Dean’s Dismissal May Cost USC B-School Up To $40 Million In Support

Outrage among donors is growing over last month’s highly controversial decision  by the Interim President of the University of Southern California to fire the highly popular dean of its Marshall School of Business. One of the school’s chief development officers estimates that Marshall could lose between $30 million to $40 million in philanthropic support because so many of the school’s most generous donors are angry about the decision that they consider unfair and unwarranted.

A firestorm of anger has emerged from faculty, staff, students and alumni ever since Interim President Wanda Austin decided in November to cut short Ellis’ term as dean by June 30th of this year, three years before his current five-year term ends. More than 3,400 people have signed a petition in support of Ellis, and hundreds more have sent letters, emails and phone calls to the university’s board of trustees opposing the university’s decision. Austin has not publicly disclosed the reason for the termination, only that the decision was made “after careful deliberation,” according to an email sent to alumni. “Because this is a personnel matter, we are limited in what we can share about this decision,” she added.

However, unnamed university sources, in spinning the story to the Los Angeles Times, suggested that Ellis was ousted because he had allegedly mishandled gender and racial bias complaints at the school.  Rick Caruso, chairman of the board of trustees, has been quoted in the newspaper saying that Ellis’ firing “is part of where the university is today in terms of acknowledging a proper culture that needs to be embraced and practiced on campus.”

ELLIS HAS RAISED HALF A BILLION FOR THE SCHOOL

Faculty, staff, students and alumni take strong issue with the notion that there is anything but an inclusive and diverse culture at the school. In fact, many insist that Marshall’s culture has long been more open and progressive than the culture at the top of the university which has been rocked by multiple scandals that resulted in the resignation of President C.L. Max Nikias in the wake of a series of headline-producing scandals, including the administration’s handling of a campus gynecologist accused of sexually abusing patients.

The decision to terminate Dean Ellis was made only two months after he was awarded a $70,000 performance bonus from the university. It also occurs in the same year that Marshall became the first prominent business school to reach gender parity in its full-time MBA program (see USC Marshall Reaches Gender Parity). It also, in fact, occurs only a month after a highly favorable 13th place finish in the new Bloomberg Businessweek MBA ranking of U.S. schools. The magazine’s surveys of alumni, moreover, showed that the school’s culture was “extremely positive” in its treatment of racial, religious and ethnic minorities as well as women and people of all sexual orientations.

During his 11-year tenure as dean, Ellis has raised half a billion dollars on behalf of the school and significantly improved the reputation and stature of the  institution. “A lot of donors give to Marshall because they know Jim Ellis and his character,” says Sara Jensen, senior director of development for Marshall. Jensen noted that Ellis raised $10 million from one donor in August of this year even though the person was not an alum of the school.

SOME MARSHALL DONORS WANT TO FUND A DEFAMATION SUIT VS. THE UNIVERSITY

“They trust Jim and knew he would do good things,” adds Jensen who says she is personally appalled by the university’s decision. “Unless this is overturned, a lot of people have told me that they are writing USC out of their wills and are not going to pay off on their pledges.” Most larger gifts to the university are given over a five-year timeframe.

In the aftermath of the decision, some donors have called the development office to suggest putting together a pool of money for Dean Jim Ellis to fund a defamation case against the university’s administration. While the losses in support could very well go higher, so far the office is projecting a loss of between $30 million to $40 million. “It’s possibly much more but we won’t know until later this year when we see if donors continue to pay their pledges,” explains Jensen, one of nine members on the school’s major gift team. “Our team is putting together a list of donors who have contacted us saying they either will not pay their pledge or who will not donate unless Jim is reinstated. That number is based on people who proactively contacted us during the past month, but there may be other donors who we haven’t heard from yet. From my personal relationships, we’re projected to lose over $20 million.”

Jensen says one $8 million gift has been cancelled and another $10 million gift from a donor is in question. “He doesn’t know if he wants to do it now,” she says. “Several other million-dollar donors have said they will take the school out of their wills. We have millions and millions of dollars that are not coming in now. What is happening is wrong.”

‘EVERYONE IS SHOCKED AND SCARED AND UPSET’

Jensen knows the school’s culture both as a student and an employee. She graduated from Marshall’s MBA program in 2010 and came back to work in development at Marshall in October of 2012.  Her support for Ellis is unequivocal. She has traveled the country with him for the past six years on fundraising trips, seen him engage with donors, students, faculty and staff in social and professional situations and Jensen says she has never seen him say or do anything remotely inappropriate. “On our team,” she notes, “we are 90% female and have every minority represented. Everyone is supportive of Jim. Everyone is also shocked and scared and upset.”

She was one of the first staffers to write a letter in support of Ellis and send it to every member of the Board of Trustees. That letter evokes a poignant anecdote, compelling evidence of the inclusive and supportive culture that Ellis had nurtured and led at Marshall. In that letter, she explained that she and her husband had struggled for 12 years to have a child without success. Jensen’s sister would volunteer to be her surrogate, and Jensen was the first USC employee to use a surrogate. Just before her son’s birth, however, she discovered that she did not quality for USC’s maternity benefits because she was not physically pregnant.

Jensen strongly felt that the university’s policy was discriminatory because it did not provide equal benefits to adoptive or surrogate parents. Once Ellis heard about her situation, he sprang into action, at first offering to pay her benefits out of the business school’s budget so she could get the same treatment other new mothers received. Ellis then supported and encouraged her decision to challenge the policy, understanding that a change could benefit not only infertile couples but many in the LGBTQ community. 

‘A LOT OF MY CO-WORKERS ARE TERRIFIED FOR THEIR JOBS’

“He said, ‘I stand by you.’ And Jim pushed this along,” she recalls. “He got me meetings with HR (human resources) when they didn’t get back to me. And he kept following up. Jim was a huge advocate for me.”  A new university parental leave policy went into effect this past May and now offers equal maternity benefits for all new parents.

“I was discriminated against by a university policy and Jim advocated for me. This has been a very emotional situation. A lot of my co-workers are terrified for their jobs. They are scared to speak out. They think that if they could fire Jim, they could fire us. We don’t make a ton of money but we believe in the school and think it has a positive impact on people.” 

Jensen and many at the school are equally angry that USC’s leadership has left a perception that there is a toxic culture at Marshall. “That could not be further from the truth and deeply hurts so many of us,” she wrote in her letter to the trustees and to President Austin.

“I understand your mandate and desire to show that you are serious about making changes to negative elements of USC’s culture,” she added, “but your brief, opaque letter that was sent to alumni has led to damaging insinuations that Jim has committed moral or ethical violations, irreparably harming his reputation and causing outrage in thousands of students, staff and alumni who know the person Jim is and who have been touched by his selfless service.”

Poets&Quants’ repeated requests for interviews with both Interim President Austin and Board Chair Caruso have either been turned down or have not been answered.

DON’T MISS: THE MBA LEADING THE FIGHT TO SAVE A BUSINESS SCHOOL DEAN or COMMENTARY: HOW USC’S PRESIDENT AND BOARD CHAIR FLUNKED THEIR FIRST LEADERSHIP TEST