The economy’s collapse has caught up with the billion-dollar campaign. In the past 12 months, the amount of money raised by a dozen of the colleges engaged in higher education’s biggest fund-raising campaigns fell 32 percent from the year before, according to a Chronicle analysis.
The decline, which started before the worst of the recession, has forced colleges to postpone expansion plans, readjust their budgets, and ask better-off donors to expedite pledge payments. If the slump continues, experts say, more serious cutbacks could come. It’s a situation institutions can’t ignore as they look to private giving to make up for huge endowment losses and declining government support.
The economic volatility is causing donors — even some of the wealthiest, who are normally insulated from downturns — to postpone gifts or rethink the timing and size of future donations.
“Fewer people are willing to make multiple-year commitments at nearly the level they would have six months ago,” says Donald M. Fellows, chief executive of the fund-raising consultants Marts & Lundy. He and other observers predict a difficult 2009.
In response to the tough climate, colleges are shifting priorities from capital projects to student aid, hiring more fund raisers, and looking for any way to get in front of their most loyal supporters.
The Chronicle’s findings, which come from fund-raising totals reported by the 12 colleges that have been in billion-dollar campaigns since 2007, follow a February report from the Council for Aid to Education, which said fund raisers started hitting a wall early this year. The Center on Philanthropy at Indiana University also saw a big drop in the number of million-dollar donations to nonprofit organizations over all in the second half of 2008.
“The floor just fell out,” says Patrick M. Rooney, the center’s interim executive director. He expects a lag between when people start to feel confident in the economy and when their confidence is strong enough to give away money. For fund raisers, he says, “the challenge is, how do you survive this transition period?”
Slow Fade
The 12 colleges included in the analysis raised almost $4-billion between February 2007 and January 2008. From then until the end of this January, the last month data were available, gifts and pledges to those colleges dropped to $2.713-billion.
Each six-month period since February 2007 has shown a deeper decline. From February through July 2007, institutions brought in $2.1-billion. During the latest six-month stretch, from August 2008 through January, they raised about a billion less (see chart at left).
Four colleges had declines of more than 40 percent: Cornell University (minus 55 percent), the University of Virginia (minus 48 percent), Dartmouth College (minus 44 percent), and Columbia University (minus 43 percent). The University of Pittsburgh, Brown University, the University of Maryland at College Park, and Yale University also went down. Three institutions posted gains, and one stayed flat.
Cornell is conducting a $4-billion campaign, one of the biggest in higher education. According to The Chronicle’s data, the university raised $380-million in the last 12 months, far less than the $840-million it brought in the year before. University officials say they are still on track to complete the campaign by the end of 2011 — they have raised more than half the money — but the economic situation has made that goal more challenging.
“We’re struggling, just like everyone else,” said Charles D. Phlegar, vice president for alumni affairs and development. He expressed a mix of discouragement at the current situation and optimism that with steady work, giving could come back to the higher levels of recent years.
In 2007, Cornell had a month any university would kill for, announcing $400-million in donations, including $250-million for the medical school and $50-million for science research at the Ithaca campus, both from Sanford I. Weill, the chairman emeritus of Citigroup. (Citi’s stock, like that of many other banks, has since cratered.)
But by the end of 2008, Cornell started seeing a noticeable drop in new pledges.
The pipeline of new gifts is drying up at many institutions, says John J. Glier, a fund-raising consultant who works with Cornell and other institutions with billion-dollar campaigns. However, cash on hand (pledges paid and annual gifts, which is what the Council for Aid to Education measures) has so far held steady or declined only slightly from the year before. Because major gifts are often in the works for at least a year, Mr. Glier expects more colleges will see a significant dip in giving for the coming year, even if the economy starts to recover.
To help turn around its numbers, Cornell is hiring more fund raisers and planned-giving officers and concentrating more on alumni who are 70 and older, whose investments may have been more conservative. The university has also switched from raising money for capital projects to raising money for undergraduate education and student aid, hoping to appeal to donors where the needs are the greatest.
Among the biggest fund-raising drives, the University of Virginia has seen the second-largest drop in giving. In 2007, Virginia reported raising $478-million, which included the payoff of a mega-pledge, said Julian M. Bivins Jr., assistant vice president for development and public affairs. Last year the university raised $250-million.
Virginia’s fund raisers are seeing a decline in the amount of the average gift, while the number of alumni donors has stayed steady. The university has a high concentration of alumni who work in financial services, Mr. Bivins said, which has been hard hit in the downturn.
“I wouldn’t be surprised if some of our individuals are rebalancing,” he said.
The university is still on track to raise $3-billion by 2011 and has already raised $1.86-billion. Donors are still willing to meet with senior administrators, and presidential events are still well attended, Mr. Bivins said. “Those doors are still being opened,” he said. “I would get nervous if those indicators started changing.”
Lowering goals is not an option. “The University of Virginia cannot become a lesser institution or stay the same,” he said. “The universe will not allow us to tread water.”
Precipitous Drop
Brown University, which was down 11.4 percent in the last 12 months, has seen a significant drop in new gifts and pledges in the last few months, said Ronald D. Vanden Dorpel, senior vice president for advancement and campaign director.
The university brought in $35-million in December. But it raised less than $3-million in both January and February. “Everyone was shellshocked,” Mr. Vanden Dorpel said. “No one was talking to us, or if they did, they said, ‘Talk to me in June.’”
The decline is being felt mainly in gifts between $1,000 and $25,000, Mr. Vanden Dorpel said. Donations from alumni in the financial industry who would typically give $15,000 or $20,000 when they received their year-end bonuses were down by about a third last year.
Even the wealthiest donors are being cautious. Brown is soliciting gifts of $35-million and $40-million, but the prospective donors are hedging on the timing. Mr. Vanden Dorpel thinks it could be about three years before gifts of $5-million and above come back to previous levels.
To adjust, Brown has asked several donors with big pledges to expedite their payments at a slight discount. One foundation, which was scheduled to pay $25-million in 2012, will instead pay $23.9-million in June. “We can’t wait,” Mr. Vanden Dorpel said. “I think many of our donors are willing to do that, and we’re certainly willing to accept that.”
Leading the Recovery
Even in these uncertain times, colleges are still announcing big campaigns, with some using the downturn and the country’s financial restructuring to bolster the case for higher education. Last week City University of New York announced that it had met its $1.2-billion campaign goal three years ahead of schedule, and would expand the campaign to seek $3-billion by the end of 2015. The university cited soaring demand from people who have lost jobs or are looking to make career changes.
In the last six months, the University of Texas at Austin, the University of Utah, Rice University, and Boston College have all announced campaigns of $1-billion or more. Philanthropy experts say they still expect a university to start a $5-billion campaign — just not anytime soon.
The University of Texas at Austin, which publicly announced a $3-billion drive in October, is working with donors who are suffering financial losses to restructure their gifts so they feel less of an immediate impact, said John H. McCall Jr., associate vice president for development.
Utah, which just started a $1.2-billion campaign, is finding donors receptive to its drive. Ed Catmull, a Utah graduate and founder and president of Pixar Animation Studios, made a significant gift and held a campaign event at the company’s stylish studios in Emeryville, Calif. He believes giving to the university is essential to the nation’s economic recovery.
“Our way out of this mess is training smart people,” he said. “It’s our obligation to give back support.”
Marisa López-Rivera contributed to this article.
| THE CAUTIOUS DONOR Last fall Michael B. Russell, head of a construction and development company in Atlanta, pledged $150,000 to the University of Virginia for engineering scholarships for African-American students. The gift, intended to foster diversity in the field and at the institution, had been in the works for about a year. Despite a slowdown in the construction sector, Mr. Russell is still planning to make his payments on time. He donated $25,000 last year and will pay another $25,000 this year and in 2010, he says. But he may ask for an extension if his business and cash flow fall off sharply in the coming year. “Right now I’m moving forward with it,” says Mr. Russell, a 1987 Virginia graduate. “Hopefully, my situation stays solid.” He is thankful that he structured part of the gift through his estate, with one-third of the pledge going to the university after he dies. He says that if he had made the pledge more recently, he may have structured even more of it through his estate. As part of a university campaign committee that will reach out to Atlanta alumni, Mr. Russell is expecting fewer people will be able to write checks in coming months. Instead, the committee will emphasize planned gifts. “Everybody’s not as wealthy as they were one or two years ago,” he says. “I think naturally that will affect giving.” In his case, he is waiting to see what happens with the economy before going ahead with other donations he has been considering to colleges and other charities in Georgia. So far he has a backlog of construction work, but he worries about how much business the company will have this time next year. “Everyone in my industry,” he says, “is concerned about that.” |
| OVERALL DECLINES IN 12 BIG CAMPAIGNS | 2007-8 | $3,993,200,000 | | 2008-9 | $2,713,500,000 | | Total percent change | -32% | | NOTE: Totals based on institutional reports from February 2007 through January 2009 | |
| DECLINES IN BILLION-DOLLAR CAMPAIGNS On the whole, the 12 colleges that have been engaged in billion-dollar fund-raising campaigns since 2007 have seen a steady drop in donations during the past two years. | February-July 2007 | | | August 2007-January 2008 | | | February-July 2008 | | | August 2008-January 2009 | | | NOTE: Totals based on rounded amounts of money raised each month. | | SOURCE: INSTITUTIONAL REPORTS | |
| UPS AND DOWNS IN BIG CAMPAIGNS | Cornell U. | $840,200,000 | $379,800,000 | -54.80% | | U. of Virginia | $478,000,000 | $250,000,000 | -47.70% | | Dartmouth College | $222,400,000 | $125,000,000 | -43.79% | | Columbia U. | $849,000,000 | $481,000,000 | -43.35% | | U. of Pittsburgh | $179,000,000 | $113,000,000 | -36.87% | | Yale U. | $598,000,000 | $448,000,000 | -25.08% | | U. of Maryland at College Park | $137,000,000 | $112,400,000 | -17.96% | | Brown U. | $200,300,000 | $177,500,000 | -11.38% | | Rensselaer Polytechnic Institute | $93,200,000 | $92,500,000 | -0.75% | | U. Missouri at Columbia | $130,900,000 | $140,100,000 | 7.03% | | Vanderbilt U. | $152,600,000 | $184,100,000 | 20.64% | | Tufts U. | $112,600,000 | $210,100,000 | 86.59% | | NOTE: Totals based on rounded amounts of money raised each month. | |
http://chronicle.com Section: Money & Management Volume 55, Issue 30, Page A1
