When a Gift Isn’t Free

In a hypothetical example, Barbara McFadden Allen, Ruth Watkins and Robin Kaler explore why presidents should become educated about fund-raising early in their careers.

November 16, 2016
 
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University president Michael Holt is under pressure. He was recruited to raise the profile of his new institution, tasked with increasing private donations deemed so vital for success in light of the university’s strained finances. Yet, as a new president, Holt has found it more challenging than he anticipated to connect with donors interested in making transformative gifts. His monthly reports on private giving, conveyed to the board, are becoming a concern.

During a lunch with a powerful graduate, Michael outlines a compelling case for an unrestricted scholarship fund to promote access and completion. To Holt’s surprise, the alumnus indicates that he will contribute $1 million to the scholarship fund, but his real passion is to see the university create a center on conservative governance in his name. The alum would like to give $5 million for this center, in addition to the scholarship gift.

Conservative governance is not a priority or strength of the university. In fact, Holt cannot think of any current faculty members whose scholarship aligns with this area, and he briefly considers whether agreeing to accept a gift for a center -- without discussion or process -- might be troublesome. But he must increase private giving, and the scholarship fund is a top priority. A $6 million gift would be a real win.

Holt concludes the lunch meeting with a handshake agreement with the alum, convinced that he is acting in the best interest of the university.

Can President Holt Succeed?

Yes, if he quickly consults with university colleagues who specialize in fund-raising to develop his skills in this area, and if he honestly discusses his reservations about the proposed center with the donor. He must recognize his shortcomings in this area and act quickly to improve his performance. With proper guidance, he could secure the $1 million scholarship fund and perhaps steer the donor toward an additional contribution that better matches the academic and research strengths of the existing faculty.

No, if he concludes the lunch meeting without a more honest follow-up conversation with the donor. It is understandable that he wants a gift and a positive relationship with the alum, whose long-range giving capacity likely exceeds a $6 million gift. But unfortunately, for what appears to be an immediate win, Holt has more than likely undermined the trust of his faculty and the relationship with this donor. This is a case where a dollar does not equal a dollar. Accepting a gift that binds the institution to an obligation it is neither prepared nor qualified to manage will create challenges and distractions. Holt will face serious challenges managing this down the road -- and he will create a mess for the university to clean up after he departs.

The bottom line: as a university leader, you should develop fund-raising skills early in your career. Don’t assume that every gift offered is appropriate and in the best interest of the university. Consult with your foundation and donor relations staff before your performance in this area becomes an issue. One of your important jobs as a leader is to raise the profile of the university while also raising funds. Work to develop the art of identifying how to connect a donor’s passion with the people and programs that have the potential to solve vexing problems and positively impact society. The strongest leaders can gracefully and gently decline offers that don’t serve the institution.

Bio

Barbara McFadden Allen is executive director of the Big Ten Academic Alliance. Ruth Watkins is senior vice president for academic affairs at the University of Utah. Robin Kaler is associate chancellor for public affairs at the University of Illinois at Urbana-Champaign.

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