Shake Shack founder Danny Meyer did the right thing in returning the $10M loan that his chain received under the Paycheck Protection Plan. After intense Congressional criticism, Harvard University (sort of) follows his lead.
The stomachs of many Shake Shack fans would have turned sour had the company kept the loan that was intended for small businesses, rather than a $600M enterprise.
During 2016, I used to work in New York's Flatiron District close to that neighborhood's beating heart, Madison Square Park, where Meyer launched Shake Shack.
I often hung out in that park, and marveled at the long lines of 20-somethings waiting patiently at Shake Shack to pick up their orders of burgers, hot dogs, fries, chicken breast sandwiches and even an occasional shake.
Many of those Shake Shack customers worked at tech companies located in what was then known as Silicon Alley, and the supporting cast of media, PR firms, advertising agencies and social media sites.
The COVID-19 pandemic has walloped the Flatiron District. Many of those Shake Shack fans won't have jobs to go back to as the outbreak results in business shutdowns and severe downsizings.
Some of those impacted businesses will close because they didn't have the team of lawyers that Shake Shack used to gather the required documentation needed to participate in the PPP.
The army of Shake Shack fans and now unemployed Flatiron workers would not have looked too kindly if their favorite restaurant survived due to COVID-10 support, while their jobs went under.
Ruth's Chris Steak House may hold on to its $20M PPP loan because it serves an expense-account crowd, not worried about their next paycheck.
Meyer made the right PR move.
And speaking of expense accounts, Harvard is in line for $9M in aid under the Coronavirus Aid Relief and Economic Security Act. Under that grant, the school is required to allocate at least half of that windfall for emergency grants to students. The Harvard Crimson reported that some of the money may wind up to bankroll technology and housing.
Harvard is blessed with an endowment of $41B and a fiscal 2019 operating surplus of $300M. Why did it take the money in the first place?
Even Department of Education Secretary Betsy DeVos expressed unease about shoveling tons of money to rich schools, while other educational institutions are barely able to scrape by.
"We hope that the presidents of these schools will take the Secretary's advice and direct CARES Act funds to students in need, no matter where those students are enrolled," said a DeVos spokesperson
A Harvard spokesperson told Newsweek on April 16 that the college needs the CARES cash to address the "substantial costs" incurred during the pandemic.
"Like nearly all sectors of the economy, higher education has experienced significant disruption due to the coronavirus pandemic; most immediately with our efforts to reduce the population on our campuses, move classes online, and shutter most research labs, while at the same time, working to support staff and our local communities, as well as rapidly escalate our research around treatments, diagnostics and vaccines for COVID-19," the Harvard spokesperson said.
After a storm of criticism from Republican Senators Ted Cruz (TX), Josh Hawley (MO.), Rick Scott (FL) and Congressmen Mark Green (TN), and Thomas Massie (KY), Harvard is now directing all the CARES aid to financial assistance.
That's admirable but super-wealthy Harvard, which boasts of the world's largest endowment, is using cash that could be better spent in support of struggling schools that might not survive the pandemic.
But Harvard isn't the only big moneybags college soaking up CARES aid.
Ivy League schools Columbia University and Cornell are in line for $12.8M, while Yale eyes $7M and Princeton expects $2.5m. At the very least, they should follow Harvard's footsteps and give 100 percent of the money to their needy students.
And when that happens, Harvard president Lawrence Bacow should drop by the Shake Shack at 92 Winthrop Street, which is down the block from Harvard Square, and enjoy a celebratory burger.
I bet Danny Meyer would pick up the tab.