Yale traces its beginnings to “An Act for Liberty to Erect a Collegiate School”, passed by the General Court of the Colony of Connecticut on October 9, 1701, in an effort to create an institution to train ministers and lay leadership for Connecticut. Soon thereafter, a group of ten Congregationalist ministers: Samuel Andrew, Thomas Buckingham, Israel Chauncy, Samuel Mather, James Noyes, James Pierpont, Abraham Pierson, Noadiah Russell, Joseph Webb and Timothy Woodbridge, all of whom were alumni of Harvard, met in the study of Reverend Samuel Russell in Branford, Connecticut, to pool their books to form the school’s first library. The group, led by James Pierpont, is now known as “The Founders”.
Originally called the “Collegiate School”, the institution opened in the home of its first rector, Abraham Pierson, in Killingworth (now Clinton). The school moved to Saybrook, and then Wethersfield. In 1718 the college moved to New Haven, Connecticut.
Meanwhile, a rift was forming at Harvard between its sixth president Increase Mather and the rest of the Harvard clergy, whom Mather viewed as increasingly liberal, ecclesiastically lax, and overly broad in Church polity. The feud caused the Mathers to champion the success of the Collegiate School in the hope that it would maintain the Puritan religious orthodoxy in a way that Harvard had not.
In 1718, at the behest of either Rector Samuel Andrew or the colony’s Governor Gurdon Saltonstall, Cotton Mather contacted a successful businessman in Wales named Elihu Yale to ask him for financial help in constructing a new building for the college. Through the persuasion of Jeremiah Dummer, Yale, who had made a fortune through trade while living in India as a representative of the East India Company, donated nine bales of goods, which were sold for more than £560, a substantial sum at the time. Yale also donated 417 books and a portrait of King George I. Cotton Mather suggested that the school change its name to Yale College in gratitude to its benefactor, and to increase the chances that he would give the college another large donation or bequest. Elihu Yale was away in India when the news of the school’s name change reached his home in Wrexham, Wales, a trip from which he never returned. While he did ultimately leave his fortunes to the “Collegiate School within His Majesties Colony of Connecticot”,{citation needed|date=July 2012} the institution was never able to successfully lay claim to it.
Sources: http://en.wikipedia.org/wiki/Yale_University