Foundations of Consequence: New Year Brings Significant Challenges for College and University Foundations

By Cheri E. O'Neill    //    Volume 28,  Number 1   //    January/February 2020

As we embark on this new year, one needn’t have 20/20 vision to see some of the challenges that lie ahead for our college and university foundations. We’ll be needed more than ever, but we’re going to face increasing pressure to deliver more dollars, more quickly, and at the risk of shortchanging our endowments. Here are some of the emerging and continuing issues affecting our future work.

Foundations will be asked to provide a larger percentage of universities’ operating budgets.

As government support for higher education has fallen, I’ve often heard the lament from university administrators nationwide: “We used to be a state university. Then, we became a state-assisted university. Now, we’re a state university in name only.”

With growing pressure on state governments to fund myriad priorities (without raising taxes), there’s no sign this down-ward trend will change—ever.

Coupled with escalating student debt, and the consequent pressure to limit tuition and fees, universities are looking to their foundations, and the donors who fund them, to provide increased support for every facet of higher education, including basic operations.

As a result, our foundations must become active partners in the budgeting process, projecting how much donor funding we can muster to more broadly support immediate university needs while still honoring donors’ directives.

Will donors tolerate university fundraising costs and the fees that support them?

It costs money to raise money, which begs the question: Whose responsibility is it to cover the cost of fundraising and donor/alumni engagement: the donors who want to make an impact on the university, or the university that seeks the donors’ gifts?

University foundations that cover the cost of advancement (development and alumni) often find themselves mired in this dilemma: How can we set appropriate fees to support university advancement without alienating donors or failing to deliver inter-generational equity?

Here’s another conundrum: If our foundations are primarily raising restricted or expendable funds for the university, then those dollars can’t fund foundation operations. And if a foundation lacks a sufficiently large endowment to fund its own operation, then it also can’t fund university advancement. So unless the university invests in its own fundraising, the development operation will be inadequate to grow the endowment. Chicken, meet egg.

Will “the cliff,” student debt, and transactional relationships affect future fundraising?

Many charities have witnessed a mixed blessing in recent years: more dollars coming in the door but from fewer donors. If gift amounts begin to follow diminishing donor trends, where will we find new contributions?

We know the student population entering college will soon drop off (“the cliff”). That not only affects tuition dollars in the short term but also, potentially, donor dollars in the long term.

Additionally, we need to weigh the philanthropic impact of rising student debt. As graduates leave our institutions saddled with, and, often, resentful about, student loan debt, will they feel the university mer-its a gift?

Finally, as our colleges continue to deliver much-in-demand online courses, a job-training focus, community college/four-year partnerships, etc., will that affect future giving?

To wit: If online students never see university facilities or meet faculty members, will they want to support buildings or endowed chairs? If college is merely some-thing students pay for to get a job, will that inspire philanthropy? If students attend multiple institutions to earn a degree over extended periods of time, will they feel allegiance to any one place?

What’s a foundation to do?

I’m not a pessimist; I’m a realist. And part of a foundation leader’s job is to be realistic with his or her university partners about what’s coming so we can both be prepared.

Reviewing the challenges above (and others), there’s one clear priority: Build the endowment now and build it fast because we’re going to need every endowed dollar, and the strongest-possible return on those dollars, to offset inevitable declines in government funding, shifts in donor demo-graphics, and drops in donor numbers and giving capacity down the road.

Philanthropy for immediate needs is important. But endowed philanthropy that supports access and affordability, teaching and learning, community and global impact—in perpetuity—is more vital than ever.

Cherí E. O’Neill is the president and CEO of the Colorado State University Foundation and a member of the AGB Council of Presidents. 

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