The Monroe Street Journal

Issue date: 12/1/08 Section: Features

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In 2004 Stephen M. Ross changed Michigan's Business School forever by donating 100 million dollars and renaming the school after himself. Earlier this month, David Booth, the co-founder of Dimensional Fund Advisors, an investment firm based in Santa Monica, donated an astounding $300 million to the University of Chicago's Graduate Business School. The University of Chicago changed the name of its business school to the Booth School of Business in honor of the donation.

David Booth's Dimensional Fund Advisors manages almost $120 billion for intuitional investors. The donation is considered the largest donation to any business school in the world. In the United States, the donation surpassed Philip Knight's record donation to Stanford by an astonishing $195 million.

Booth said that his experience at the University of Chicago was life changing, and credits his success to Professor Eugene Fama and his theory on the efficient market. During the presentation following the donation, Booth said "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. We built Dimensional Fund Advisors around his set of ideas." Booth went on to say the gift is a tribute to the school's unique teaching methods.

The University of Chicago now faces the question of what to do with the large sum of money. The University of Michigan and the Stanford Graduate School of Business both faced these decisions in past few years after receiving such large gifts. Both schools went on to use to the money for massive construction projects. Stanford, unlike, Michigan and the University of Chicago, did not rename its prestigious business school after its prized donor.

While the donation comes with no restrictions, Booth sees the school's faculty as its greatest asset and wants to make sure that the dean has the resources to get any faculty he wants. Dean Ted Snyder said that he hopes to use the money to accelerate development of international programs and develop the school's intellectual capital.

The donation comes at crucial time for the university and provides major relief to the university's financial concerns. Dean Snyder announced a $100 million matching intiative, and hopes that other alumni will follow Booth in making significant contributions to the program. Although the school can take a deep breath from financial concerns, University President Zimmer said this donation in no way solves the financial problems completely.

Changing its name from the Graduate School of Business to the Booth School of Business will undoubtedly have an adjustment period, but renaming such a prestigious university is the perfect act of gratitude.

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