The University of California, Berkeley, today (Monday, Sept. 10) received the largest private gift in its history, $113 million from the William and Flora Hewlett Foundation. This gift represents a turning point in the financing of public higher education, providing endowment support that will help to close the funding gap between the nation's preeminent public university and its elite private peers, according to UC Berkeley Chancellor Robert J. Birgeneau.

The Hewlett gift provides UC Berkeley with a major new source of endowed funds to attract and support world-class faculty and graduate students. Through a challenge grant, it will create 100 endowed chairs, permanent funds designed to keep UC Berkeley professors' salaries competitive with those at the best private schools and to recruit top graduate students. The challenge grant will match other private donations dollar-for-dollar, resulting in $220 million in new endowments once the challenge is met. An additional $3 million will be used to support an enhanced infrastructure for managing those endowed funds.

"This gift is an extraordinary vote of confidence in the contribution that UC Berkeley and all great public universities make to society. It is a recognition that public universities can and must compete with the best private universities and can only do so through a partnership between public funding and private philanthropy," said Birgeneau.

Each year, an increasing number of UC Berkeley professors are receiving lucrative offers from elite private schools. Between 2000 and 2006, the campus retained almost 70 percent of the faculty members with competing outside offers. Of 236 professors, 162 were retained. However, in Birgeneau's view, this success was only achieved through extraordinary efforts and cost-cutting measures that cannot be continued over time.

"If we lose faculty, we may still have a public university, but it won't be the same," said Paul Alivisatos, the Larry and Diane Bock Professor of Nanotechnology at UC Berkeley and a world-renowned pioneer in the field.

"What I see when I'm teaching freshman chemistry is a population that's not ordinary. These are kids from all backgrounds coming to Berkeley, where we offer an opportunity for them to excel in an atmosphere of excellence," he said. "If we lose faculty, we'll have hurt young people who have so much to gain and so much to offer."

According to George Breslauer, UC Berkeley's executive vice chancellor and provost, "Some universities are phenomenal in three or four fields, but we have 35 departments that are ranked in the top 10, nationally. So, we have to invest broadly in order to maintain that breadth and depth of excellence."

In the past two decades, UC Berkeley's state funding — which represents about a third of the campus's annual budget — has remained relatively robust and constant when adjusted for inflation. At the same time, however, endowments at UC Berkeley's leading peer institutions have been producing returns that often have exceeded 20 percent per annum. In addition, the cost of running a major research university continues to rise rapidly. As of the 2006 fiscal year, UC Berkeley's endowment was nearly $2.5 billion. In comparison, in the same period, Harvard University's endowment was nearly $30 billion and Stanford University's was about $14 billion.

"Higher education is an increasingly competitive arena, and private institutions are at an advantage, having traditionally built up large endowments," said Birgeneau. "With only a third of our annual budget coming from state funds, increasing the size of Berkeley's endowment is the only way to sustain a stable financial foundation for the future."

For more than a year, Birgeneau and the Hewlett Foundation held frequent discussions about how the foundation's support could set the stage for a new way for private philanthropy to aid the mission of the country's top public universities. The foundation is known for the high value it places on sustaining and improving institutions that make contributions to society.

"Berkeley is the crown jewel of public higher education — not just in California, but in the country," said Walter Hewlett, chairman of the board of the Hewlett Foundation. "The foundation's grant represents our vote of confidence in a truly great institution."

"Maintaining the high quality of the Berkeley faculty is essential not only to California but to the nation as a whole," added Paul Brest, president of the Hewlett Foundation. "We hope that this grant will help ensure that Berkeley will be able to maintain its excellence long into the future.''

Over the next seven years, the Hewlett Foundation will put $110 million toward establishing the 100 endowed chairs and encourage a wide range of donors to step forward to match its gift, dollar for dollar. With the match, the Hewlett Challenge ultimately will raise $220 million in funding for new chairs. This funding will be spaced across the campus's 14 schools and colleges and represent an almost 50 percent increase over UC Berkeley's current $468 million in endowed chair funding.

To read more about this story and view video of the news conference, visit the Berkeley News Center.