University of California, Berkeley, got a $113 million (81.91 million EUR) donation from the William and Flora Hewlett Foundation.
The gift, largest in campus history, would create 100 new endowed chairs on campus, a crucial tool in retaining star professors.
"It's a really important step forward for us," said UC Berkeley Chancellor Robert J. Birgeneau.
Berkeley, a prestigious state school, has struggled to keep up with wealthy private rivals backed by fast-growing endowments.
Berkeley had an endowment of $2.5 billion (1.81 billion EUR) as of the 2006 fiscal year; Harvard's current endowment is about $35 billion (25.37 billion EUR).
Between 2000 and 2006, 236 Berkeley professors got outside job offers, mostly from elite private schools. The campus was able to keep 162 professors, but only through extraordinary efforts that cannot be sustained long-term, Birgeneau said.
Being able to offer a faculty members the prestige and research funding of an endowed chair is a strong bargaining chip, said Mark Richards, Berkeley professor of earth and planetary science and executive dean of the College of Letters and Science.
"This is really an amazing gift because it goes right to the core of the financial challenge that the university faces as a public university effectively competing with elite private institutions," Richards said.
The foundation, created by the late William Hewlett, co-founder of the Hewlett-Packard Co., will donate the $110 million (79.74 million EUR) over the next seven years and an additional $3 million (2.17 million EUR) to support management of the funds. Campus officials will work to get the grants matched dollar-for-dollar to ultimately establish 100 chairs.
Income from the endowments is expected to total about $100,000 (72,490 EUR) a year, with money going to the faculty member's research, graduate student support and to support faculty salaries of the chair-holder and others.
The funding will be distributed across campus and, once matched, would represent an almost 50 percent increase in Berkeley's current $468 million (339.25 million EUR) in endowed chair funding.