Foundations and endowments hit by market slide

It seems like only yesterday when foundations and non-profit endowment managers were talking with lustful jealousy about their desire to get involved with hedge funds that could return double digit gains.

Well, it's hard to believe we won't be hearing from some of the bigger losers who chased out sized market performance and lost bundles. According to Investment News:

Endowments have posted double-digit returns since 2004, according to a survey of 785 institutions by the National Association of College and University Business Officers, a Washington-based professional organization. It found a one-year average return of 17.2% for fiscal-year 2007, 10.7% for 2006, 9.3% for 2005 and 15.1% for 2004.

But that reign is over.

A recent report from Chicago-based Northern Trust Corp. found that year-to-date returns through June 30 were negative for the third consecutive quarter for its database of 291 funds, which include 90 foundations and endowments with $91 billion in assets.

While I'm sure that there will be some big blow-ups... much are expecting flat to moderately negative returns:

On an anecdotal basis, foundations and endowments are experiencing flat to negative returns, said John Griswold, executive director of the Commonfund Institute of Wilton, Conn., which researches nearly 800 endowments of colleges and private independent schools, and about 300 foundations.

And finally, some people believe that the big dogs like Harvard and Yale will escape without serious injury this year:

Some larger endowments may have positive returns, such as Harvard University of Cambridge, Mass., which is expected to have returns that range from 7% to 9%, according to published reports not confirmed by the university. The university reported this year that 33% of its endowment's holdings were in real assets.

"I think you can expect Yale [University of New Haven, Conn.] to be positive again and many of the large universities, which have a heavy allocation to private-capital investments and commodities," Mr. Griswold said. "But for those who came into commodities only recently, they may have found it disappointing."

You can read more here.

University's fundraising ethics go up in smoke

Holy smokes!

The New York Times reported yesterday that Virginia Commonwealth University, a public institution, signed a secret grant agreement in 2006 to do research for Philip Morris USA.

"The contract bars professors from publishing the results of their studies, or even talking about them, without Philip Morris’s permission. If “a third party,” including news organizations, asks about the agreement, university officials have to decline to comment and tell the company. Nearly all patent and other intellectual property rights go to the company, not the university or its professors.

“There is restrictive language in here,” said Francis L. Macrina, Virginia Commonwealth’s vice president for research, who acknowledged that many of the provisions violated the university’s guidelines for industry-sponsored research. “In the end, it was language we thought we could agree to. It’s a balancing act.”

But the contract, a copy of which The New York Times obtained under the Virginia Freedom of Information law, is highly unusual and raises questions about how far universities will go in search of scarce research dollars to enhance their standing. It also brings a new dimension to the already divisive debate on many campuses over whether it is appropriate for universities to accept tobacco money for research."

Apparently the nation's largest tobacco company also has similar agreements with other universities - although a spokesman declines to say how many or which ones.

Harvard finishes second to Stanford in fundraising - Yale drops from 3rd to 8th

From Prateek Kumar at the Harvard Crimson:

Harvard finished second to Stanford in fundraising this fiscal year, according to an annual survey published by the Council for Aid to Education (CAE), raising $614 million dollars. Cardinal out-raised Crimson by over $200 million dollars.

The University of Southern California, Johns Hopkins University, and Columbia University rounded out the top five institutions. In total, American institutions of higher education received nearly $30 billion in donations, an increase of 6.3 percent over the previous year.

The 20 institutions with the highest levels of fundraising account for nearly a third of that increase, about $518 million. These schools raised over $7.5 billion, representing a quarter of total donations.

Yale saw a drop of 9.7 percent from 2006 to 2007, which resulted in a drop from third to eight.

The best fundraisers are those who can tell a story

At the heart of it all, as fundraisers, we are all storytellers.

You can't be a successful fundraiser if you can't tell a good story. It's that simple.

Here is a great video featuring Professor Brian Sturm from the University of North Carolina at Chapel Hill. He describes storytelling as a way of organizing information, conveying emotions, and building community.



When you think of his model of storytelling as altered state of consciousness (the story trance) that includes 16 portals to altered states... it really helps understand his thesis.

The video features three stories that are told to illustrate the theoretical model: Truth and Story; What happens when you really listen; and The stone cutter. Storytelling ethics and the need for trust and truth are discussed.

I encourage you to start the video and minimize the window while you are checking emails this week and just list to what Professor Sturm has to say.

Why is Barnard's endowment so tiny?

According to the Columbia Spectator:

Barnard’s endowment of around $200 million is markedly smaller than those of similar institutions. In comparison, Wellesley College’s endowment, the largest of any women’s college, was $1.6 billion in 2007.

Martha Dean, Director of Development at Bryn Mawr College, speculates that women’s colleges have faced unique fundraising challenges because “women, at least historically, have approached philanthropy more tentatively than men.” According to Dean, women tend to leave money to their colleges as part of their estates, while men donate more throughout their lives.

Even with recent shifts in fundraising at women’s colleges, Barnard’s endowment is still much smaller than Smith’s $1.3 billion or Bryn Mawr’s $678 million.

Maybe more donors need to be told that Barnard and Columbia have separate endowments and, moreover, “the Barnard endowment does not receive money from Columbia’s fundraising efforts.”

Barefoot coach gets huge donation

A college basketball coach named Ron Hunter in Indianapolis wanted to raise 40,000 pairs of shoes for Samaritan's Feet - a charity based in Charlotte, N.C. that helps children in the U.S. and around the world.

To draw attention to this feat - he decided to go barefoot while coaching a game for his team at Indiana University-Purdue University Indianapolis.

Soo... it was a little unorthodox, it might have violated some health codes, and it most certainly stunk... but it worked.

The coach appeared on several ESPN shows on Thursday, and secured donations of thousands of shoes from Converse, Wal-Mart, Nine West and the Department of Homeland Security.The mission of the nonprofit, Christian-based Samaritan charity is to send 10 million shoes in 10 years to children living in poverty.

By the time the results, nearly $20,000 and 110,000 pairs of shoes were donated.

Hunter, 43, who almost never sits when coaching games, didn't have his feet stepped on, but they were still sore.

"My feet hurt so bad," he said after the game. "But imagine a child or a human going their whole lives without shoes."

As a small footnote to the story (get it?), IUPUI beat Oakland 82-69.

The big business of college football

Yesterday, I found myself watching some boring college football Bowl games... so I tried to pass the time by arguing with friends about the largess of NCAA coaches. If you want to impress your friends with some facts and figures, here is some quick research I pulled together from other sources.

The USA Today reported last month that "the number of million-dollar coaches has soared from five in 1999 to 50 today."

The truth is that the games on New Years Day are only part of college football's larger $400 million bowl industry. Fox Business reports that each of the BCS bowl games pays out $17 million to the conferences represented. The conferences, based on their own rules, divide the payout among all of the teams in the conference. If an additional team from a conference is lucky enough to make a BCS bowl, the conference receives an extra $4.5 million.

The Atlanta Journal-Constitution had a great article last week outlining the huge bonuses given to coaches for winning their bowl game. The biggest bonus seems to await Les Miles if LSU can win next week's National Championship game. Others earn the right to renegotiate contracts if their team hits overall goals.

Alumni boosters at Hawaii ran a campaign to raise $114,000 for the team’s head coach, June S. Jones III when they grew worried he might leave the university when his contract expires in six months.

According to Forbes magazine, Ohio State has the biggest athletic department budget in the U.S. at a whopping $104.7 million for the year ending June 30, 2006. Texas was second at $97.8 million.

Then again, we are living in the age where 31 universities are seeking to raise at least a billion dollars.

In December, Ohio State President E. Gordon Gee tapped Peter Weiler to head up all of OSU’s fund-raising efforts, including a possible $2.5 billion capital campaign. Weiler will begin his new job in early 2008 as senior vice president for university development and president of the Ohio State University Foundation.

Just hours after OSU's announcement, the University of Georgia named longtime administrator Tom Landrum the permanent senior vice president for external affairs, the administrator in charge of fundraising, public affairs and alumni relations.

With Landrum in the vice president's office this year, fundraisers shot past their five-year fundraising goal to collect $500 million for the Archways to Excellence campaign. The campaign is set to conclude June 30, but already has collected $580 million, according to Landrum.

As vice president, Landrum will make $252,000 a year, the 13th highest salary among UGA administrators and faculty, according to university spokesman Tom Jackson.

UC gets $420 million gift

The University of Cincinnati received a $420.7 million gift thanks to the hard work of two people who see the world very differently.

Sam Anand, mechanical engineering professor at UC's College of Engineering and Brigid O'Kane, an associate design professor in the College of Design, Art, Architecture and Planning, or DAAP, began applying for the donation about two years ago. They submitted a 90-page proposal that focused on the collaboration between the two colleges, which will be the prime benefactors of the donation.

The gift is the largest in the school's history.

The gift of in-kind contributions of cutting-edge computer software, hardware and technology support comes from PACE, or the Partners for the Advancement of Collaborative Engineering Education, a consortium of General Motors, Inc., EDS, Hewlett-Packard Co., Siemens PLM Software and Sun Microsystems, said Greg Hand, UC spokesman.

Chapman-Moore said demonstrating "the great collaboration" between the two colleges was critical to UC being chosen for the donation.

Rap video makes college telemarketing cool

The rumors of telemarketing's death have been greatly exaggerated.

It can be a very effective integrated marketing technique and even though Trent Stamp hates it, telemarketing can also be an efficient and engaging way to keep in touch with your donors.

If your program is slumping maybe all you need is a cool rap video to train your callers. The telemarketers at the University of Toronto put this video together.

Hats off to Dori Sonntag for the posting of this video and other great college telemarketing training tips at her blog, Inspired Annual Giving.

Alumni from elite schools give donations to needier schools

Zachary Seward at the Wall Street Journal had a great article yesterday on what he sees as a growing trend by alumni of elite universities donating to needier colleges instead of their alma maters.

Turned off by massive endowments at the nation's top schools, they seek to make a greater impact at less-wealthy institutions. They are probably also aware of a fringe benefit: getting your name on a building is a cheaper proposition at schools not accustomed to seven-figure donations.

Those ivy league kids sure know how to bargain shop.

Contributions to higher education by nonalumni rose 14% last year, to $5.7 billion, according to the Council for Aid to Education in New York. In comparison, alumni gave $8.4 billion to their own schools, the council says. A review of the council's data indicates that less-prosperous schools are more likely to rely on gifts from outside their alumni base than their own graduates.

Not only is Havard aware of the trend, materials distributed to fund-raising volunteers include a response to the questions about whether the school needs more money given that it already has a large endowment.

Donor withdraws $3 million gift after regent calls him "bully and tyrant"

The Winston-Salem Journal has a great story about a sensitive donor who didn't take kindly to a negative job review:

The chancellor of Nevada’s higher-education system says that he and his family will no longer consider donating $3 million to one of its schools after a regent’s negative comments in his job evaluation.

In his written evaluation June 22, regent Ron Knecht wrote that John Rogers “is known primarily as a self-absorbed, self-indulgent bully and tyrant, given to rashly going off at little or no provocation.”

The donor said he didn't feel like giving money after receiving the "flogging."

I’m no stranger to trying to raise money under tough circumstances

Back in 2001, Benedict College, the historically black institution in Columbia, South Carolina raised $5.2 million in private gifts. Since then... their fundraising has been in a bit of a funk.

In the past two years, Benedict has averaged about $2.5 million a year in private gifts while similiar school like Claflin University in Orangeburg, raised $6.8 million in private gifts in the year that ended June 30, 2006.

To revive the anemic private donations, the college hired Love Collins III, a West Point graduate and former U.S. Army officer. In his previous job Collins was a vice president for advancement at the National Underground Railroad Freedom Center in Cincinnati where he raised more than $11.1 million.

In an interview with James T. Hammond at The State, Collins said:

“I’m no stranger to trying to raise money under tough circumstances,” said Collins, Benedict’s new executive vice president for institutional advancement. “But I’m a firm believer that if you tell people what your plan is, they will help you.”

...and it appears things are already going well.

Collins said he has just closed out Benedict’s Alumni Annual Giving Campaign, raising $787,859 in gifts and pledges for the academic year that just ended. That total compares with $696,520 a year earlier; $654,520 in 2005; and $655,771 in 2004.

I love the fact that one man can really turn a fundraising program around.

Secretive $5 million gift comes with strings

Remember last year when we posted a story about a donor who reportedly withdrew his $20 million pledge, resigned from the university board, and has asked that the name of the school be changed - all because he had his feelings hurt by the university president?

Well now Erin Strout at The Chronicle of Higher Education's Face Value blog points out an incredible turn in Florida International University’s fundraising saga.

The newspaper reported today that the public university’s foundation board approved a deal with an anonymous donor without seeing a contract and assumed lifetime liability on two insurance claims as a “special condition” to receive the $5-million cash gift.

The Miami Herald says, "There was no paperwork explaining the deal, just an oral summary from FIU President Modesto ''Mitch'' Maidique." The paper also says that FIU has declined to release any paperwork to the public.

Hmmmmmm.

Not only does it seem the board failed to fully examine the liability the claims might bring, it also sounds like convenient timing:

Maidique told board members that he reviewed the potential risk with attorneys, but did not provide them a copy of analysis. When FIU gets the cash, the school will also qualify for a $5 million matching gift from the state.

Face Value asks readers what risks institutions assume by entering such deals. I'll take it on step further... does anyone else following this story think this Mitch guy is a shady fundraiser or is he just having a shitty (and well publicized) couple of months?

(This image shows FIU President Modesto A. Maidique (left) and FIU Board of Trustees Chairman Adolfo Henriques (right) with a ceremonial $10 million check signifying Herbert Wertheim’s support of the proposed FIU medical school - dated July 2004.)

College misses challenge grant deadline

Don't Tell the Donor received an email tip last week from someone at Virginia Intermont College giving us the tip that the school was going to miss a challenge grant deadline of June 30th. The Associated Press ran a story on it yesterday:

Auto dealer Bill Gatton initially gave Virginia Intermont College $250,000 and offered $750,000 more if $5 million could be raised by the end of June. Intermont President Michael Puglisi would not say how much money has been raised, but in May said about half of the $5 million was in hand.

"We're still working on it, and Mr. Gatton is still very supportive," Puglisi said. "We have been on the road and locally soliciting donations, but we still have work to do. (Gatton) has been willing to work with us."

The school announced in April that they would need about $4 million to remain open next year.

The financial crisis is the culmination of years of unfunded scholarship assistance for students, poor financial management practices, programs that did not generate significant revenue and consistently narrow operating margins, school officials said.

It was only two weeks ago that VI extended contracts with faculty. One wonders if the school knew at that time they were going to miss the deadline.

Sources seem to think Gatton will give them more time.

The first month since the VA Tech shooting

It's been almost month since the shootings at Virginia Tech. We thought it would be interesting to revisit the topic of fundraising in the wake of the tragedy and to examine the progress of those fundraising efforts.

Within 8 days of the shootings, the Chronicle of Philanthropy reported:

The university' s new Hokie Spirit Memorial Fund — created the day after the shootings to pay for grief counseling, memorials, and other needs of victims' families and survivors — has raised more than $1-million, including an estimated 8,000 online donations totaling about $800,000, said Michael Kiser, the university's director of development communication.

In addition to the general fund, the school also created the Hokie Spirit Scholarship Fund to support students university-wide, in addition to specific funds in the name of each of the victims. (Check this for a list of funds that have been established in victims' names.)

The school has said that the final criteria for these funds will be dependent upon approval by each family. When I peeked at the secure donation form the school was using, I was a little confused by the list. It will be interesting to see how this fundraising tactic plays out.

It has also been interesting to see how student run websites like DonateVT.com were established immediately and have flourished in the past thirty days.

In fact, I am also curious how the ongoing unrestricted fundraising efforts by the school will be effected by this outpouring of special giving. The Hokie Athletic Club website says the school was already behind in total fundraising through February 2007, raising $15.7 million as compared to $19.6 million the same time last year.