Booth Donates Record $300 Million to Chicago Business School

Investor David Booth, who credits his success to the ``life-changing'' experience studying at the University of Chicago Graduate School of Business, donated $300 million to the school, the largest gift in the university's history.

The business school, which will be renamed in honor of Booth, may use the funds for any purpose, such as attracting new faculty and expanding its campuses overseas, the university said yesterday in a statement.

Booth, 52, is the chief executive officer of Dimensional Fund Advisors Inc., with $140 billion under management, according to the investment company's Web site. He received a master's degree in business administration from Chicago in 1971. He said the theories he learned from Eugene Fama, a finance professor at the school, inspired him to start his Santa Monica, California- based company in 1981, and have been instrumental in its success.

``It would be hard to find anyone who benefited more from a University of Chicago education and from the faculty at Chicago than I have,'' Booth said in the university's statement reporting the gift. ``The school is already in a strong position. This gift is intended to help it keep moving forward.''

The University of Chicago, like other universities, is concerned the current financial crisis may hurt its endowment by lowering returns and deterring donors, said Steve Kloehn, a spokesman for the school, in a telephone interview.

Topping Rockefeller

Booth's gift is three times as large as the $100 million that retired banker David M. Rockefeller Sr. gave to Harvard University in Cambridge, Massachusetts, in April to finance studies abroad and advance the arts, and more than twice the record $125 million that the Swiss philanthropist Hansjoerg Wyss gave Harvard last month to fund a bioengineering institute. It is the largest gift to any business school, Kloehn said.

Other major gifts to universities from individual donors include $400 million in 2007 from John W. Kluge, former chairman of Metromedia International Group Inc., to Columbia University and $350 million from International Data Group Inc. founder Patrick J. and Lore Harp McGovern to the Massachusetts Institute of Technology in 2000 to fund research on the human brain.

The University of Chicago business school's past and current students and faculty have won 25 Nobel Memorial Prizes in economics led by the late Milton Friedman, the late Friedrich Hayek, and Paul Samuelson.

`Life-Changing'

``The very first course I took at the University of Chicago was taught by Eugene Fama and it was a life-changing event for me,'' Booth said in the statement. ``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.''

Fama, 69, who has been referred to as the father of modern finance, is best known for his theory that capital markets are so efficient they embody the collective wisdom of all buyers and sellers, according to the university. In 1980, Fama accepted Booth's invitation to put his theories to work as a member of the management committee of Dimensional Fund Advisors. He thanked Booth today for what he called an incredible gift.

The company, founded in a brownstone in Brooklyn, promotes itself as investing in ``the science of capital markets'' rather than speculation about how the market will perform, according to the Web site.

Booth is a trustee at the University of Chicago. He is also a trustee of the endowment association that raises funds for the University of Kansas in Lawrence, where he obtained his undergraduate degree.

The University of Chicago dates from 1892, when it was founded by John D. Rockefeller, who was then embroiled in an intense public debate over monopolistic business practices at Standard Oil Co.

Friedman Looms Large

For 30 years, starting in 1946, the university's economics department was dominated by Friedman. He won a Nobel Memorial Prize in economics for showing, among other things, that consumers decide to save money on the basis of expectations for what they'll earn over their entire lifetime, not on short-term fluctuations that may be prompted by government attempts to fine- tune aggregate demand. He also advised such free-market, limited government advocates as Barry Goldwater, Ronald Reagan, and Margaret Thatcher.

After Friedman left for the Hoover Institution at Stanford University in 1977, the limelight shifted to such finance professors as Fama.

Booth's donation isn't related to the proposed Milton Friedman Institute for the study of economics, the subject of a faculty controversy. While advocates of the institute wish to honor Friedman, critics say the institute would represent a misuse of university funds and may fail to embrace a range of economic ideas.

Friedman's influence still made itself felt during a ceremony today announcing the gift.

``Together, we will do great things for the world's market- oriented economies,'' Ted Snyder, the business school's dean, said today while thanking Booth.