Give to Your Alma Mater? (Part 2 of 3)
The discerning donor must ask herself: Would I rather my gift of $10,000 rescued $10,000 worth of animals, or promoted $12,000 worth of education (minus a small sum to pay the man who found my alma mater an extra two grand)? Is there a way for a donor to be sure her gift does “apparent good” within her alma mater? If she is going to give, can she make sure her dollars are used the way she wants?
Earmarking donations demands that a university’s office of development strike a delicate balance. For its Senior Class Gift Campaign, for example, Yale’s goal is 100% participation, with a priority on unrestricted gifts. Seniors can earmark their donation no matter what its size, but Class Gift Officers encourage students to give without restriction, the rationale being that Yale’s investment officers know better where those dollars are needed than the individual does. Although the University demonstrates some movement toward customization, with the option to earmark even the smallest of gifts, the architecture still favors “generic giving.”
When donors give money to Yale, they are essentially purchasing a product. In a simplistic financial model, the “customer” always wants choice, and the “company” wants to push a single option. Competition drives companies to expand the menu. In this model of University as “company,” however, the ivory tower faces little competition; each donor only has one or two alma maters. Without competition, how responsive must the University be to its donors’ desires?
In the era of the discerning donor, competition comes from other sources. Though myriad pressures encourage the alumna to give back, she is not required to do so. The University must keep her happy to maintain her loyalty. Although the question “to give or not to give” is a subjective one for the donor, it’s a question for which every University must have a well-reasoned answer; it’s the question that keeps every University on its toes. With the globalization of giving, the ivory tower faces competition from outside the miniscule sphere of higher education. The University must make sure Stein doesn’t give all his philanthropic dollars to animal rescue. And that means options; that means tangible results.
Joan O’Neill, Yale’s Associate Vice President for Development says that universities have always felt competition from external philanthropy, especially because “Yale alumni have always been active in their communities.” She continues, “Now, those communities are on a global scale instead of a regional scale.” The “Yale Tomorrow” campaign encourages alumni not to think of it as a competition; an alumna can give back to Yale and give back to her community, either by supporting the community through Yale (ex: financial aid), or just by keeping Yale in her cycle of giving, supporting Old Blue one year, and animal rescue the next.
Ms. O’Neill says that she has recently noticed the development of a more “sophisticated donor”, someone who, “reads Yale’s financial statement, and wants to understand how her gift is making a difference.” For most donations, of course, it’s easier for the development office to “tell a story about how that money is used in aggregate.”
When an alum gives back to Yale, the development office allows her to restrict her gift no matter what the size. According to Ms. O’Neill, the problem with earmarking a small gift is that “it costs money to direct a restricted gift,” so such a gift may be doing less “direct good” than the alumna desires. Ms. O’Neill explains, “Unrestricted gifts can be put to use most immediately, pumped right into the operating budget. Every University depends on these dollars for day-to-day functioning.” Donors may not be excited about heating the library, for example, but without those unrestricted operating dollars, library learning can’t happen. The “good” of such a gift is less direct, but still necessary to keep education on course. An unrestricted gift is like a well-executed assist on the soccer field, perhaps less glamorous than the goal-scoring kick, but the team can’t win without it.
From a cost-benefit perspective, it only makes sense for a donor to restrict her gift if it is above a certain amount. For Yale, that dollar amount is $100,000. At that level, an alumna can establish an individually-named Endowed Fund. Such a fund, of course, requires resources to manage it, and only at the $100,000 level do the benefits begin to outweigh the costs. At $5 million, donors can get really involved, establishing what Yale calls a donor-advised fund.” Half of the money stays with Yale, but the donor can ask that Yale direct the other half (of both the principle and the income) to any other charity of her choosing. At this level, Ms. O’Neill explains, giving to Yale and giving to the community really go hand-in-hand: Yale manages the money, earns it an income, and then lets the alumna direct the cash toward a non-Yale charity of her choice, be it local or international.
For those who want to restrict their donations, both Ms. O’Neill and Yale at large seem to encourage extremely specialized departmental giving. In explanation, Ms. O’Neill underscores the example previously put forth by James Dabney Miller of Yale Law School: many professional schools are significantly less endowed than Yale College (the Law School must find $10 million in alumni donations before it can open its doors each September). Ms. O’Neill emphasizes that for the “sophisticated donor” who wants to see the impact of her gift, the development office can more easily track a very specific gift than one with more general restrictions. “Let’s say there’s a $5,000 gift to women’s gymnastics,” O’Neill explains, “We can tell you exactly how that money was used, but for a general gift to the department of history, it’s harder to tell you where it went.”
When O’Neill explained her job to a colleague, he replied, “Oh I see, you guys are the ones who stoke the fire.” Keeping that fire alive and growing requires a complicated dance.
This is the first of a three-part series by Chad Callaghan, Special Projects Coordinator for PhilanthroMedia, Inc.
Posted at 1:36 AM, Apr 03, 2008 in Permalink | Comment