Philanthropists | Finance

“Infinite Growth Horizon.” Some Higher Ed Funders Are Giving Like It’s 2019

INSIDE PHILANTHROPY   |  October 23, 2020 by Mike Scutari

Back in May, I looked at how the pandemic could shape funders’ priorities in the months and years ahead. Issues like student health and wellness, online learning and financial aid were in; tuition-busting construction projects and athletics were out. This pandemic “will force radical change,” said Jeffrey Wolfman, Fitchburg State University’s vice president for institutional advancement. “We have to get back to an essential-only model.”

Five months later, some regional funders have other ideas. On October 6, the Portland, Maine-based Harold Alfond Foundation announced a $500 million investment in the state’s institutions. Almost half of the commitment will flow to the University of Maine public university system. Part of that funding will create the College of Engineering, Computing and Information Science, while the largest chunk, $90 million, will pay for upgrades to the systems’ athletic facilities. It’s the largest gift in the foundation’s history and the largest ever given to a New England public education system. 

Around the same time, alumnus Richard M. McVey gave his alma mater, Oxford, Ohio’s Miami University, $20 million to fund construction of a data science facility. The gift is one of the top-five-largest single gifts in the school’s history. Soon after, St. Louis couple Fred and June Kummer announced a $300 commitment to the Missouri University of Science and Technology (Missouri S&T) to establish a school of innovation. It’s the largest single gift in the history of Missouri higher education.

And on October 17, Clemson University received $60 million from South Carolina businessman W.O. “Billy” Powers to name its new business school. It is—wait for it!—the largest gift in the school’s history, and some of the money will go toward construction, reported Inside Higher Ed’s Lilah Burke.

Four historic gifts to regional public universities primarily earmarked for construction projects made within a two-week stretch does not constitute an irrefutable trend. But it suggests that the terrain has evolved considerably since early May. Currently, only 23% of universities are back to an in-person model. First-year undergraduate populations are down 16%, and admissions officers fear enrollment will remain depressed in the years to come. Public university administrators are bracing for painful cuts in state funding. Cases are rising and many regional university towns remain largely shut down with winter approaching and no end in sight.

Universities and surrounding areas desperately need a spark, and gifts for wellness centers and scholarships won’t cut it. The good news: With the stock market back to pre-pandemic highs, higher ed funders have plenty of wealth. And many are stepping up in a moment of crisis, reaching for that old familiar playbook: gifts for new STEM schools to attract students and faculty, construction projects that drive economic revitalization and athletic departments to revive flagging school spirit.

Top-of-the-Pyramid Donors Are Doing Fine

How have fundraisers’ views evolved over the past seven months? Let’s look at it through the lens of market volatility.

On March 31, consulting firm Grenzebach Glier and Associates found that 83% of responding fundraisers were canceling or postponing some or all of their solicitations as a result of the pandemic. At the time, the S&P Index stood at 2,584, down significantly from its pre-pandemic high, but up from its nadir of 2,305 the week before. On June 8, when the S&P was up to 3,232, EAB declared, Higher education fundraising is poised for a dramatic drop that will rival or exceed decreases seen during the Great Depression.”

Fast-forward to September 28. The S&P Index was just shy of its pre-pandemic peak of 3,386, and some advancement officers suddenly had a spring in their step. Don Hasseltine, senior consultant and vice president at the Aspen Leadership Group, wrote that officers he spoke with bought into the idea that philanthropy“has an infinite growth horizon.” Just as the stock market “appears to be acting in contrast to the overall economy,” Hasseltine wrote, “philanthropy has been robust throughout the pandemic.”

But how can this be, given fundraisers’ visions of doom and gloom? Hasseltine’s answer will sound familiar: The rising tide hasn’t lifted all boats. “Fewer donors are participating, but those who are, are giving as much, if not more,” he said, while noting that more than 80% of his current and former clients raised as much or more in 2020 than in 2019. 

A few weeks and a combined $880 million later, Hasseltine’s theory has found validation in Portland, Maine; Oxford, Ohio; Rolla, Missouri; and Clemson, South Carolina.

A Spate of New Projects

The Harold Alfond Foundation’s $500 million payout will support eight Maine-based organizations. A burgeoning tech hub called the Roux Institute at Northeastern University will get $100 million, more than $60 million of which will fund scholarships. The University of New England will receive a grant to support the establishment of the Institute for Interprofessional Education and Practice and construction of a new facility. Both gifts align with regional funders’ pre-pandemic focus of cultivating STEM research centers to attract students, faculty and employers to the area.

The biggest recipient of foundation funding is the University of Maine System (UMS), which will receive $240 million over 12 years. Some mega-gifts are years in the making, and it can be difficult to determine how market volatility influences funders’ decision-making. The foundation’s gift to UMS, however, appeared to come together relatively quickly.

Dannel Malloy, the former governor of Connecticut, became the chancellor of UMS on July 1, 2019. A few months later, the university began discussions with the foundation about a grant proposal. Then came the global pandemic. In March, the UMS predicted a short-term loss of $20 million due to room and board refunds. Five months later, Maine governor Janet Mills proposed spending cuts that would mean a $22.5 million hit for the state’s universities.

The foundation, meanwhile, “expects its 2020 giving to top $50 million because of increased giving during the COVID-19 pandemic,” wrote Bangor Daily News Eesha Pendharkar. Did it ever!

Foundation Chairman Greg Powell said that the funder’s leadership was impressed by the system’s progress toward a unified accreditation. “We love what the chancellor and the board of trustees have been able to accomplish in approving unified accreditation,” he said. “Unified accreditation means teamwork to us, and Mr. Alfond loved teamwork.”

The system will receive $75 million to create the College of Engineering, Computing and Information Science across multiple campuses of the system. Again, it’s a classic pre-pandemic move buttressed by familiar pre-pandemic logic. “In aggregate,” the foundation’s press release read, “the UMS grant represents a strategic, long-term effort to strengthen the capacity of Maine’s public universities to meet the state’s most pressing higher education, workforce and economic needs.”

A Gift that “May Raise Some Eyebrows”

The largest component of the foundation’s UMS gift will support an area whose utility looks pretty dubious as tuition keeps rising—athletics. The foundation will allocate $90 million to UMaine athletics, primarily earmarked to upgrade the system’s athletic facilities.

Back in February, Michael Poliakoff, president of the American Council of Trustees and Alumni, wrote a piece in Forbes commenting on news that Binghamton University received a $60 million gift from an anonymous donor to build a baseball stadium. He crunched the numbers and concluded that $60 million “could give full rides to 6,089 low-income, in-state students” at the school.

I couldn’t resist the urge to do some similar calculations. According to the National Center for Education Statistics, the University of Maine’s in-state tuition and fees stood at $11,438 for 2019-2020, up 2.4% over 2018-2019. The Harold Alfond Foundation’s $90 million gift could give 7,869 in-state students—or 83% of the undergraduate population—a year’s worth of free tuition. Assuming a similar increase in tuition in future years, the gift could give four-year full rides to 1,898 in-state students.

The BDN Editorial Board said the athletic gift “may raise some eyebrows,” especially at a time when families are struggling and the UMS may curtail health benefits to nearly 2,900 retirees as part of a pandemic-related cost-cutting measure. That said, I couldn’t discern much pushback from the university community for the athletic component of the gift. That may be due in part to the fact that it’s only 38% of the foundation’s total outlay. When your system is about to receive a quarter-billion dollars during a global pandemic, why split hairs?

Nonetheless, the foundation, as if trying to circumvent pushback, justified the commitment by citing donor intent. Alfond was always a big supporter of athletics, so providing $90 million mostly to upgrade University of Maine’s facilities made sense, according to Powell. “Mr. Alfond believed deeply in the UMaine athletic program. It’s our only Division I program and he [always] felt a need to make a major contribution to lift the program to a whole new level.” Previous grants supported the construction of the Harold Alfond Sports Stadium and Harold Alfond Sports Arena.

The foundation’s $500 million commitment also included $101 million to Colby College for a new athletics and recreation center and to spur economic development in the college’s town of Waterville.

Harold Alfond established the foundation in 1950. He was a Maine shoe magnate who sold his Dexter Shoe enterprise to Warren Buffett’s Berkshire Hathaway in the 1990s. He committed nearly all of his wealth to the foundation upon his passing in 2007. Since then, the foundation has awarded over $425 million in grants, primarily in Maine. The foundation awarded $47.1 million in grants in 2019, about 90% of which benefited Maine-based charities.

Contrasting Priorities

Fred Kummer, who, along with his wife June, gave a $300 million gift to Missouri S&T, is the founder and chairman of St. Louis-based HBE Corp., which he established in 1960 and built into the world’s leading design-build firm for healthcare.

The gift creates the Kummer Institute Foundation to support an astonishing array of construction projects for a rural school with an undergraduate enrollment of 6,462 in a town with 20,000 residents. These include four new research centers, the Kummer School of Innovation, Entrepreneurship and Economic Development, the construction of new buildings and labs, and the expansion and renovation of existing structures. Funding will also support scholarships and an expansion of Missouri S&T’s online degree programs.

All told, the Kummers and Harold Alfond Foundation gifts are heavily tilted toward construction projects that will inevitably increase tuition. In addition, despite the Kummers’ support for online degree programs, neither commitment appears to “make the embrace of online education more than a blip,” to quote the Chronicle of Higher Education’s Goldie Blumenstyk.

This isn’t to say that funders aren’t subscribing to what Fitchburg State University’s Wolfman called an  “essentials only” model. On October 7, an anonymous alumnus gave a large gift to Smith College, $40 million of which is earmarked for student financial aid. A week later, Baylor University announced a $30 million commitment for merit-based scholarships from alumni Dan and Jenni Hord.

But the fact remains that the Kummers, the Harold Alfond Foundation, and the two additional regional funders responsible for close to a billion dollars in new support focused on mostly pre-pandemic areas. They concluded that in the short-term, it’s more important for schools to recruit students, train them in next-generation skills and rebuild local economies.

Are Happy Days Here Again?

All of which brings me back to Hasseltine’s take on the state of fundraising. In June, when the market was inching back up, he told me that “top-of-the-pyramid” donors are “still making money and doing better than the rest of the world.”

To his point: Last September, the University of Maine announced it exceeded its $200 million “Vision for Tomorrow” campaign by $8 million, thanks to support from approximately 36,000 donors. With the stroke of a pen, the Harold Alfond Foundation’s recent $500 million gift—$453 million more than it gave in 2019—blew past the campaign’s goal by a cool $292 million.

A month after the University of Maine announced its campaign haul, another public Missouri school, Missouri State University (MSU), went public with its $250 million fundraising campaign. At the time, it had raised more than $151 million from 50,000 donors, according to Springfield News-Leader’s Claudette Riley. The Kummers’ Missouri S&T gift eclipsed the original campaign goal of the far larger MSU by tens of millions of dollars—and the couple still had $50 million left to spare. 

If anything, the confluence of mega-gifts for construction projects and financial aid shows that philanthropy can be all things to all people at a time when the market is humming and investors are feeling increasingly bullish, thanks to what Axios’ Mike Allen called a potentially “clear-cut” Biden victory, an imminent coronavirus relief package, and a forthcoming COVID-19 vaccine.

Writing to advancement officers in late September, Hasseltine offered a similarly rosy outlook. The pandemic “is disruptive and unsettling,” he said, “yet the top quartile of income earners has fared well and those who are philanthropic remain in a position to support your mission.”

The original source can be found here»


Launched in 1995, we are the only organization that works with alumni, donors, trustees, and education leaders across the United States to support liberal arts education, uphold high academic standards, safeguard the free exchange of ideas on campus, and ensure that the next generation receives an intellectually rich, high-quality college education at an affordable price.

Discover More