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Donors get dibs in higher ed

Managing the expectations that come with philanthropy
University Business, February 2016
At the University of South Florida, current and former scholarship recipients were among those who signed a giant thank-you card presented to donors Barron and Dana Collier during a ceremony announcing their latest major gift.
At the University of South Florida, current and former scholarship recipients were among those who signed a giant thank-you card presented to donors Barron and Dana Collier during a ceremony announcing their latest major gift.

Pom-poms; a marching band; cheering students; a four-by-two-foot, $25 million ceremonial check—all part of college football halftime.

At least they were in November when Micron Technology CEO Mark Durcan presented the check to Boise State University President Bob Kustra, other officials and several delighted students on the 50-yard line.

The Micron Technology Foundation’s gift, which will help fund a new College of Engineering Center for Materials Research, is Boise State’s largest ever. So all the fanfare made sense.

After all, donors love to be thanked. Smart advancement teams put thought and research into making stewardship individual and heartfelt. But how far will institutions bend on their mission when a donor offers big bucks? Do the biggest gifts now bring more than naming rights?

Are donors negotiating for honorary degrees, access to students, influence over scholarships or a leg up in recruiting graduates?

Pitfalls of naming

What’s in a name? Many buildings are named to steward donors and inspire prospects. But when it comes to entire schools, colleges and universities, changing a name can mean angst, protests and lost donations. Three examples, three outcomes:

  1. Chandrika and Ranjan Tandon gave $100 million to New York University’s engineering school. A renaming announcement last fall set off protests and a petition from some alumni, students and others about this being the fourth name in a decade and the loss of the term “polytechnic,” which had historical significance to stakeholders. “The dean is actively engaged with students and alumni to talk about ways to keep the name ‘polytechnic’ honored properly,” says spokesman John Beckman. But, as of October 2015, the name is the Tandon School of Engineering.
  2. Some 300 miles north, Paul Smith’s College was in financial straits last summer when a donor offered $20 million. The college would be renamed Joan Weill-Paul Smith’s College. But hundreds of alumni wouldn’t hear of it. Neither would State Supreme Court Justice John T. Ellis. He ruled that the college hadn’t proved a need to violate its founding donor’s will, which specified that the college would be “forever known” as Paul Smith’s. The college did not appeal, and Joan and Sanford Weill decided not to proceed with the gift. Other major donors, however, have since stepped forward and a Coming Home Challenge campaign includes a matching gift offer.
  3. People didn’t always realize that The College of Idaho was private and sometimes confused it with nearby institutions. All of that hasn’t changed. What did change in 1991: The board renamed the institution Albertson College of Idaho to honor longtime donors and alumni Joe and Kathryn Albertson. Fundraising became easier because the campus sounded private—but also harder because of assumptions the family was supporting it. And some alumni felt unconnected to this new name. So just 16 years later, a new board changed the name back. The Albertson family has since donated another $50 million.

Situation takeaways:

The difference between big name changes working or not is transparency, says Donald Fellows, president and CEO of fundraising consulting firm Marts & Lundy. He and Robert Sevier, senior vice president of strategy at the higher ed marketing firm Stamats, agree that calm, thorough communication with all parties smooths the way.

It’s also easier “if your donor has clean hands,” says Sevier. Individual or company gifts linked to weapons, genetic modifications or poor labor practices are just a few that might spark protests.

“One of the great things about higher education is the ability to protest,” says Sevier. “But it’s not always the whole story.” Alumni or students may not be seeing the bigger picture. Sevier’s second piece of advice is to act like NYC officials and simply have some patience, as the issue may just blow over.

“With philanthropy, we don’t talk about that. Gifts are gifts. That’s more contractual,” says Laura Simic, who, as Boise State’s vice president for university advancement, was on the football field that day. Setting conditions like those listed above “take it out of the realm of pure philanthropy.”

But Boise State is only one point on a spectrum of how colleges and universities handle the rights and expectations of today’s individual and corporate donors.

Campus officials can also refer to the Council for Advancement and Support of Education’s Reporting Standards & Management guidelines when navigating sticky giving situations.

“CASE Standards do help define what is a gift versus sponsored research or other corporate sponsorship,” Fellows says—“although the guidelines are not so hard and fast, and they’re open to different interpretations.”

Corporate giving: Shifting lines

Boise State has had a long relationship with Micron. Before this $25 million gift, the company gave $6 million to launch the College of Engineering and more toward specific undergraduate and doctoral programs, including $13 million in 2013. Nearly 1,000 alumni work at Micron, less than 10 miles from campus.

The new center originated from the question, “What would it take for materials science engineering to reach national prominence?” Simic says.

Naming the building was not a condition, she says—but the Micron name is on other buildings already. “The last thing corporate leaders want to do is give the impression that they want to dictate or push around on the terms of a gift,” Kustra says.

On the other hand, what if it’s the university dictating the terms? Drake University in Des Moines and the University of Houston show how two campuses handle corporate giving programs.

Following a typical workforce development model, Houston’s new Cougar Corporate Partners “lets companies invest directly in programs that will have an immediate impact on students who make up the future workforce,” its website states. Most of the first half-dozen partners are energy companies, which receive perks according to giving level, which ranges from $5,000 (associate partner) to $50,000 (executive partner).

Laying out the specifics is “efficient for both sides,” says Eloise Dunn Stuhr, vice chancellor and vice president for university advancement.

“They look at a chart that says, ‘For X support, we can do this, and the university can do this for me.’ This is bringing in new donors.” For example, a $10,000 giving level earns a single career center event sponsorship, whereas a $50,000 level earns three event sponsorships plus naming rights for interview rooms.

Since 2014, Houston’s Vanguard Society has rewarded corporate donors of $5 million and up that give annually. All members have the opportunity to develop research and recruitment partnerships and volunteer on campus, Stuhr says.

A credit union, for instance, paid $15 million to rename the campus stadium for 10 years and teach students financial literacy. Stuhr says the move has brought TDECU $89 million in business, helping it “make a name for itself in Houston.”

And at Drake, a recent $216 million campaign benefited from donors such as Principal Financial Group, American Equity, EMC Insurance and Meredith Corp. Some gifts allow students to talk with executives returning from overseas or to compete for a company-named prize.

“It’s a changing but still philanthropic model,” says John Smith, Drake’s vice president for alumni and development.

Transactional opportunities—in which corporations purchase what he calls a package of benefits—are handled separately, through Shannon Cofield, senior adviser for external affairs in the Office of the President.

Drake’s planned Corporate Partners Program also will reward companies for support—with, say, waived fees on career fairs, discounts on academic programs for employees, discounted tickets for athletic and other events, and VIP seating at such events.

The catch is that “it’s not true philanthropy,” Cofield says. “I don’t want to say it’s fee for service, but ... you get something in return for it. This is more in the area of the university needing to diversify revenue.”

Separating these programs “is quite unusual,” says Donald Fellows, president and CEO of Marts & Lundy, a fundraising consultancy that does a lot of work in higher ed.

Corporate partners have certainly become interested in more holistic partnerships over the past decade, says Jane DiFalco Parker, vice president for development at Auburn University in Alabama.

“They’re trying to be increasingly strategic, which is understandable and sensible,” adds Parker, who is also president of the AU Foundation. “But it’s not a quid pro quo. If the benefits are more contractual, if it’s outcome-driven, that negates a ‘donation.’ ”

Individual giving: Recognition conversation

Individuals and couples who have made fortunes in industry rarely seek the sorts of payback that corporate giving can entail.

Last summer, alumnus Barron Collier and his wife, Dana, gave $10.85 million to the University of South Florida for a student success center at the Muma College of Business. “When we made the proposal, the naming opportunity was part of it,” says the school’s dean, Moez Limayem. “It was a legacy for the family.”

But not just a legacy. A long cultivation period revealed a passion for career preparation—especially for first-generation college students. The Colliers got access to talk to students helped by scholarships the couple had funded previously.

Given the Colliers’ fortune—a grandfather developed much of southwest Florida—many nonprofits had sought donations from them. “What set us apart is a clear, compelling interest” in common, says Limayem. “They saw that we were not faking an interest in students and changing lives.”

In April 2015, Auburn announced that 1957 alumni John Brown and Rosemary Kopel Brown were giving $57 million for a new performing arts center and a student achievement center within the engineering school. “Donor recognition was a big part of the conversation,” says Parker of the process that led to the gift.

The Brown-Kopel Engineering Student Achievement Center was named for both donors, and naming rights for the future arts center are reserved for them, she says.

The Auburn board of trustees must approve all such names. A former CEO of Stryker Corp., John Brown was the first person named to AU’s Entrepreneur Hall of Fame in April, but “as an extraordinarily successful businessman, chances are pretty good he would have received that whether or not this gift worked out,” Parker says.

Mike and Marian Ilitch’s $40 million gift to Wayne State University for a new business school came not from alumni but from previous donors well known for boosting downtown Detroit. The gift includes $35 million for the building, use of the land at $1 a year and a $5 million endowment.

The couple founded Little Caesars in 1959. So—will the new complex serve that brand of pizza? No discussions on that one to date, laughs Chacona Johnson, foundation president/vice president for university development and alumni affairs.

In fact, even the business-school vision wasn’t a direct discussion at first; it was a hopeful sentiment the couple heard President M. Roy Wilson mention to a group.

Wayne State doesn’t award honorary degrees based on financial contributions (only for people with distinguished accomplishments throughout their lifetime), so that wasn’t a consideration. But given the Ilitchs’ sports and entertainment interests—the family owns two minor-league sports teams, Olympia Entertainment and a casino hotel—the school has plans to build a sport and entertainment management program.

“Donors and family foundations are becoming more specific in what they like and a lot more specific in how [gifts] will be used,” says Robert Sevier, senior vice president of strategy at Stamats, a higher ed marketing firm.

Donors also want more accountability than in the past, adds Fellows of Marts & Lundy. And in cases where donors want to be too involved managing funds, there may be a more philanthropic intent and a lack of real understanding about how campuses operate. For both ethical and legal reasons, universities have to say no, he adds.

And what about those who have a goal not necessarily shared by the university? “At major universities, there’s so much going on that there’s usually something to compromise on,” says Parker at Auburn.

That happened at the University of South Florida, where doctors Kiran and Pallavi Patel envisioned a global, interdisciplinary focus that hadn’t formally been part of the university’s strategic planning. Campus officials “wanted to go in that direction, but the donors’ wish made it practical,” says Joel Momberg, CEO of the USF Foundation.

An initial $12 million started a program, which further funds eventually grew into the Patel College of Global Sustainability.

And last fall at Boise State, a donor suggested $1 million for several sculptures depicting lessons in civil rights and discourse.

“It wasn’t on our master plan, but something not unlike it had come up,” says Kustra. “So we found a way to marry his idea and our idea. ... We concluded that when parents and high school students visit, how impressive it would be to see how leaders confronted and overcame obstacles like that.”

Ellen Ryan is a Rockville, Maryland-based writer whose focus areas include institutional advancement.

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