London Business School receives £10m for endowment pot

London Business School has received its largest ever donation, of £10m, from South African billionaire Nathan Kirsh. The money will go directly to top up the UK business school’s endowment, which will grow by 40 per cent to just under £36m as a result of the gift.

Mr Kirsh, who purchased Tower 42, the former headquarters of NatWest Bank, in 2011 and has both offices and a home in London close to LBS, says his initial contact with the school was through his granddaughter, who received her MBA there in 2012 – her brother will also join the programme this year. Mr Kirsh says he was surprised to discover that LBS had such a low endowment: Harvard Business School, by comparison, has an endowment of $2.8bn.

“The Americans have a much more active alumni stream in money-raising and promoting the university,” says Mr Kirsh. It is a culture he hopes to kick-start in the UK for LBS. “It [the £10m gift] is to create a benchmark for other people to match. It’s not over the top but it’s meaningful.”

Both Mr Kirsh and LBS dean Andrew Likierman are hoping the donation will generate matched funding from other companies, although Prof Likierman is reticent about a target figure for the endowment. “Having set the example, the intention is to ask others to continue in the same way,” he says.

Mr Kirsh is less conservative about naming the goal. “I would imagine it would not be beyond our ability to raise £200m in endowment.” And the timescale? “Quick.”

He continues: “There are enough big companies floating around to be able to do this . . . British companies and companies that do business in Britain.”

The money will be used to increase the quality of the teaching and research at the school, says Prof Likierman, and to help attract top students. Some of the endowment income could be used for seed research, to bring in visiting faculty, or to top up scholarships to attract the best students.

The announcement by LBS comes at a time when applications to MBA programmes are falling in the US and Europe and business schools with low endowments are having to find other means to balance the books. Many have turned to commercial partners to help fund online degrees, which enable the schools to scale up the number of participants on their programmes. Others, such as Ashridge in the UK, have signed up with commercial partners to teach undergraduate degrees, where there is a predictable source of income over several years. In France, the trend has been for business schools to merge in order to reduce overheads.

The £10m donation is unusual in UK terms in being targeted specifically as building an endowment. Most other donations to UK business schools have been to fund building work, scholarships or research centres. In March hedge fund Brevan Howard gave £20.1m over eight years to Imperial College Business School in London to set up a research centre in financial economics. And in June the Pershing Square Foundation, set up by activist hedge fund manager Bill Ackman, gave £4.5m to Saïd Business School at Oxford university for student scholarships.

In November 2012, Prof Likierman announced substantial expansion plans for the school. LBS and Westminster city council had reached an agreement for the school to take over the iconic Old Marylebone Town Hall building on a 35-year renewable contract. The school needs to raise a further £60m to refurbish the main building and annexe before they can open for lectures in 2017. Once open, LBS’s teaching facilities will increase by 70 per cent.