Raising 1 Billion Dollars

February 15, 2008       Jeff Jones      

“Subprime crisis” and “liquidity crunch” are a few phrases that were missing from the general lexicon of early 2006 when the University of Maryland System launched a $1.7-billion fundraising campaign.

A few other phrases come to mind for Leonard Raley, vice chancellor for advancement at the University System of Maryland in Adelphi, Md. “There were two words that weren’t in our vocabulary — credit crisis,” said Raley, also president and chief executive officer of University of Maryland System Foundation. “That has impacted the thinking for a lot of people. The good news for us is we have not seen any real decline in terms of giving or interest in any of our campaigns. It’s fair to say that for some people, especially among our major donors and donor prospects, what’s going on in the economy gives some people pause.”

The stock market can affect the timing and size of gifts, said Ann E. Kaplan, director, Voluntary Support of Education Survey at the Council for Aid to Education in New York City. Personal giving isn’t as volatile as the stock market, she said. Perhaps that’s one reason universities in the midst of $1 billion campaigns or considering one aren’t sweating a down market. Ohio State University (OSU) in Columbus, Ohio, and University of Georgia in Athens, Ga., both are in the early planning stages of $1 billion campaigns.

OSU hired Peter Weiler to head its development organization and fundraising efforts. Weiler is scheduled to begin this March. He’ll leave his post as vice president for development and alumni relations at State College, Pa.-based Penn State University, which recently finished a seven-year, $1.3 billion campaign.

OSU picked Weiler because they’re planning a large campaign, and he’s “the best in the nation,” said Jeff Kaplan, vice president and special assistant to the president at OSU. While Weiler’s name is well known among his peers, OSU didn’t hire him for name value, but rather for his fundraising capability, skills and hard work as evidenced by his success, Kaplan said.

Though a downturn could have an effect on the campaign, OSU’s Kaplan downplayed that aspect. “In my experience, there’s more often a ‘sky is falling mentality’ and then everything works out fine,” rather than the doomsayers being correct, he said. “There’s going to be some bumps. But some things will work out that you hadn’t planned for, as well.”

Kent E. Dove, senior vice president for development at Indiana University Foundation, is directing Indiana University Bloomington’s (IUB) $1 billion campaign that started in July 2003. The university had 70 percent in pocket when it publicly launched this past November, Dove said.

IUB’s capital campaign goal within the comprehensive campaign is $400 million. It has received a gift of $77 million and roughly seven gifts of $25 million or more, Dove said.

“The thing that impresses me the most right now is that high-end fundraising is doing better than ever,” Dove said. The focus in capital campaigns is on the high-end, with greater expectations that the group will comprise a greater percentage of the total goal.

Johns Hopkins University’s ongoing $3.2 billion Knowledge for the World campaign underscores that trend. Some 46 percent of the total has been from gifts of $10 million or more. Gifts of $1 million or more represent 78 percent of the total, Scott Rembold, associate vice president for development at Johns Hopkins University in Baltimore, wrote in an email in response to questions.

“Major gifts from individuals, 51 percent of our total, have been the driving force in the success of this campaign,” Rembold wrote. Alumni giving represents 25 percent of the total and gifts from friends represents 26 percent. Foundation support accounts for 33 percent of the total raised, corporations 6 percent, and planned gifts from individuals represent roughly 10 percent, he wrote.

Dove said the stock market is at a near-historic level, even after the recent retreat. “A lot of fundraising is psychology, and we are letting some things psychologically influence us that if you put them in perspective don’t look nearly as bad as the headlines of the newspaper would portend,” Dove said. “The last time we did a capital campaign the stock market was nowhere close” to its current levels, and “we were successful in that campaign, too.”

High-end donors may not be feeling the pinch, but others are. “I think there are some real effects of the economy on other areas,” specifically that mid-range donors ($25,000 – $250,000) are disappearing, Dove said.

Timing isn’t everything

Shorter campaign cycles change fundraising methodology, Dove said. Today, a capital campaign focuses on major-gift ready donors, and not the entire constituency because campaign planners know they’ll be back into a campaign in a relatively short period of time, thus reducing the risk of losing donors not ready to make a major gift. “They are the next generation of prospects for your next campaign,” Dove said.

Closer campaign cycles are the case at the University of Georgia, where Tom Landrum recently became senior vice president for external affairs. Georgia will close in June what originally was a $500 million campaign with an anticipated $650 million, Landrum said. The school is planning an at least $1 billion campaign slated for a quiet-phase start two years after this one closes, Landrum said. They’ll conduct mini-campaigns for endowed professorships and capital projects in between, he said.

In an effort to expand the donor base, Landrum will pursue initiatives focusing on thousands of alumni graduating each year, and parents of newly enrolled students as prospects, he said. A softening economy doesn’t concern him. “I don’t necessarily believe a recession spells hard times for higher education philanthropy,” Landrum said. It’s a long-term giving strategy and donors are thinking about what they can give regardless of a downturn, he said. Deferred gifts are more influenced by donors’ own estate and tax planning, he added.

Rembold echoed those thoughts. “The general philosophy is that a ‘bear market’ can change the way that people give and may change the gift vehicle they use, but it does not have a significant impact on total giving,” Rembold said.

Donating real estate, such as a second or third home, is an example of an asset that isn’t stock or cash, but that someone might be willing to donate, said Robert Carter, vice chairman of New York City-based Archimede Philanthropy Partners. Empathy can help land gifts after the market recovers. “When someone is wincing a little bit about gift levels, you have to go with that,” Carter said.

Michael J. Worth, principal of Michael J. Worth and Associates in Washington, D.C., suggested targeting sectors that are performing well, such as energy. A strong case for support is important — even more so in a challenging economy, Worth said.

Another strategy is allowing donors to extend pledge payment periods if the economy slows, said Timothy L. Seiler, director of the Fund Raising School and Public Service at the Center on Philanthropy of Indiana University in Indianapolis. “In any five to seven year campaign period, chances are reasonably good that there will be a downtick in the economy, so you’re going to have to make adjustments,” Seiler said.

Gains Hawkins, vice president for institutional advancement at the University of Maryland Eastern Shore (UMES) in Princess Anne, has more modest goals. The historically black college seeks $14 million for its campaign that’s part of the University of Maryland System’s $1.7 billion effort. An early $3 million gift bolstered the campaign, which has raised $6 million, but it likely needs at least two more seven-figure gifts to reach the goal, he said.

Turnover prior to his arrival in 2003 meant the development office languished and lacked continuity, according to Hawkins. He’s laying the groundwork through annual mailings, alumni publications, and a phone-a-thon. Annual alumni giving increased from 2 percent to 9.5 percent last year, Hawkins said.

The souring economy and lack of philanthropic experience among its donor pool creates a difficult climate, he said. “If there’s no philanthropic experience, there’s a hesitancy to commit to a large gift,” Hawkins said. Still, he’s optimistic UMES will meet its campaign goal. NPT

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Jeff Jones is former senior writer with The NonProfit Times and now freelances from Pittsburgh, Pa.