The high-tech bubble may not have completely burst, but it is certainly leaking. As analysts ponder the significance of technology to the new economy, presidents and boards at most higher-education institutions are wondering if the high-tech donor has gone bust as well. Yet the impact of venture philanthropy persists, suggesting that at least some of the new styles of giving that emerged in the 90’s may have a permanent place in philanthropy.
There are at least two compelling reasons why we in higher education should review our fund-raising methods in the wake of the high-tech boom. One is that aggressive and substantial donors from the high-tech sector are still with us and are likely to remain so, even as the shakeout eliminates some of the less viable dot-com enterprises. The second reason is that many, if not most, of the new high-tech donors are also baby boomers.
That is particularly significant, because baby boomers will be around for a while. As they move into their prime giving years, they are likely to remake -- or at least modify -- philanthropy, just as they have influenced so many other aspects of society. On top of any personal wealth gained from high-tech or other enterprises, their generation stands to inherit the bulk of the $41-trillion now projected to transfer from the World War II generation. That inheritance -- and the influence that goes with it -- is likely to be magnified with the scheduled repeal of the federal estate tax.
As the architect of a development effort at a college whose prospect list was full of baby-boomer and high-tech donors, I had the opportunity to engage regularly with new donors during high tech’s recent halcyon days. Now I also find myself in another role -- as senior administrator of a grant-financed initiative on the future of higher education. The convergence of these two activities leads me to reflect on what might endure from the high-tech philanthropic boom, and on how our institutions might find both opportunity and challenge in the changes.
Certainly part of what we learned as fund raisers during the boom was gratifying rather than earthshaking: Many of our best practices were indeed important. But, sometimes to our own chagrin, we also were reminded of the need to remain true to the basics: conduct thorough research on prospects; ensure that, despite a desire for speed, both donor and institution can deliver on promises; and seek gifts that are aligned with the institution’s mission.
But other aspects of the new donor challenge us to think differently about how our colleges and universities raise money. New approaches will become more important as institutions anticipate a growing reliance on private support in the face of increased competition for private funds and a continuing decline in public financing.
What are the differences between the traditional donor and the new philanthropist, and what do those differences mean for our institutions? It is too soon for definitive answers. What follows is not intended to be comprehensive, or universally applicable to either traditional or new donors, but rather the beginning of a general framework for understanding the long-term effects of the new philanthropist on higher education.
The traditional donor wants to leave a legacy. The new donor often wants to change the world, and wants to do it now.
Although Andrew Carnegie and many philanthropists since have, at the end of their careers, looked to establish a legacy that would outlive them, high-tech and baby-boom donors expect to see the results of their giving in their own lifetimes. Not only are they engaging in philanthropic giving at an earlier age, but they also can look forward to a longer life span than any previous generation.
Certainly, some traditional donors expect to see the results of their giving, like meeting a scholarship recipient or witnessing the erection of a new building. But the new donor may bring a level of activism that is more dramatic. We can see this process in the Gates Foundation’s effort to eradicate polio worldwide, or in gifts like the Barksdales’ $100-million gift to improve children’s literacy in Mississippi. The scale of those gifts increases the expectation for measurable results in relatively brief periods of time. Donors like the Barksdales and the Gateses and their peers -- who are not only giving large sums of money but doing it at a relatively early age -- can reasonably expect to see for themselves long-term tangible outcomes from their gifts.
This perspective of new donors may be a natural outcome of their life experiences. Raised in an era in which they had a profound impact on such historical events as the Vietnam War and race relations, baby boomers still seek to change the world. High-tech donors, coming from a dynamic professional environment, share that perspective. The new donors have altered the world at every juncture in their lives thus far, from politics and popular culture to the advent of the Internet. Why should their perspective on philanthropy be any different?
The traditional donor invests in established institutions. The new donor may have a suspicion of established institutions.
Traditional donors have long had an extensive list of recognized organizations for their charitable giving. The United Way and other groups have made themselves the cornerstone of philanthropy in many, if not most, communities. And colleges and universities have secured substantial advantages as traditional recipients of major gifts. Those of us in higher education have benefited from our visibility, compelling mission, and status as long-established members of the community. For many traditional donors, giving to the local college or their alma mater has been a means to both give back and give to the community.
That equation works well with traditional donors. But if donors want to make significant changes, they may look upon traditional institutions with suspicion. Fairly or not, the new donor may judge traditional institutions not by their accomplishments, but by the societal ills they have failed to cure. When I was working as a lead campus-development officer and approached new philanthropists for support, it was a challenge to secure their support for unrestricted funds for the campus. Many were equally unwilling to support the endowment, which they often saw as perpetuating the status quo.
Because the new donor invests in issues, loyalty to a particular college can be less compelling than a cause. Long-term relationships can be harder to maintain, as the donor’s interest must be cultivated through continuing progress on a given issue. In fact, a number of new donors try to structure their gifts so that, after the initial sum, the fulfillment of pledges is contingent on the institution’s meeting specific benchmarks.
New donors are likely to be attracted to new or emerging organizations that are developing innovative solutions. In pockets of baby-boom, high-tech wealth, like Seattle, we have seen start-up organizations -- the Washington Early Learning Foundation and the Loomis Forest Fund, for example -- gain the attention of new philanthropists and quickly join the fastest-growing nonprofit groups in the region.
The traditional donor expects a gift to lead to a predictable outcome. The new donor may be more willing to embrace nascent or risky ideas.
The cultivation of traditional major gifts is usually a long-term process. Detailed proposals show how the money will be used and how that effort fits with the institution’s larger plans, and offers a set of assumptions about the gift’s long-range impact. Traditional donors can reasonably expect the proposal to include a tangible outcome, be it an endowed professorship, scholarship fund, or new research facility.
It may be more difficult to persuade new donors to support such a model. Certainly, they expect a clear mission and vision for the institution. But if our assumptions about new donors’ suspicion of traditional institutions are accurate, then the new donor will find a gift for an endowed professorship or scholarships less attractive than an innovative idea.
For example, when we were building a development program at Antioch University, in Seattle, we decided to divide prospects into new donors and traditional donors. We asked the latter to support our unrestricted and scholarship efforts. But for support of a somewhat risky new interdisciplinary graduate program, we approached donors who fit the model of the new philanthropist.
We received 10 major gifts from a limited list of new-donor prospects in less than two months with our approach. The new donors liked the creativity and even the risk-taking involved in developing a new project. As one put it, “I know this is somewhat risky, but I want to see whether this approach works. If it doesn’t, at least we’ve tried something creative, and we can try something else next time.”
Traditional donors take on volunteer leadership roles defined by the institution. New donors may expect to contribute not only financial resources but also their expertise.
Traditional volunteer opportunities typically involve serving on the governing board or the alumni association, assisting in celebratory activities like Founders Day, and recruiting and cultivating other donor prospects. Certainly, some traditional volunteers are more inclined to become involved in the day-to-day activities of the college, but the separation between administrative work and that of volunteers is clearly and rigorously maintained by most administrators.
Many new donors, however, do not respond to those traditional roles. The baby-boom donor whose college experience might have included clashes with the administration, or the high-tech donor who sees ceremonial gatherings as outdated, may not be inclined to participate in typical campus events. Rather than perpetuate the status quo, they prefer to use their vision for change, or their experience in the new economy, to make a contribution. Indeed, new donors may view campus responsiveness to their input as a measure of the institution’s ability to move forward -- and gauge their gifts accordingly.
Emerging organizations like Social Venture Partners, a nonprofit group made up mostly of young high-tech philanthropists, exemplifies the new model. The mission statement describes members as people who want to offer their time, expertise, and resources to the community, and says that although members are not required to contribute time and expertise, more than two-thirds of them do. The donors thus become involved not only financially but also in the functioning of the grant recipients.
The desire by new donors for that level of involvement may wane somewhat if the high-tech economic model continues to lose its appeal. But the interest in a deeper commitment is also evident in baby boomers, who will have time as well as money to give to organizations and may continue to expect that their expertise, along with their financial resources, be used by the institutions that they support.
The differences between the traditional donor and the new philanthropist suggest that venture philanthropy presents both opportunities and challenges for higher education. Available information reinforces that perception. According to an article in The Chronicle last year (July 21, 2000), many colleges are finding that graduates from the late 1960’s and early 1970’s are less likely than their predecessors to provide financial support to their alma maters. Other research suggests that for high-tech and baby-boom- era donors, issue-focused family and community foundations are emerging as the models of choice. The Community Foundation of Silicon Valley is one of the fastest-growing foundations in the country, fueled by significant high-tech largess. And a number of new philanthropists have chosen to create their own vehicles -- the Jaech Family Foundation, the Technology Access Foundation, the Brainerd Foundation, and a host of others -- to realize their goals.
Many fund-raising professionals argue that the new donors simply need to be educated in how to provide meaningful philanthropic support. Undoubtedly, as such donors become more familiar with the established culture of giving, some of their desire for speed and hands-on personal involvement may subside.
Yet we cannot assume that their behavior will eventually conform to that of their predecessors. In fact, all evidence suggests that the new philanthropists will have perspectives and behaviors far different from those of the previous generations of donors.
Beyond the risk of losing the new donor to more-nimble, issue-oriented organizations, colleges and universities face the possibility that adapting wholeheartedly to the new philanthropy will pose a challenge to the independence and integrity of our institutions. It may be necessary to develop a two-tiered strategy for pursuing donations -- one that continues the more traditional approach to philanthropy, and one that accommodates the new donors.
Innovations like learning communities and service learning show promise for improving the educational experience for students, but require financial support and major institutional change to be successful. When campuses need assistance with innovation, it is likely that the new donors will be the ones who respond with support and energy. We can identify innovative and emerging projects at our institutions, and seek funds from new donors to support those efforts, taking advantage of their desire to support meaningful change while remaining true to an institution’s mission and vision.
Ultimately, while new donors offer significant challenges to our way of doing business, they also offer tremendous opportunities. We in higher education must continue to work to understand what motivates those donors. We should make them partners in our efforts to improve our institutions. Although the future is always uncertain -- the economy may slow considerably, tax incentives for giving may change again -- the new approach to philanthropy may very well be with us for quite some time.
Mary Marcy is co-director and senior administrator of Antioch University’s Project on the Future of Higher Education. She is the former dean of university relations at the Seattle campus of Antioch.
http://chronicle.com Section: The Chronicle Review Page: B13
