Financial aid officers serve many masters. They must monitor institutional compliance with federal and state regulations governing financial aid. They must ensure that institutional resources are being spent as efficiently and effectively as possible. They must be responsive to the concerns of families, but at the same time balance their needs against the needs of the institution. And finally, they must comply with the wishes of alumni and friends who have donated money for scholarships and grants. Although in some sense all of these activities can be classified as stewardship, it is the latter that traditionally comes to mind when that term is used.
In order for stewardship of donated funds to be managed effectively, it is critical that financial aid, finance, and development officers work closely together. They need to understand each other's goals, timelines, and challenges and agree on an approach that can effectively serve all parties. Without such an understanding, institutions run the risk of raising funds for financial aid that cannot be spent efficiently; disappointing donors; frustrating students; and significantly adding to the workload of all the offices involved.
For example, development officers are sometimes unaware of all that is involved in identifying eligible students. Stewarding some donated funds can be far more time consuming than the dollars involved would justify. One favorite example is a fund that granted a $1,000 scholarship annually to one student. This fund not only required that a student be of Italian heritage (a category not captured in the student system), but also required an application and an essay. Consequently, the financial aid office had to first identify and send applications to potentially eligible recipients, then collect the completed applications and send them to the donor. Once selected, the recipient not only had to write a thank you letter, but also had to attend a formal ball that served as an annual fundraiser for the scholarship. The cost of the required attire could likely exceed the award amount!
While this is an extreme example, it is very common for financial aid officers to invest considerable time in managing literally hundreds of endowed funds and annual gifts with specific awarding restrictions. Often these requirements are not captured in the institution's database, and so it is not a simple matter to identify eligible students. In some cases, the requirements are so restrictive that it is impossible to spend the funds in a given year. For example, we are aware of one institution that has an endowed scholarship for students who are members of a particular church congregation. Although the institution advertises every year at that church, many years can pass when no eligible students are enrolled. Consequently, it is critical that financial aid officers be given an opportunity to review donor criteria before an agreement with a potential donor is signed.
Whenever offices must rely on
each other to provide information
or to move a process to the next
step, natural tensions emerge.
Timing can also be a significant issue. In order to use the funds most effectively from an institutional perspective, donated funds would ideally be awarded to students who would have otherwise been eligible for unfunded student aid. However, award letters are typically sent in early spring, often before the funds available to award have been determined by the finance office. Moreover, because the awarding time frame is typically compressed, with the bulk of awards being done in a one or two-month period, it is challenging to find the time to identify eligible students and build the donated funds into the award letter. For new students this challenge is exacerbated by the fact that some of those offered donated funds may not enroll. Consequently, many aid officers simply used endowed funds and annual gifts as add-ons to a student's regular package, awarding those funds in the fall once students are on campus. Endowment officers like this, because the student clearly sees the benefit to them, and is more willing to write a thank you letter. For institutions with significant amounts of endowed funding, however, this often means that net tuition revenues are not being maximized. A compromise position is to initially award institutional scholarships or grants under a generic name, noting in the original letter that these funds are made available through the generosity of donors and that assignments to specific donor names will be made later. Even with this upfront explanation, however, students can be confused when they see the exchange being made, and wonder why they can't keep both awards.
