After Scandals Explode, Universities Often Raise More Money Than Ever Before. Why?
By Will Jarvis
August 14, 2019
When a sexual-assault scandal exploded at Michigan State University, in late 2017, the blowback was swift and damning. Alumni were horrified at the scale of abuse and indifference — “We want to know the truth,” one alum toldThe Detroit News — and a half-billion-dollar settlement loomed, as did threats to the institution’s bond rating.
The Larry Nassar scandal implicated administrators from the president’s office to the athletics department. The university’s moral authority was tarnished.
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When a sexual-assault scandal exploded at Michigan State University, in late 2017, the blowback was swift and damning. Alumni were horrified at the scale of abuse and indifference — “We want to know the truth,” one alum toldThe Detroit News — and a half-billion-dollar settlement loomed, as did threats to the institution’s bond rating.
The Larry Nassar scandal implicated administrators from the president’s office to the athletics department. The university’s moral authority was tarnished.
Even as Michigan State is still grappling with the aftermath of what it hopes is a once-in-a-generation scandal, it shared some good news last week: The fiscal year concluded with the university’s best fund-raising haul in its 164-year history, totaling more than $272 million in gifts and pledges.
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The trajectory points to a counterintuitive path charted by institutions in similarly grave circumstances. While headline-grabbing scandals involving rogue administrators and structural failures often generate steep legal fees, criminal charges, and public outrage, high-profile universities have seen donations — and sometimes enrollment — rise in the aftermath.
Baylor University is another example. In 2016 it began to suffer harsh criticism for its failure to take action against football players accused of sexual assault by multiple female students. The scandal led to the resignation of Kenneth W. Starr, the university’s president, and the firing of Art Briles, the head football coach.
A year later, spending on legal fees had quadrupled, but applications for early admission jumped 19 percent. Last month Baylor too announced its largest single-year fund-raising total in university history: $243 million.
Penn State had a similarly confounding fund-raising result soon after the Jerry Sandusky scandal broke, in 2011. The scandal resulted in the former assistant football coach’s conviction on 45 counts of molesting children, and the university’s longtime president was left jobless.
By mid-2012, Penn State announced its second-best year ever in donations, with $208.7 million, a total lauded by a university spokesman as “a loud and distinct message” that “despite the things that have happened with Jerry Sandusky, Penn State never really lost the support of its alumni.”
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In addition, enrollment was slightly above target, and by 2014 a capital campaign exceeded its goal by raising $2.158 billion, with support from more than 167,000 alumni, according to a university news release.
The Baylors, Michigan States, and Penn States of the world, with strong brand recognition and long institutional history, can survive high-profile scandals. They’re also multifaceted entities, “complex places where people attach their loyalties or interest to a particular area,” said David Weerts, an associate professor of higher education at the University of Minnesota-Twin Cities. The entomology alumni care more about insects than athletics, he said, and donations will reflect that.
Emotional Connection
When the Sandusky news broke, Rodney P. Kirsch knew his job would get a lot harder.
Kirsch, then Penn State’s vice president for development and alumni relations, was thrust onto the front lines of reputational defense. Alumni and donors were horrified. They called Kirsch’s office to air grievances and find answers (few of which he had), and his team’s primary role of fund raising shifted away from asking for big gifts and toward listening.
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“In the year this happened, we made more face-to-face visits than we’ve ever made in the history of the university,” Kirsch said. “We were not asking people for major gifts; we were doing damage control. We were trying to rebuild the brand.”
The development office was then in the midst of a $2-billion capital campaign, and Kirsch thinks the scandal had an impact. While Penn State was able to raise $2.1 billion for the campaign, Kirsch estimates that the institution could have gotten to $2.5 billion had the scandal not happened. While Penn State’s public image was being scarred, and it faced tens of millions in legal fees, Kirsch and his team sought to preserve donors’ relationships with the institution.
One donor called in the months after the scandal broke and offered a million-dollar donation — “a birthday gift to myself,” Kirsch recalled him saying. Others were symbolic gestures, he remembered. It wasn’t until three years later, he said, that his job truly returned to a place of “normalcy.”
Those kinds of donations make psychological sense, said Dennis Kramer. An assistant professor of education at the University of Florida, Kramer studies athletics and its conduits for influencing university decisions. He said high-profile athletics scandals could, in a convoluted way, encourage alumni to show financial support.
“It’s the idea that when there’s a scandal, or when there’s something that causes us to question the viability of something we hold dear, we may respond with supporting that entity more,” Kramer said.
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That “we” is important. Weerts, at Minnesota, found in his research that the more you identify as part of an organization, the more likely you are to donate to that entity. “It’s one of the things that’s ripe for study — the impact of these events and even how people make sense of this with their own giving,” he said.
At Penn State the biggest donors stood by the institution. When Kirsch and his capital-campaign chair looked back at the 4,000 emails they’d received in the 10 days after Sandusky’s actions were made public, they found that the most prolific donors were also the most likely to voice support — about 75 percent of the messages from lifetime donors of $25,000 or more were positive, he said. Of those who’d never donated, about two-thirds were negative.
“The great preponderance of people who have been involved the longest and have given the most are, for the most part, going to stand by the institutions,” Kirsch said. “That doesn’t mean they’re not upset; it doesn’t mean they haven’t had some momentary loss of confidence. But for the most part, you’re going to keep those people.”
It helped that Penn State’s capital campaign at the time, “For the Future: the Campaign for Penn State Students,” was focused on students, a messaging strategy that shifted the focus back to the university’s core mission of education.
That gave more confidence to alumni, who carry more emotional connections to their alma mater than they would to, say, a corporation. Whereas companies can see sudden and devastating drops in value after high-profile scandals, universities can better maintain fund-raising stability. It’s where alums grew into adults, met their partners, found their passions: “I may love my Google stock,” Kirsch said, “but I don’t love it in the same way I love my alma mater.”
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The Student Experience
Although scandal may not substantially hinder fund raising, it has been shown to cause declines in student applications. A 2016 paper by analysts at the Harvard Business School found that an exposé in a national news outlet leads to an average application drop of 10 percent. In the year following the Nassar scandal, Michigan State saw an 8-percent drop in applications and “sweeping changes” in the admissions office.
But those dips rarely last, Kramer said. He likened the situation to the “Flutie effect,” which describes application surges after abnormally successful football seasons or NCAA men’s basketball tournament upsets. Within a couple of years, however, applications return to pre-Cinderella rates. Scandals present the flip side of the same phenomenon, that “athletics is a significant driver of institutional decision making, as well as student enrollment,” Kramer said.
David Strauss, who works on institutional strategy as a principal for the Art & Science Group, a higher-ed research and consulting firm, believes the question is larger than just athletics or scandals. It’s about the overall student experience, and the misdeeds of a few high-profile administrators probably won’t alter that experience. The “enduring appeals” of the institution — academic experience, social life, campus climate — aren’t likely to change because of a scandal, he said.
When there’s something that causes us to question the viability of something we hold dear, we may respond with supporting that entity more.
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As horrifying as the actions of Nassar, Sandusky, and Baylor football players were — not to mention the inadequate response by those in charge — most students assume they’ll never be victims of such abuse.
“Young people deciding where to apply are looking at what they think the experience is going to be like for them,” added Craig Goebel, another Art & Science Group principal.
Strauss cited an example from a few years back, when the firm was working with a university that had seen two murders on its campus. Administrators worried the killings might derail the institution’s appeal, that prospective students would avoid applying because of them.
“What we found,” Strauss said, “was that those two murders didn’t even register in the minds of prospective students and those who advised them. It’s an example of the fact that things that come up in a moment, and may look huge within the life of the institution or even in the media, don’t necessarily register on external constituencies the way one might expect.”
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But there’s one instance in which that changes: if a scandal exacerbates or publicizes an already-existing institutional problem — an institution known for lax academics that becomes embroiled in a cheating scandal, for example.
Said Strauss, “If it’s reinforcing of a problem the school already has, watch out.”