This is the largest gift to any business school in the world, the school announced on Thursday, November 6.
The donor is David G. Booth, founder and chief executive of Dimensional Fund Advisors, an investment firm, his wife Suzanne Booth and their family. David Booth received an M.B.A. from the school in 1971. The combination of an up-front payment, the income stream, and the equity interest provided by the Booth gift is valued at $300 million. In recognition of the gift, the school will be renamed the University of Chicago Booth School of Business.
Before Booth's gift, the largest gift to a business school was $105 million given to Stanford University's Graduate School of Business in 2006 by Philip H. Knight, founder and chairman of Nike. Other large gifts to business schools include $100 million to the University of Michigan in 2004 from Stephen M. Ross, $85 million to the University of Wisconsin at Madison in 2007 from a combined partnership of 13 alumni and $60 million to the Darden School at the University of Virginia from Frank Batten Sr., retired chairman and chief executive of Landmark Communications.
"The very first course I took at the University of Chicago was taught by Eugene Fama and it was a life-changing event for me," said Booth, who was a Ph.D. student at the business school and a research assistant to Fama, the Robert R. McCormick Distinguished Service Professor of Finance. Fama is the founder of the efficient market hypothesis, which says investors in stocks should not be able to beat the market since there is no way for them to know something about a stock that is not already reflected in the stock's price. Instead, market efficiency suggests investors are better off buying and holding widely diversified portfolios – the basic thinking behind index funds.
"I remember Professor Fama standing up the first day of class and saying 'This is the most practical course you will ever take,' and it turned out to be true," Booth said. "We built Dimensional Fund Advisors around his set of ideas. I am hoping that others will join me in giving back to this amazing business school. Dean Snyder and his colleagues will need tremendous resources to realize their vision of maintaining and enhancing Chicago's influence on business and markets."
President Robert J. Zimmer called the gift a vivid illustration of the power of ideas.
"This gift is extraordinary in both its generosity and its endorsement of the University's mission," said Zimmer. "The relationship between David Booth and Eugene Fama – and the idea that captivated them both – is another example of how groundbreaking theory, rigorous examination and application of principles come together often at the University of Chicago."
"Given the profile of our school and its role in the world, it is imperative that the person who names the school embodies its values and, moreover, is a person who is of great integrity and who commands respect," said Edward Snyder, dean of the University of Chicago business school. "In David Booth, we have a person who exceeds all the relevant criteria."
After founding Dimensional Fund Advisors in 1981 with University of Chicago classmate Rex Sinquefield, a 1972 M.B.A. graduate, Booth leveraged his Chicago education and the ongoing flow of ideas from its business school to develop strategies for his firm that were grounded in the efficient market hypothesis which says stock prices reflect all available information. Dimensional Fund Advisors now manages $120 billion for institutional investors and clients of registered financial advisors. The firm has U.S. offices in Austin, Chicago and Santa Monica, and international offices in London, Sydney and Vancouver.
"By using the efficient market hypothesis developed at the University of Chicago business school, we have been able to document clearly that you don't have to try to outguess the market in order to have a good investment experience," Booth said.
The school plans to use the money for several new initiatives, including aggressively attracting and retaining star faculty. Other uses being considered include developing new faculty groups in academic areas not normally associated with business schools, expanding existing research centers, and launching ambitious programs to better leverage the school's intellectual capital.
The gift may also be used to expand the school's international presence beyond its existing campuses in London and Singapore.
Booth earlier gave the University of Chicago business school $10 million to help fund construction of the Charles M. Harper Center on the school's Chicago campus.
The University of Chicago Booth School of Business is one of the leading business schools in the world. The school's faculty includes many renowned scholars and its graduates include many business leaders worldwide. The Chicago approach to management education is distinguished by how it leverages fundamental knowledge, its rigor, and its practical application to business challenges. Chicago Booth offers a full-time M.B.A. program, an evening M.B.A. program, a weekend M.B.A. program, an executive M.B.A. program in London and Singapore in addition to Chicago, a Ph.D. program, open enrollment executive education, and custom corporate education.
