This fall the big-money trees are starting to bloom again.
After several years of gossip about fund-raising campaigns getting delayed and adjustments to deal with the economic downturn, in the past month three universities – Case Western Reserve University, Georgetown University, and the University of Rochester – have publicly launched comprehensive fund-raising campaigns with goals of at least $1 billion.
While the goals may harken back to a time before the recession, the conservative way the institutions rolled out their campaigns – with long quiet phases, a high percentage raised during that phase, and long time frames – is a reflection of the impact of the recession and the still-shaky economic recovery on the fund-raising world, university fund-raisers said. But the fact that these institutions have decided to roll out their campaigns, and that they view the fund-raising climate with enough confidence to predict big goals, is a sign of stability that could signal the return of large campaigns in the near future.
“Colleges and universities definitely have their mojo back,” said Bruce Matthews, vice president of Campbell and Company, a consulting firm that works with nonprofits on fund-raising, who said his company has recently worked with several institutions to lay the groundwork for campaigns. “Given endowment losses, and that state colleges are in such bad shape with their budgets being severely cut, it emphasizes a greater need for them to increase private philanthropy.”
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The fund-raising front has been relatively quiet since the recession began in 2008, and few institutions have publicly rolled out campaigns. The largest news has come out of several institutions that were in the middle of campaigns when the recession struck, including Cornell University and Columbia University, who announced that they were stretching out their timelines and bumping up their totals.
Cornell, which sought a goal of $4 billion by the end of 2011 when it launched its campaign in 2006, had raised 3.3 billion by late October. It has since upped its goal to $4.75 billion by 2015. Columbia’s campaign, which also launched in 2006, was slated to raise $4 billion by the end of 2011. It upped its goal to $5 billion by 2013 last December.
Because the field has been so quiet over the past few years, there was broad speculation that several universities that were planning to roll out campaigns put off publicly announcing them as a result of the downturn, and the newly announced campaigns confirm that. “Quiet phases are never 100 percent silent,” said R. Bartley Moore, Georgetown’s vice president for advancement. “So there was an expectation that we would go into public campaign phase at some point.”
“Colleges and universities definitely have their mojo back.”
--Bruce Matthews, Campbell and Company
Georgetown began the quiet phase of a $1.5 billion campaign in summer 2006. At that time, the university’s administration did not nail down a time for the campaign to go public, Moore said. But absent the economic crash, he said, the university likely would have gone public in 2010. “We were very concerned about being insensitive or disrespectful in the face of extraordinary uncertainty that was prevailing in 2009 and 2010,” Moore said. “We decided to put off that decision until the environment was more supportive and more appropriate.”
Rae Goldsmith, vice president for advancement resources at the Council for the Advancement and Support of Education, said university fund-raisers are constantly getting signals from donors about their confidence and ability to give. In 2009 and much of 2010, she said, most institutions were not getting signs to move forward.
“What happened was the events of the fall of 2008 -- entirely apart from the dramatic effect they had on people’s actual assets and ability to give -- I think it induced uncertainty and in some cases fear about the future that led people to pause to stop and wait in their decisions about their philanthropy,” Moore said. “What we heard very consistently was ‘I don’t feel very confident about making this commitment right now.’ ”
Moore said donors were particularly skeptical of making the kind of multi-year commitments that are typically associated with the largest gifts of seven or eight figures, given the uncertainty in the market.
Unlike universities such as Cornell and Columbia, which had already committed publicly to a goal and timeline before the economy fell dramatically in the fall of 2008, Georgetown, Case Western, and Rochester were not under the same kind of pressure, meaning they could put off going public.
Moore said Georgetown started seeing an improvement in donor receptivity and willingness to give starting at the end of 2010 and the start of 2011, so administrators started ramping up for the public phase of the campaign. When economic volatility returned to the stock market in August and September, it was too late for the institution to back off the public launch, which took place Oct. 28 at a toned-down campus ceremony.
Because the recession stalled fund-raising, the quiet phases of Georgetown, Rochester, and Case Western’s campaigns were significantly longer than traditional quiet phases.
For campaigns with goals of more than $1 billion, quiet phases tend to last 36 months, according to a survey of institutions that concluded or were in campaigns in 2010 by the Council for the Advancement and Support of Education. Case Western’s quiet phase lasted about 50 months. Georgetown’s quiet phase lasted about 60 months. And Rochester’s quiet phase, which had been going on since 2005, totaled about 75 months.
Rochester’s delay was not entirely attributable to the economy, said Jonathan Schwartz, senior associate vice president for university advancement and university campaigns. The current campaign is Rochester’s first comprehensive university campaign, and the university lacked the centralized fund-raising staff and infrastructure to rapidly launch it. So administrators spent two to three years developing the infrastructure. Unfortunately, by the time the infrastructure was in place, the recession had struck, delaying the launch even further.
Rochester and Case Western also launched their campaigns with a surprisingly high percentage of the their goals already secured. About 43 percent of all institutions have between 41 percent and 60 percent of their goal when they go public, according to the CASE survey. Only 23 percent of institutions have more than that. Rochester was 63 percent of the way toward its goal when it announced; Case Western had secured 66 percent.
The high amounts raised in the quiet phase could be an indicator of some uncertainty about the fund-raising environment. “We knew that we wanted to have at least 50 percent or 60 percent in hand before we kicked off,” Schwartz said.
The extended quiet phases also stretch out all three universities’ overall timelines. Campaigns of more than $1 billion have tended to last between six and eight years, including the quiet phase. The three campaigns launched in the last month clock in between 9 and 11 years. But the public phases are not significantly longer than those at other campaigns of more than a billion dollars.
One other change brought on by the recession, Moore noted, was a change in the university’s fund-raising priorities. A third of the money the college hopes to raise, $500 million, is earmarked for scholarships, a larger share than the college originally planned to seek. Moore said the financial aid message has been received well by donors. Since the university started been fund-raising on that message two years ago, annual contributions to financial aid have doubled.
In contrast to the general timidity about fund-raising, the University of Southern California broke the dam wide open in August when it launched a $6 billion campaign, the largest in the history of American higher education.
USC’s announcement was decidedly less conservative than those at Georgetown, Case Western, and Rochester. Aside from the historic goal, the college also launched after a short quiet phase of only one year with only $1.2 billion, about 20 percent, already committed. Only 13 percent of the institutions in CASE’s survey said they went public with 20 percent or less of their goal.
While the recent announcements indicate a sense of optimism about the fund-raising climate, several fund-raisers noted that the market has changed significantly since before 2008. “Prior to the collapse of the market, the majority of $100 million gifts that were made by individuals were made to higher education,” Matthews said. “There just aren’t as many of those people anymore.” Large gifts make up the overwhelming majority of money raised during campaigns. For campaigns of more than $1 billion, 85 percent of gifts come from the top 1 percent of donors and 96 percent come from the top 10, according to the CASE survey.
Schwartz at Rochester said his campaign is focused more on “upper-middle” gifts of six, rather than seven figures. It has already secured gifts of $30 million, $25 million, and $20 million.
USC, on the other hand, seems poised to follow a more traditional path. It secured gifts of $200 million, $150 million, and $110 million prior to its public kickoff.
In the long run, consultants said, when a campaign is actually launched is almost irrelevant. Donors want to give to universities, and even if the economy doesn’t recover as quickly as people hoped, fund-raisers said, they will likely become comfortable with giving in the “new normal.”
“During a six- or seven-year period there are always going to be peaks and valleys,” Matthews said. “You’re never going to find the perfect time to launch a campaign.”