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Searching for Cash Overseas

July 19, 2010

NEW YORK -- What do you do, asked a fund raiser in the audience, when a prospective donor from Asia asks how much he has to give to get an honorary degree?

From a scan of the room here at the Council for Advancement and Support of Education, it appeared that some were horrified that the question was asked and others were unfazed. (Not coincidentally, the audience was a mix of those who already have ambitious fund raising goals abroad and those hoping to start them.)

One of the panelists -- Scott Nichols, vice president of development and alumni relations of Boston University -- said he wouldn't be worried about such a question at all. He noted that many American colleges and universities honor philanthropy with honorary degrees. While potential donors from outside the United States may ask the question with a direct approach that might put some off, he said that he wouldn't have a problem answering with a number, provided that an institution has such a number.

But Nichols then offered a recent example of a question he had received on which he couldn't be so accommodating. A Middle Easterner living in Europe, someone on BU's prospect list, sent an aide to see him. The question: In return for a gift of a certain size, "how many admissions slots will be allowed?" Nichols said that he had to respond that "gee, it doesn't work that way here," but said that such direct questions shouldn't make anyone write off a donor. "The quid pro quo is a way to get inside their head" and to learn more about a would-be donor, he said.

At the session here, Nichols and others urged colleges to either start or expand international fund raising efforts. They told stories about landing seven-figure gifts from donors who had never been approached before and of the ability to bring in new money at a time when many American donors are feeling pinched by the economic downturn. “Get out of New York City real estate depression mode," Nichols said.

He told a story about a recent $25 million pledge from the Middle East. Its origins, he said, were in a cold call that a development officer was making to every CEO or equivalent in the region with a BU connection. The first response to the cold call was, "Where have you been all these years?" and the university found out that this individual had sent two children to the university and cared deeply about it and despite serious wealth, had never been approached. Thirteen months after the cold call, the pledge was made.

"We are talking diamond mining here, not coal mining," he said.

But how to mine? And where to mine?

One general theme was that international fund raising needs to be organized, and can't be left to the individual connections of various campus divisions. Steve Suda, managing director of international fund raising at Stanford University, said his office was created shortly after an incident in Japan in 1990. A Stanford dean was at the offices of a major corporation to make a proposal and, in the hallway, ran into another Stanford dean, there to make another proposal to the same company. A senior official saw the two meet by accident and said that "until the left hand at Stanford knows what the right hand is doing, no more proposals from Stanford."

Now, Suda said, he helps organize such trips to Japan and elsewhere, and there is an overall plan. He said that his division has goals both for Stanford's overall fund raising agenda, and for specific international-related objectives. The panelists from larger universities with international fund-raising ambitions described having four or more people focused on non-U.S. donors full time and many more spending some of their time on these prospects.

Suda and other panelists also said it was important for those with international fund raising experience to be involved in working with prospects that don't fit neatly in an international-domestic dichotomy. Companies that are based in the United States but have major interests abroad might be an example. Another might be foreign companies with major American operations. He also noted that many of his biggest gifts have come from individuals with family members both in and outside the United States.

Jerry May, vice president for development at the University of Michigan, said that his institution has made a commitment to an annual major event in China. The first was led by the university's president, and the provost and vice presidents have led subsequent trips. It's important, he said, for alumni and other potential donors to see that a university is committed to building relationships over a long term. Along those lines, Michigan brings 25 executives from China to Ann Arbor for two weeks every year.

May was among many at the session who said that they would be adding fund raising staff focused on international development, and hiring was clearly on the minds of many here. A general consensus from the discussion was that colleges are best off hiring outstanding fund raisers, and teaching them the culture of the counties they will be working in, rather than trying to hire area specialists who know a country or region, but not fund raising. For those who haven't done much abroad yet, the general advice was to select a city or two -- based on alumni, foreign students (whose parents could be good donors), faculty research interests and various connections between your home campus and the rest of the world.

Language should not be a barrier. Nichols said that while he speaks some of several languages, he prefers to use a translator so he's sure to catch the nuances of anyone he is talking to. Suda of Stanford agreed, and said he doesn't try to teach those from Stanford who accompany him the local language. But he said that he spends time with all delegation members on the names of everyone they will be seeing. These individuals are tolerant of Americans who don't speak their languages "but you can't mangle a name."

The faculty role in international fund raising was the subject of much discussion. Several said that their institutions first started raising money abroad at the request of faculty members with connections in various countries, and several described bringing faculty members on foreign trips, having them translate and make introductions, and so forth. Several credited professors with making the difference in obtaining big gifts.

But Nichols said that he worries about relying too much on faculty members when actually reaching out to potential donors. He said that one thing a delegation from the United States is going to be asked is, "What are your institutional priorities? And how does the faculty member respond?.... You can be there in Korea and the professor is saying 'Gee the work I'm doing in Korean studies is important,' but you are thinking 'I really need to raise money for scholarships.' " He said it was key for senior fund raisers to be dealing with "the top of the academic food chain," so that it's clear the money is going to the best possible use. "You need to pick your sherpas very carefully."

And good guidance is also needed on ethics issues. Speakers noted that the philanthropic traditions outside the United States vary widely. Donors may not receive the equivalent tax deductions associated with big gifts in the United States and may expect something tangible in return. Foreign donors may be governments, not individuals, and that raises issues.

"Governments have an agenda, and it's not always philanthropic," Suda said. He described one gift from a government, which was followed with many faxes. "We would like a 10,000 square foot office for the director" of the program, said one fax. "We would like a [specific] professor" in the program, said another. While Stanford didn't meet those demands, the back and forth showed the "cultural nuance" involved in getting gifts from foreign governments.

Then there is tradition. Nichols described the last part of the process in which Saudi royalty made a seven-figure gift. It was the "thank you" visit, for which a former university employer of Nichols sent an 11-member delegation, including several Jewish professors, something several people at the university thought was an important symbol at a time of reaching out to the Saudis. The Saudis had no problem with the Jewish academics who were there. The delegation offered a token of appreciation -- with a gift box including a book and a tie.

A Saudi aide went to a back room, and emerged with 11 boxes. When the members of the delegation opened their boxes, they each had a new Rolex, with the Saudi king's name inscribed on it. After some quick thinking, the group decided that they could keep their new watches, but that individuals wanting to keep them would have to declare them and pay any duty themselves when going through customs. (They all opted to keep the watches.)

Gift-giving abroad is not what it is in American philanthropy, and colleges in the U.S. need to be aware, Nichols said. These days when he travels for fund raising abroad, he takes two suitcases, typically. One is for gifts he's bringing.

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