion and $16.2 billion.

By comparison, Michael Bloomberg has given $3.3 billion to John Hopkins over the years; the Bill and Melinda Gates’ foundation is worth around $50 billion.