Nearly $1.7 million from Koch Foundation going to Iowa State University

Some ISU faculty initially concerned about accepting money from Charles Koch, a multibillionaire political donor

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Iowa State University has announced it will accept nearly $1.7 million from the Charles Koch Foundation for a program of study on Midwest markets and entrepreneurship, finalizing a deal that’s been in the works for more than a year.

The foundation, led by multibillionaire political donor and philanthropist Charles Koch, will provide $1.685 million over five years to ISU’s Economics Department. The gift could grow to nearly $2.5 million, as the foundation has pledged to match other gifts given to the new academic program, ISU announced.

ISU is one of more than 300 colleges and universities to get financial support from the Charles Koch Foundation. Neither the University of Iowa nor University of Northern Iowa has financial support from the foundation.

ISU has received $127,000 since 2014 from the Koch Foundation, according to a Gazette investigation in April. The money is roughly split between ISU’s Greenlee School of Journalism and Communication for annual free speech celebrations and the Department of Economics, mostly for undergraduate research.

Koch Foundation staff encouraged ISU Economics Professor Peter Orazem, a recipient of past Koch grants, to apply for a larger grant for a program on Midwest markets and entrepreneurship, Joshua Rosenbloom, professor and chairman of the Iowa State University Economics Department, told The Gazette in July.

Orazem’s request was focused on a program studying Midwestern “thin” markets, or areas with low access to venture capital, and how the Midwest can attract and retain people to grow the economy, according to records obtained by The Gazette. Research also would focus on the role taxes and regulatory policies play in entrepreneurship and economic growth, the proposal stated.

“Studies of entrepreneurship, innovation and economic growth have focused predominantly on the experiences of cities, and mainly on the East and West coasts,” Orazem, who directs the new program, said in a prepared statement. “Compared to these urban areas, Midwest labor, product and capital markets are thin, which means they typically have fewer buyers and sellers, wider spreads in prices and wages and greater chances that needed workers, investors or customers will not match with firms.”

Charles Koch, who has vast business holdings in oil refining, logging, manufacturing and other areas, is probably best known for partnering with his brother, David Koch, to pour hundreds of millions of dollars into Republican politics.

Some ISU economics faculty, who learned of the proposed gift last November, were concerned the Koch Foundation would try to influence curriculum, research or hiring.

“Your apparent willingness to consider an enticing funding opportunity for the Econ Department offered by the notoriously secretive and politically driven Charles Koch raises serious concerns regarding possible adverse effects on the academic reputation of the Econ Department,” ISU Economics Professor Leigh Tesfatsion wrote in a Dec. 2 email to Rosenbloom, obtained by The Gazette through an Open Records request.

A nine-page memorandum of understanding between ISU and the foundation made public Wednesday says the university retains full academic freedom.

“The donor’s grant is intended to help promote an environment at the university where ideas can be exchanged freely and useful knowledge will benefit the well-being of individuals and society,” the agreement states.

The ISU Economics Department is in the process of hiring a new tenure-track professor for the Midwest markets program, Rosenbloom said. Three candidates will visit campus later this semester, he said, but he did not know when they would hire someone.

l Comments: (319) 339-3157; erin.jordan@thegazette.com

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