The University of Michigan began with a gift of land by the Native people. In 1817, the Ojibwe, Odawa, Podewatomi, Shawnee, and Wendat (Huron) owned most of what is now Michigan's lower peninsula. In the fall of that year, a treaty was signed at Fort Miegs, Ohio, near what is now Toledo, between Michigan's Territorial Governor, Lewis Cass, and the "Indians." In the treaty process, Governor Cass pursuaded the Indians to cede 3840 acres of land, half of which was to go to St. Anne's church and half for "a college at Detroit" in which Indians would be eligible to enroll.

While the territory had been planning a statewide school system built around a university, no specific funds had been allocated nor officers appointed. The territorial government now hastened to formalize their plans in order to assure their eligibility for the college land. The act that founded the University was drafted by Judge Augustus Woodward, Father Gabriel Richard, and Reverend John Montieth. Officers were appointed and a building was built in Detroit in 1821 but no classes were held because there were no qualified students.

In 1837, some land developers in Ann Arbor offered 40 acres on the edge of town if the University would move. The original Native gift land was sold and Michigan courts have since held that the proceeds of that sale remain part of the permanent endowment of the University of Michigan. (Note that early seals of the University show the founding date as 1837. That was before the University proved in court that the original donation of 1817 has remained intact in the University's accounting of its funding sources.)