Some Thoughts on College Fundraising

For several years, the media has highlighted the importance of capital campaigns to relieve the financial burden at many colleges and universities. In doing so, they focus on the scale at the largest research universities where these campaigns now approach $5 billion in announced campaign goals.

In doing so, they also typically set the campaign in some ratio that includes the size of the university’s endowment. Why does Harvard with a $36.4 billion endowment as reported in June 2014 need more money?

While I’m sure that our Harvard colleagues can speak for themselves, it is accurate to say that colleges and universities look at their sources of support carefully. At most colleges, they are the comprehensive fee (tuition, fees, room and board), auxiliary enterprises, endowment, and fundraising. Thrown into this mix is the ability of boards of trustees to access debt, particularly for capital improvements.

Fundraising is a critical component of how colleges and universities fund themselves. But at most institutions it is a “run in place” proposition at best.

Why bother?

In today’s economy, there are typically two types of campaigns. The first is a targeted “capital” effort designed to raise money, usually in “mini-campaign” format for specific projects – a new library, athletic center, or student scholarship support. The second is a comprehensive campaign.

The comprehensive campaign is just what it professes to be – comprehensive in nature. It includes money and pledges accumulated in a silent phase where the target is usually about 50 percent of the total to be raised. The comprehensive campaign concludes with a public phase designed to meet, or better exceed, the announced goal. All money raised — including annual fund, parents fund, trustee challenges, and any other tactical approaches — is included in the final number.

These campaigns may last anywhere from four to even ten years, helping to explain why colleges appear to be in continuous campaigns with staffs who suffer from campaign exhaustion.

If campaigns at all but a handful of the largest research institutions are “run in place” propositions, then what parameters should American colleges and universities use to guide them?

Here are several suggestions:

  • Be ready before you begin a campaign. Make certain that you know the reasons for increased fundraising, how they differ from annual solicitations, and whether the institution is equipped to launch a comprehensive campaign.
  • Do your research. Many colleges and universities begin their campaigns without a clear understanding of their constituencies, sources of support, the likelihood that donors will give, and the amount on which they are willing to agree. Be certain that “yes” means “yes” in the deal. Draw up clear, definitive agreements that handle the business side of philanthropy.
  • Don’t anticipate that campaigns will rise on the “backs of giants.” Many colleges and universities make an important first mistake of assuming that one or perhaps a handful of donors will carry the campaign. I can think of several examples where this approach held true, but they are the exceptions to the rule.
  • Know your bank. In a few cases, for example, the support of wealthy parents can equal or exceed the level of support among the historic base of large alumni givers. Cultivate these relationships and do nothing to alienate parents from their children’s college. They can be important backers, especially in key initiatives.
  • Whether alumni, parent or friend of the college, beware of the bully philanthropist. At some point, boards must ask logically if the grief is worth the potential inferred by the donor. For how long can a college or university be held hostage with promises that do not convert into donor agreements in writing?
  • Don’t let the donor drive the strategy. Do you really need the squash court, ceremonial fountain, or rock wall to enhance the academic program? If so, is the “edifice complex” part of a broader strategy to align donor priorities to larger institutional strategic needs?
  • Be prepared to say “no.”
  • Link every request to a “living,” prudent and ambitious strategy. Every dollar raised, ideally, should help to achieve a part of the college or university’s strategic plan.

Within the campaign, it’s always best to keep three thoughts in mind.

First, campaign counsel should be retained and valued for their ability to set the campaign’s parameters in place. But the success of the campaign will rise or fall based upon the ability of the president and the team assembled to help to build a compelling case. Donors know it when they feel it. You can’t phone it in.

Second, comprehensive campaigns can create many things, like buildings and endowments. But the best campaigns place the faculty and students first. If the faculty is the heart of the educational enterprise, they have real needs that go beyond buildings and cash in the bank. In the public phase, put the faculty out front. Nobody explains the “why” better.

And finally, it’s about providing students with an education. Perhaps the best dollars raised are student scholarship funds. Scholarship dollars are what permits colleges to live the spirit of such great federal programs as the GI Bill, commit to diversity in all its forms, and make certain that America remains a place where anything is possible – especially with a little help from your friends.

Development is about telling a story and not about the person who tells it. Sometimes when you “run in place” with fundraising good work gets done even if bigger problems remain.

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