The Government wants universities to raise more income by fundraising. So can they learn anything from their counterparts in the US, where targeting the rich is a way of life? Stephen Phillips reports.
Robert Sweeney is taking a breather from the University of Virginia's latest capital campaign. The drive to raise $3 billion by 2012, publicly launched last September, is touted as the most ambitious fundraising effort yet mounted by a public campus and the fourth biggest overall, trailing only the elite private trio of Stanford, Columbia and Cornell.
Officials bill it as a vehicle to vault Virginia "into the front ranks of all institutions of higher learning", with the potential to inaugurate a "new model in American higher education - the essentially privately funded public university". Sweeney, senior vice-president for development and public affairs, has just got off the phone with a "major" donor. "We're working with him... on an eight-figure gift," he says. "These very large campaigns are driven by transformational gifts - so large they end up changing what the institution can be." The University of Arkansas banked just such a "transformational" sum in 2002 with a $300 million gift from the charitable foundation of the family of Sam Walton, founder of US cut-price retail juggernaut Wal-Mart, based in Arkansas. The donation was pivotal in helping Arkansas reach its seven-year $1 billion fundraising goal in 2005 - not just in absolute terms but because the pledge, contingent on match donations, galvanised other benefactors. "There's no way we could have raised $1.046 billion (without) that incentive," says G. David Gearhart, vice-chancellor for university advancement.
This is the kind of catalytic effect the Government is hoping to ignite with its recently announced £200 million initiative to promote British institutional fundraising with match funding of £1 for every £2 tapped from private donors, up to an annual value of £2 million, and seed financing for fundraising centres on campuses without them. The scheme has focused attention on the US, where institutions have decades of experience in fundraising - typically dubbed "advancement" or "development". Ivy League campuses, founded by private philanthropists, have been at it since their inception and bring into play intellectual pedigree, research heritage, critical masses of star faculty, a lock on bright students and sheer momentum in their continuing fundraising clout.
On September 29, Columbia set the loftiest-ever fundraising goal at $4 billion over five years at a lavish New York reception. This was topped 12 days later when Stanford announced a five-year $4.3 billion campaign. Both universities must raise $2 million a day, calculates John Lippincott, president of the Council for Advancement and Support of Education, the professional association for university fundraisers - a daunting task until you consider that Stanford raked in a staggering $911.16 million, or $2.5 million a day, from private donors last year, according to the Council for Aid to Education (CAE). Also in October, Cornell launched a $4 billion, five-year campaign with New York mayor and business mogul Michael Bloomberg and ex-Citigroup chairman Sanford Weill, a Cornell alumnus, on hand as cheerleaders, while Yale announced plans to raise $3 billion in five years.
Non-Oxbridge UK campuses, however, may more readily identify with America's public universities, which in recent decades have taken to fundraising with alacrity, mounting high-powered campaigns that now rival or even surpass private efforts. Eight public campuses ranked among last year's 20 top fundraisers compiled by the CAE. As of early February, 28 US campuses - public and private - were in the throes of $1 billion-plus campaigns, according to The Chronicle of Higher Education , and more modest efforts are under way across the board, says Lippincott.
Private gifts are being used to bankroll institutional ambition amid what Lippincott calls the "increasing price of excellence" - for recruitment and retention war chests in ever more competitive academic labour markets, for instance. Private giving "is putting the fine edge on programmes, allowing [campuses] to go from good to great", says Gearhart. Public campuses face a second driver: shrinking public education budgets and the imperative to plug gaping shortfalls in state support. Campaign receipts may be ploughed into scholarships to offset high tuition fees and maintain institutional missions of equity and access. Just $160 million, or 8 per cent, of Virginia's annual $1.9 billion operating budget is met by state funding.
More representative, at Arkansas, state funding covers 30 per cent of running costs, says Gearhart.
Institutions are also ramping up efforts amid a booming philanthropic marketplace that offers rich pickings, adds Lippincott. Last year, private giving to campuses rose 9.4 per cent - the strongest growth since 2000 - to $28 billion, 30 per cent of which came from alumni, according to the CAE.
Of the balance, 25 per cent came in grants from philanthropic foundations and 16 per cent from corporations, with the remainder composed of institution-specific patrons, such as religious orders, and non-alumni, which might include former patients of teaching hospitals such as one Dick Cheney, who last March kicked in $2.7 million for a new cardiovascular institute in his name at George Washington University Hospital. Longer term, officials cite a projected $6 trillion charity windfall from a 50-year $41 trillion "inter- generational wealth transfer", predicted by Boston College's Social Welfare Research Institute (renamed the Centre on Wealth and Philanthropy in 2004).
Universities are well placed to court donors in their ability to make the case that donating to them affords opportunities to "make a difference" by bankrolling fundamental research or offering a financial lifeline to disadvantaged students - not to mention the vanity aspect of endowing an eponymous chair or institute. "(Donors) want to solve problems or help someone like them," says Albert Novak, vice-chancellor, institutional advancement at the University of Pittsburgh, currently in a $2 billion campaign. A Chronicle of Philanthropy survey found that "the 60 most generous Americans" gave $7 billion (excluding investment sage Warren Buffet's $43.5 billion gift to Bill Gate's philanthropic foundation) to charitable causes last year, versus $4.3 billion in 2005, with campuses the leading recipients.
The institutional standing of development chiefs highlights the profile of fundraising on US campuses. "(Most) fundraising chiefs (are) in senior management roles," says Lippincott. "They're seen as part of institutions' strategic direction." At Virginia, Sweeney presides over a staff of 250, communicates daily with president John Casteen and commands a $385,000 salary.
Moreover, glad-handing benefactors, addressing alumni and even being rolled out to clinch donations represent increasingly inalienable parts of the presidential role on US campuses. A 2005 survey of 764 presidents commissioned by The Chronicle of Higher Education found that more than 91 per cent conducted fundraising activities at least weekly, making it the most widely performed duty.
Before making the "solicitation" or "ask" in US fundraising parlance, officials lay the groundwork meticulously. Before campaigns are launched publicly, campuses will have conducted feasibility studies with key supporters to determine what sums they can reasonably aspire to raise.
Virginia was not taking a flier in targeting $3 billion; it had already raised $1 billion before the public phase. Meanwhile the current $4.3 billion "Stanford Challenge" originated in 2000 when faculty were canvassed on institutional goals and funding priorities.
To identify "prospects", staff use sophisticated data-mining techniques.
One service tracks alumni job promotions, alerting fundraisers, says Novak.
If alumni work for publicly traded firms, their shareholdings may be disclosed, offering insights into their personal wealth that can be cross-referenced with tax rolls and car ownership records, also in the public domain. Meanwhile, documentation of donors to other causes is fair game in identifying the philanthropically inclined.
With large sums, cultivating donors can be a slow dance. The lead-time on $100,000-plus donations can be up to 18 months, says Gearhart. And the work doesn't end when the gift is received. Today's donors are far more assertive in performing due diligence before committing themselves, then demanding to be kept appraised of their "investment", entailing spiralling managerial overheads. Virginia furnishes donors with reports detailing the beneficiaries of their largesse. Offering such services is a prerequisite for capturing donations, says Sweeney. "We (need) a level of sophistication (in) acknowledging donors that allows very large donations to take place."
Everyone has their agenda, adds Jack Butler, president and CEO of Barnes & Roche, a fundraising consultant to campuses, making blank cheques increasingly rare. "People support things they think are important," he says. "Colleges (say) philanthropy is actually a selfish act. People are giving to their own enlightened self-interest."
Campuses can also come up against finickiness. Last year, Larry Ellison, CEO of software behemoth Oracle, pulled a $115 million pledge to Harvard, reportedly asserting that it was voided by the departure of Lawrence Summers as president. The College of William and Mary reinstated a cross in its chapel several months after its removal out of deference to non-Christians caused a flap, including a threat from one donor to rescind a $12 million pledge.
But even with these hazards, every institution can raise funds, Gearhart says. All "have their constituencies - groups of people who'd be interested. It just depends on the level".