Building and Protecting Institutional Reputation

What Governing Boards Should Know About Global Reporting Standards for Fundraising

By Sue Cunningham    //    Volume 30,  Number 6   //    November/December 2022
Takeaways

  • Educational philanthropy is the voluntary act of providing private financial support to nonprofit educational institutions. To be categorized as philanthropy in keeping with CASE standards, such financial support must be provided for the sole purpose of benefiting the institution’s mission and its social impact, without the expressed or implied expectation that the donor will receive anything more than recognition and stewardship as the result of such support.
  • The CASE Global Reporting Standards are professionally derived reporting standards that are being implemented to guide all philanthropic engagement at colleges, universities, and independent schools around the world. The CASE Standards are the standards by which global and regional fundraising and alumni engagement surveys will be built and benchmarks will be based upon. The fifth edition, and first global version, of the CASE Standards is rooted in four decades of evolution of fundraising reporting standards, built and vetted by leaders in the profession.
  • The CASE Global Reporting Standards help by establishing a framework for apples-to-apples comparisons across institutions and allow for institutions to develop insights into their operations based on these comparisons. They are a check on how an institution is doing.
  • Core to the governing board’s responsibility is the fiscal integrity of the institution. While this is carried out daily by the institution’s leadership and staff, it is imperative for board members to understand that professional standards and principles
    undergird advancement across the institution.

Trust is at the heart of the word “trustee.” It is our solemn obligation as trustees for universities and colleges to hold these institutions in trust for future generations so their missions can serve in perpetuity. This is the essence of fiduciary responsibility. As a longtime advancement leader, I understood this even before I became a member of a university board of trustees. And now, as I see things from both sides of the table, I appreciate even more the role of clearly delineated standards to help guide our work.

Benchmarks and standards help put the institution’s progress in context and provide a framework for asking key questions about effectiveness and success. They ensure that in the oversight of institutional performance, benchmarks are reviewed against peers, using apples-to-apples comparisons. Standards help protect institutional reputation. And critically, as we engage with key supporters, they provide confidence that our institution conducts its activities in a manner consistent with the highest professional guidance and ethics, shared and respected across the globe.

This is especially important to governing boards when the very value of higher education is publicly questioned every day. Despite how competitive our institutions may be, we must work together to advance the public understanding of the vitality and importance of education and the immense value that our institutions, collectively, bring. This is even more critical now as we see survey after survey demonstrating declines in public trust in institutions. With the increased scrutiny on the value of higher education, and decreasing state support, philanthropy is no longer a nice-to-have but a must-have, no longer just for campus and academic enhancement but funding more critical aspects of student and institutional success.

To rebuild public trust, our efforts must not only focus on building our own reputations, but trust in the sector. Collective efforts that focus on the value of higher education as a whole—including adhering to a respected group of standard ethics and practices—encourage deeper affinity, connections, and community in support of the educational institutions we serve. They also help us avoid practices that grab headlines, undermine trust and support, and reflect poorly on the entire sector.

The Council for Advancement and Support of Education (CASE) is the leading global resource for the profession of advancement—the strategic, integrated method of managing relationships to increase understanding and support among an institution’s key constituencies. We serve fundraising, alumni relations, communications and marketing, and data services professionals. They work together for the institutions they serve to raise the visibility, define and protect the reputation, build community, and garner support. CASE, the association I lead, defines the competencies and standards for the profession and leads their dissemination and promulgation across the world’s educational institutions.

Educational Philanthropy is Growing Worldwide
Governing boards, college and university presidents, principals and vice-chancellors, and heads of independent schools know the vital role philanthropy plays in achieving their institution’s mission. Philanthropic and community support enables investment in priorities, helps shape and deliver strategy, creates relationships that enhance the institution, and stimulates internal transformation to better achieve institutional outcomes.

CASE tracks giving to institutions and other modes of engagement across our membership around the world. During the 2020–2021 academic fiscal year, the most recent year for which data is available, U.S. colleges and universities raised $52.9 billion, up from $49.5 billion the previous year. This is an astounding demonstration of the belief in and commitment to the nation’s higher education institutions. This story is repeated in other countries, as educational advancement has become a truly global endeavor. People who believe in the work of these cherished institutions have taken an active interest in their success by generously giving to support the service, teaching, and research missions. These key volunteers, like you, give of their time as well as their financial resources.

In similar surveys CASE conducts in our four regions—Europe, the United States and Canada, Asia-Pacific, and Latin America—we have seen consistent growth in
philanthropy over time. Also, we know that while donors in the past likely supported institutions in close geographical proximity, now philanthropy is a truly global activity. Today, institutions commonly secure support from alumni and others across state and national boundaries.

This is good news. While the trends are impressive, the real importance of this conversation is the difference philanthropic support makes in advancing education. Donations to institutions provide aid and opportunities for students, advance academic discovery and research, change the landscape of the institution through critical physical infrastructure, and enable institutions to serve and strengthen the communities in which they reside and interact.

In the United States, we know that philanthropy has grown while public investment in higher education has declined. Simultaneously, the costs of managing complex educational enterprises have increased. Students have greater needs for support. Rising institutional costs necessitate that leaders identify new sources of funds. Institutions are often increasingly reliant on philanthropic support for new initiatives, emergency aid, and in some cases, basic campus operations. Across our membership, institutions have embraced the ideal AGB long ago promulgated that philanthropy creates a “margin of excellence” to fill the gap between the regular operations of the institution and what can be added toward truly making an institution excellent. We are now at a point at which the gap increasingly must address the core business. Generous supporters have long helped institutions realize ambitions related to research and other strategic agendas. Now, that need is growing.

Transparent, Ethical, and Consistent Counting and Benchmarking
As the reliance upon charitable support for colleges and universities grows, it is imperative that all those who lead institutions—and those who are charged with their governance—understand that there are robust, community-derived, and vetted standards by which institutional support is measured. As the most visible champions for their institution, board members and chief executives understand how painstaking it is to build and maintain positive institutional reputation, and how quickly a challenge or crisis can harm the institution.

As a trustee of a college or university, it is likely you were selected because you have reached the pinnacle of your profession. You have amassed a set of experiences and expertise over a number of years that enabled you to achieve at the highest levels of your chosen pursuits. It is likely that your profession has a code of ethics, a set of standards by which practice is measured, and principles by which those in the field approach their work.

Just as AGB promotes the principles of strong governance, with a set of expectations about what effective trusteeship looks like, CASE supports those professionals engaged in the work of educational advancement.

For more than four decades, CASE has provided its members with management standards and guidelines for philanthropic reporting through the CASE Reporting Standards and Management Guidelines, first created in 1979. In 2018, the CASE Board of Trustees determined a new update to the CASE Standards was necessary to keep pace with the changes in the field and to reflect the global nature of the profession. A committee of CASE’s most senior volunteers and well-respected leaders in the profession from a diverse range of institutions worldwide set about crafting the new edition. This edition, the fifth overall and the first truly global guidance, was published as the CASE Global Reporting Standards (CASE Standards) in 2021.

During the ongoing conversations with advancement leaders to prepare the new standards, we discovered that different institutions were defining philanthropy in different ways. As we updated our standards, we determined a clearer definition of educational philanthropy was necessary, as institutions did not uniformly define or report consistently on their philanthropic activities. The new definition is:

“Educational philanthropy is the voluntary act of providing private financial support to nonprofit educational institutions. To be categorized as philanthropy in keeping with CASE standards, such financial support must be provided for the sole purpose of benefiting the institution’s mission and its social impact, without the expressed or implied expectation that the donor will receive anything more than recognition and stewardship as the result of such support.”

The CASE Standards includes foundational guidance beyond the new definition of educational philanthropy. For the first time, the CASE Statement of Ethics for those who work in the profession is housed within the Standards. This statement outlines the highest standards of personal and professional conduct for advancement professionals who represent their institutions, working to eliminate any grey areas for the donor or the institution that might impede the important work of supporting these institutions. The CASE Standards articulate the Principles of Practice by advancement discipline, including guidance for alumni relations professionals, communications and marketing professionals, and fundraising professionals.

CASE, along with other fundraising organizations, has long promoted a ‘Donor Bill of Rights’ outlining the rights of the donor in a philanthropic encounter. During our work on the revision, we learned it would help protect institutions if we provided more explicit language outlining what contexts to be alert to and what situations to avoid when engaging with potential donors. In addition, the CASE Standards now provide additional guidance on donor control and influence.

Guidance on Donor Control
”A donor may express intent for the designation of a gift including general or specific purposes, which are consistent with the charitable purpose of the institution. A donor may not retain any explicit or implicit control over the use of a gift after acceptance by the institution.” The following are examples of donor control that preclude the counting of a gift:

  • A donor establishes or contributes to a scholarship fund but requires the ability to select or veto the recipient.
  • A donor makes an unrestricted contribution while requiring the institution to award a professorship to a specified individual.
  • A donor contributes to a fund for a new art museum, provided the institution selects an architect of the donor’s choice.
  • A computer equipment provider seeking an exclusive contract with the institution establishes a need-based scholarship.
  • A donor establishes or contributes to an endowed chair but requires the ability to select or veto the recipient. (CASE Global Reporting Standards, 3.1.2)

Guidance on Donor Influence
“Philanthropy is an act of giving and investing in our institutions and in no way should be executed or perceived as an act of quid pro quo. Tangible benefits may negate or reduce gift value. In addition to the prohibitions on donor control after a gift is made, a history of donor support and/or potential must not be permitted to have undue influence on decisions made by the administration. Institutions must be committed to transparency in relationships with donors to express gratitude, while maintaining a clear understanding about the decision-making authority of college/university leadership, including trustees and administration and their delegated officers.

Examples of areas where donor influence must be guarded against and/or prohibited are conflicts of interest, faculty appointments, admissions decisions, coach selections, program priorities and policies, investment policies and strategies, architect selections, search committee participation or candidate selection, and institutional decision-making or priority setting. Exceptions include instances where an institution may choose to avail itself of a donor’s expertise and such involvement is consistent with institutional guidance.” (CASE Global Reporting Standards, 3.1.2)

The CASE Standards set forth the ethical foundations for the profession by providing clear guidance on accepting financial support in a way that honors the commitments of the donors but also protects the mission of the institution in the eyes of future donors, alumni, and key constituencies. For example, in the appendices, there is a sample gift agreement. In that gift agreement, there are some new clauses that help institutions mitigate some of the reputational risk that changes over time.

Future Considerations (from Sample Gift Agreement)

The institution is grateful for the Donor’s/Donors’ support of (School/Department/Program) and is committed to fulfilling the Donor’s objectives reflected in this agreement. As research and academic programs move forward, there is the possibility that it may become impossible for this gift to serve the specific purpose of the stated intentions. If this unlikely circumstance should occur, the institution will consult with the Donor(s) or their representatives. If this unlikely circumstance should occur, the institution will consult with the Donor(s), if possible. If the Donor(s) cannot be available, the institution will consult with the Donor(’s) estate representative, if practicable, and the institution’s Head of School/Chancellor/Dean/President shall direct that the gift be devoted to the institution’s purposes that the officer deems to be most consistent with the Donor’s or Donors’ wishes.

Reputation Clause (from Sample Gift Agreement)
The institution may terminate the use of the name(s) (i) if the Donor(s) default(s) in their obligations hereunder, or (ii) in the unlikely event the institution makes a good faith determination that continuing to use the name(s) would adversely affect the reputation, image, mission, or integrity of the institution. Upon any such termination, the institution will have no further obligation or liability to donor(s) or any other person(s) or entity(ies) and will not be required to return any portion of the gift already paid. (CASE Global Reporting Standards, Sample Gift Agreement, Appendix A)

Key Questions

  • Do we follow the CASE Global Standards and participate in CASE benchmarking surveys for advancement? How does our institution compare to our peers?
  • Do our gift acceptance policies comply with the CASE Global Reporting Standards? If not, why?
  • Do we have a reputation clause in our gift agreements?

These are just a few pertinent examples of the content provided within the CASE Standards. They provide institutions with a method for ensuring consistency and transparency in reported numbers, and better reflect both in-year and future impact of fundraising and alumni engagement activity.
Furthermore they recognize that there is a difference between counting for fundraising performance and financial accounting. This is an important distinction. While the business office and accounting standards such as GASB and FASB are your best sources of financial accounting, counting for philanthropy, and in particular a metric known as new funds committed, takes into consideration the work done in cultivating gifts for the long term. A portion of any fundraising activity may include pledges, planned gifts, or commitments made in wills and bequests that will not come to fruition until some point in the future. This activity is especially important to the overall philanthropic effort and provides a pipeline of gifts into the future, so the appropriate standards for counting are essential.

What is important to note about the new CASE Global Reporting Standards is that the principles are applicable to advancement practice worldwide; and the relevant tax-related and country-specific content is housed in regional supplements compiled by separate volunteer groups of practitioners specific to that area. They are offered in Spanish for Mexico and a French translation for Canada. By ensuring that the core standards are applicable across all institutions and regions, we are better able to benchmark for the profession and provide actionable insights supporting specific institutions and regions.

Why This Matters to Trustees
The CASE Standards help boards and presidents uphold institutional reputation by ensuring a consistently ethical approach to philanthropic engagement. By establishing clear parameters for donor engagement and influence, reputational risk is mitigated. In addition, the CASE Global Reporting Standards make global
benchmarking possible. If Institution A and Institution B have the same philanthropic totals, but institution A is counting all government grants as philanthropic and institution B is not, that is not an accurate comparison. When all institutions are using the same rules, it makes comparisons among peers more precise and useful.

The role of advancement will continue to grow as we emerge from the recent pandemic, navigate political extremes, and address inequities in our societies. We are seeing continued pressure on government funding and on the financial resources of many qualified students. Institutional advancement leaders are called upon to help secure support to address these very challenges.

And, as boards and institutional leaders work closely with senior advancement professionals to help secure vital philanthropic support, it is incumbent upon the leadership at the institution—the board, the president and senior cabinet members, and the professional staff to be forthright in the adherence to ethics, principles of practice, and standards in order to ensure the reputation of not just our own institutions, but the educational enterprise as a whole.

As the volunteer chairs and leaders of the committee which delivered the 2021 CASE Global Reporting Standards, Brian Hastings, the president and chief executive officer of the University of Nebraska Foundation, and Matthew Eynon, the associate vice president and chief operating officer at the Massachusetts Institute of Technology, stated in their foreword in the CASE Standards, “As the advancement profession continues to evolve, and our educational institutions are relying more heavily on private resources to support our missions, never has there been a time when it is more important to focus on long-term relationships with donors, who want to have confidence their contributions are being stewarded properly. The increasing size and complexity of gifts and gift arrangements require not only more sophisticated work by advancement practitioners but also clear standards for counting and reporting such gifts. Operating and reporting results with integrity is paramount to maintaining the confidence and trust of our donors and the leadership of the institutions they support.”

Standards signal to faculty and others the impact and rigor of the philanthropic endeavor for the whole institution. Adhering to industry standards enables effective benchmarking of fundraising and alumni relations, and in the future, marketing and communications. Fundamentally, clear standards with which to work when setting goals and managing expectations around advancement work helps the board and leadership ensure effective oversight in measuring advancement performance. This, in turn, provides a path to inform strategic decisions.

As a president of an Australian university said on a panel about the value of standards for our philanthropic work to his institution, “if one institution fails to abide by standards, all of our institutions are at risk.”

Resources:

CASE Global Reporting Standards https://www.case.org/resources/amatlas/case-global-reporting-standards

Fundraising Campaigns in Higher Education
(AGB Press)

Sue Cunningham is the president and chief executive officer of the Council for Advancement and Support of Education.