College Fundraising at a Crossroads

• By Brian C. Mitchell
• 01/25/16

The results of a recent report on the fundraising achievements of the top 10 public and private colleges and universities in America are sobering and instructive.

The top recipients of private donations are all major research universities with clear global brands, comprehensive university-sized scale and well-established giving networks. Harvard University topped this group with more than $1 billion, to lead the pack. The report notes that giving to private colleges has grown by more than 70 percent since 1990, rising to about $12 billion annually in 2014 dollars.

On the public side, the results are similar. The largest recipients, led by The University of Texas, were typically great public land-grant universities outside the Boston-to-Washington corridor, where many of the most distinguished private universities are located. Giving to public colleges and universities has more than doubled since 1990, rising to a level approaching that for the private universities.

On the surface, these conclusions are expected. Together, these 20 private and public colleges and universities are among the largest higher education institutions in America. It seems to suggest that a university can win a fictitious national fundraising award by some combination of scale, identity and strategy. But it is a very small club, with an admission standard that self-selects and predicts the outcome.

The Value of Philanthropy

We can debate the value of philanthropy, the reasons behind large donations, the tax implications and the presumed bloat in the administration of large university fundraising machines. Setting aside the stereotypes, there are legitimate cases to be made on all counts. It is beneficial to America, however, to have universities operate as major economic and social engines fueled in part by private philanthropy. It is certainly an offset to much greater reliance on government funding, broadens a case for access and choice, funds important research critical to America’s well being and global policy concerns, and increases these universities’ economic and social impact at almost every level.

It’s not a perfect world. While the motivation may be questionable with some donations, the results outweigh these concerns.

But, the larger problem is already embedded in these results. The fact is that beyond this group of elite fundraising machines most American colleges and universities cannot raise enough money at a fast enough pace to even run in place. The elite fundraising group may be as high as 50 colleges and universities, but the use of fundraising to account for key college-wide strategies on an annual basis among the rest is limited at best.

The Continuous Campaign

Most colleges and universities are in a continuous campaign mode. Further, most run comprehensive campaigns that include subsets of fundraising incorporating as examples their annual funds, parents’ funds and athletic fundraising. These annual mini-campaigns help offset college expenses and disguise new initiatives, alleviating pressure on operating and capital budgets. Yet they often fail to provide the continuing support to maintain the new facility or pay the full cost of the tenure line or new administrative position. Fundraising can jump-start momentum but it often fails to provide a level of sustainability to keep the momentum going.

For most colleges, fundraising is not a solution or a way to meet key strategic goals. This can only come from planning and a redesign of how a college operates, where it locates and grows its sources of revenue, and how its strategy intersects with the complex relationship among people, programs and facilities. Colleges can fundraise for the sake of fundraising, under pressure from potential donors with pet projects who promise future gifts, or because poorly defined strategic plans, antiquated campus master plans and ineffective leadership can impact a college’s direction.

A Look at the Purpose of Fundraising

Let’s presume that the “big 20” public and private university fundraisers can take care of themselves. And let’s assume that philanthropy directed to them does more good than harm. Is it time for the rest of the American higher education sector to examine the purpose of their fundraising and do a cost/benefit analysis on the return on investment?

The options are narrowing. There is vocal consumer price sensitivity to a $65,000 tuition sticker price, despite the offset of financial and merit aid that most families do not fully comprehend. The U.S. Department of Education and many state governments are explicitly linking college cost to post-graduation career employment. And colleges and universities have grown into a larger footprint than they can support and maintain.

The solution for most will not be larger capital campaigns to plug holes in the dike as the water seeps through.

Instead, America’s colleges and universities must move quickly to re-define how they intend to stay in the business of education, support a robust and “best-in-class” faculty, and create a seamless education pathway for students.

Colleges and universities must ask how they can best support what they do. What are the college program, real estate and infrastructure assets that connect faculty and students? How can they protect the history, integrity and quality of an institution? If the footprint is too large, what are the core academic assets that must be protected?

Time is running out. The worst alternative is to allow erosion in academic quality, a weakened faculty, a collapsing physical plant and an American public that finds cheaper alternatives and no longer cares.