University Foundations in the United States: Development ...

[Pages:12]Research Report #35 September 2017

University Foundations in the United States: Development, Current Status, and Challenges

Blair Donner Chien-Chung Huang

University foundations have been playing an increasingly important role in the development of higher education in the United States since 1970s. Despite the contribution, there is not much information on the issue. This study aims to fill the gap by reviewing historical development and current status of university foundations, conducting a case study on function of a university foundation, and demonstrating challenges of the university foundations may face. The results show that university foundations provide timing-need resource to the universities, particularly for public universities that face substantial budget cut in recent years. However, universities foundations face challenges, mainly on the transparency and accountability issues, that may affect development of university foundations in the United States.

Keywords: Univer sity Foundation, United States, Tr anspar ency, Accountability, Donation, Grants

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Introduction

tions (Schaeffer, 2015). Moreover, the but as the demand for education ex-

University or College Foundations majority of public colleges and univer- panded throughout the twentieth cen-

(hereafter university foundation), are sities are strained by a lack of neces- tury, educational research and scien-

institutionally related foundations and sary resources and an insufficiently

tific pursuits became more and more

nonprofit organizations that support small alumni base to successfully co- standard (National Research Council,

the mission of a university through

operate with a university foundation. 1995). In the early 1960s, it was still not

fundraising and managing private

Accordingly, the purpose of this paper a common practice for public colleges

support. About two-thirds of universi- is to examine the development of uni- and universities to rely on private sup-

ty foundations are responsible for

versity foundations as well as the chal- port, and state funding consisted of

managing, investing, and soliciting

lenges they face. The paper begins

80% of operational budgets for the ma-

private support while the remaining with a brief historical background out- jority these institutions (Bass, 2010, p.

one-third of university foundations

lining the development of institution- 18). By 1977, however, private support

solely manage and invest private sup- ally related foundations in the United began to gain traction; public institu-

port (Council for Advancement and States from the late 1800s until the pre- tions of higher education obtained 25%

Support of Education, 2014). Although sent day. Following this is a case study of private donations to all bodies of

the specific roles and responsibilities of exhibiting Rutgers University Founda- higher education. In 1987, this number

the leadership board of a university tion, a discussion section, and a chal- rose to 34%, by 1997 it equated 42%,

foundation varies from institution to lenges section. Private colleges and

and finally by 2007 46% of all private

institution, an important characteristic universities are excluded from this

donations were directed toward public

of a university foundations is that its analysis because they are not subject to colleges and universities (Bass, 2010, p.

leaders share a close relationship with state laws in the same ways as public 18).

the affiliated university's governing colleges and universities (Cady, 2005;

The first wave of fundraising

board (Cady, 2005). Ever since the

National Committee for Institutionally among the community of those in-

1970s, in which an influx of baby

Related Foundations, 2014).

volved in higher education arose in the

boomer generation students enrolled Historical Development

1970s. At that time, the baby boomer

in higher education, establishing a uni-

Since the establishment of Harvard generation had just reached college

versity foundation has become an in- University in 1636, American higher enrollment age, which caused the

creasingly popular method of manag- education has had a strong tradition of number of college students in the U.S.

ing private funds (Bass, 2010; Campos philanthropy and private donations to steadily proliferate. Although the

2015). Unlike when private funds are (Chan, 2016). Public universities and inflation-adjusted aggregate dollar

collected by a public college or univer- colleges, on the other hand, evolved amounts invested in higher education

sity, university foundations have the out of the land grant college system has increased along with the number

ability to protect private donor identi- practice. Although some public univer- of enrolled students, several complex

ty, allocate funds in tandem with the sities already existed in certain states, factors have kept the costs of higher

donor's intent, invest in riskier assets, like University of Georgia (1785) and education repeatedly rising above in-

and set up research institutions or

University of North Carolina (1789), flation since the 1980s (Campos, 2015;

scholarships that appeal to specific

the number of institutions of higher Conroy, et al., 2015; Ehrenberg, 2002).

ideas or minority rights (Cady, 2005; education greatly expanded within the One of these factors is the increasingly

Council for Advancement and Support United States during the late 1800s,

competitive and selective nature of

of Education, 2014; Schaeffer, 2014). and especially after the passage of the academic administrators. Selectivity is

Despite the clear needs for univer- Morill Act of 1862 ("220 Years of Histo- necessary in order to compete with

sity foundations, challenges remain in ry", n.d.; National Research Council, other colleges and universities. As

determining their roles. In the past, for 1995; "History of UGA, 2011). Under such, administrators must allocate uni-

instance, power conflicts have arisen the provisions of the Morill Act, states versity resources in ways that improve

between a university and its founda- could gain and sell public land for a all facets of the university (classes, fac-

tion (Cady, 2005). There have also been profit as long as the sale proceeds were ulty, facilities, etc.) while sustaining

cases of overwhelmingly affluent do- used to establish a minimum of one the steadily rising influx of students

nors attempting to influence the agen- college. Many of these colleges were (Ehrenberg, 2002; Campos 2015). To

da of a public college's or university's originally intended to teach subjects put this in perspective consider that

curriculum through expansive dona- related to agriculture or mechanics, between 1965 and 2014 the number of

students in public universities rose

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from 3.4 million to 14.6 million

therefore solicit private donations to of the university foundation budget

(Statista, 2014). Instead of cutting back supplement inadequate public funds, has been kept stable at $1.9 million

on program budget or faculty budget, especially inadequate state funds, in (Flahaven, 2009, p. 10). The data im-

which are actions that risk lowering order to keep up with the higher de- plies that the wealthier foundations

school rankings and discouraging the mands for a college experience

have not been affected so much by the

recruitment of experienced staff, ad- (Applegate, 2012; Conroy, et al., 2015). recent financial crisis whereas the op-

ministrators are often left with no

Soliciting private fundraising is erating budgets of smaller sized insti-

choice but to raise tuition rates

clearly critical to the survival of a pub- tutionally related foundations have

(Ehrenberg, 2002). Furthermore, at

lic college or university, and institu- been unable to grow or have shrunk.

public institutions political bodies of- tionally related foundations are help- According to a Council for Aid to Edu-

ten have decision making power over ing ensure this is achieved. The Great cation survey conducted in 2012, that

tuition and funding levels, leaving ad- Recession of 2008, however, left a det- is four years after the recession, chari-

ministrators again with no choice but rimental impact on private giving;

table contributions to both public and

to raise tuition to compensate for state public institutions of higher education private universities have been increas-

budget cuts (Ehrenberg, 2002).

have been receiving approximately ing. The public institutions UCLA

As a result, from the 1970s on-

20% less per student from private do- (increase of $400 million), University

wards, the scope of the responsibilities nations than they had previously been of Texas at Austin (increase of $350

of university foundations in public

receiving (Tugend, 2016; Campos,

million), and University of Washing-

education has been expanding. By

2015). In 2009, a survey of 90 universi- ton (increase of $300 million) rank

1997, a survey of 198 public institu- ty foundations conducted by the

among the top 20 institutions who

tions found that 88% of the surveyed Council for Advancement and Support have secured the largest amount of

institutions had a university founda- of Education (CASE) shed further light private funding (Applegate, 2012). De-

tion (Bass, 2010, p. 18). As of 2016, it into the current trends of public colleg- spite the overall increases in university

has been found that of the 72,000 foun- es and universities that use founda- foundation endowments, smaller pub-

dations established in the United

tions to help allocate funds. According lic schools, and especially community

States, over half of all community and to the survey results, most university colleges, still struggle to solicit private

corporate foundations were created in foundations define their relationship donations.

order to have some sort of influence on with their affiliated public college or Current Status

higher education (Chen, 2016, p. 5). university as interdependent. In 2009,

University foundations support

Moreover, private giving to higher

the most common way for an institu- both public and private colleges and

education has been continuously ris- tionally related foundation to bolster a universities of all sizes, from institu-

ing, as in 2014 a total of $37 billion was public college or university was by

tions as local as community colleges to

given to both private and public col- directing the fundraising processes. By internationally recognized research

leges and universities, that is a 10% contrast, in 2006 the institutionally re- universities. As such, the 2015 data

increase from 2012 (Chen, 2016, p. 5). lated foundation mostly played only a book survey on university foundations

Overall state funding for higher educa- supporting role in the university-

published by the Council for Advance-

tion meanwhile has decreased and fed- directed or college-directed fundrais- ment and Support of Education in 2017

eral funding has increased (Campos, ing endeavors (Flahaven, 2009, p. 7). interviewed 103 representative univer-

2015; Leachman, et al., 2016). From

Changes like this suggest that univer- sity foundations affiliated with public

2008 until 2013, for example, federal sity foundations are increasingly tak- institutions over a course of five years.

funding for Pell Grant programs and ing a leadership role in the fundraising Of the university foundation survey

veterans' education benefits rose in

processes of public colleges and uni- participants, 59.2% were affiliated with

real terms by 72% ($13.2 billion) and versities.

research and doctoral institutions,

22.5% ($8.4 billion) respectively. State

The CASE survey also indicated 17.1% were affiliated with master's

sponsored general-purpose funds on that as a result of the economic reces- institutions, 18.2% are community col-

the other hand fell by 21% ($14.1 bil- sion in 2008, the budgets of university leges, and 5.6% belonged to other insti-

lion) during this time (Conroy, et al., foundations have declined in value. In tutions such as specialty and trade

2015). Additionally, between 2008 and fact, while the average size of the uni- schools (Bakerman, 2017). Within the

2013 the number of full time equiva- versity foundation budget has approx- past five years, staff size for these rep-

lent students rose by 8% (1.2 million) imately risen from $6.9 million in 2008 resentative foundations have increased

(Conroy, et al., 2015). Public schools to $7.4 million in 2010 the median size

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by 58.3% and development staff size

According to a survey of 805 U.S. official land-grant institution per the

has increased by 81.8% (Bakerman,

colleges and universities by the Na- Morill Act of 1862 (Rutgers College

2017). Development expenses, ex-

tional Association of College and Uni- Trustees, 2010; National Research

pressed as a percentage of overall ex- versity Business Officers, public and Council, 1995). Between the years 1945

penses, had also increased simultane- private colleges and universities con- and 1956, Rutgers was officially desig-

ously by approximately 3%

tinue to seek ways to increase their

nated as a New Jersey public institu-

(Bakerman, 2017). The survey results endowment even though the average tion, that is The State University of

imply that as the need for private

return on endowments during 2016 New Jersey (Rutgers Through the

funding has intensified within recent was -1.9% (Edmonds, et al., 2017, p.1). Years, 2016). In 2016, Rutgers Universi-

years, so has the need for well-

Most public colleges and universities ty hosted over 68,000 students and fac-

developed university foundations. As do not enjoy a sizable endowment, and ulty and spread over three campuses

a greater number of Americans enroll only 33% of the top 100 colleges and throughout New Jersey in the cities of

in higher education, it can be expected universities ranked by largest endow- Camden, Newark, and New Bruns-

that these trends will continue. Later, ment were public (American Council wick (Rutgers Through the Years,

through the Rutgers University Foun- on Education, 2014, p. 9). Of the 805 2016). The associated Rutgers Univer-

dation case study, an example of such U.S. colleges and universities sur-

sity Foundation was created in 1973,

expansion will be presented.

veyed, asset classes with highest re- the same decade in which public col-

During the early twentieth centu- turns included fixed income assets

leges and universities began to serious-

ry, the most common endowments

(3.6%) and short term securities (0.2%) ly campaign for private donations

gifted to universities took the form of whereas asset classes with the lowest (Rutgers University Foundation, n.d.-

real estate. Now that the system of uni- returns included non-U.S. equities (- a; Chen, 2016). The mission of Rutgers

versity foundations has evolved, cur- 7.8%) and alternative strategy invest- University Foundation is to, "advance

rent endowment assets also include ments (-1.4%) (Edmonds, et al., 2017, p. Rutgers' pursuit of excellence in edu-

commodities and private equity, and 2). In considering a longer term per- cation, research, and public service" by

even more recently venture capital, spective of the endowment data, ten "providing the bridge between donors

commercial real estate, and foreign

year returns as of 2016 for the 805 sur- and the academic programs and facul-

securities (American Council on Edu- veyed colleges and universities aver- ty, as well as students" (GuideStar,

cation, 2014, p. 7). Accordingly, the

aged 5%, slightly below the returns

n.d.). All money intended to be used

modern endowment is a conglomerate targets of 7% or 8% (Edmonds, et al, by Rutgers University, whether the gift

of different funds that usually aims to 2017, p. 4). Furthermore, the average originally be for athletics, a specific

achieve an 8% return on investment spending rate of endowment per the school, or a scholarship, is accordingly

each year. Each fund comes with

surveyed colleges and universities was collected first by the Rutgers Universi-

unique stipulation per the donator's 4.3%. Surveyed institutions also shared ty Foundation and then allocated to

decision (American Council on Educa- that endowment spending consists of the university's endeavors (Heyboer

tion, 2014, p. 10).

an average of 9.7% of their institutional and Sherman, 2014).

Currently, there are two main

operation budget (Edmonds, et al.,

During the fiscal year of 2016 to

types of private donations which con- 2017 p. 7, 8).

2017, the projected operating budget

tribute to a university's endowment; a Case Study

and total revenue of Rutgers Universi-

gift for which the principal may not be Rutgers University

spent and a gift for which the principle

Rutgers University, the State Uni-

may be spent. In the former case, it is versity of New Jersey, is the state's

expected that the principal amount

public flagship university. Chartered

gifted by the private donor will be re- in 1766 as the Queen's College in hon-

invested for a profit. In the second

or of King George III's wife, the uni-

case, a private donor's gift is classified versity became affiliated with the

as a funds functioning endowment. Dutch Reformed Church upon the

Regardless of the type of gift the pri- signing of a second charter in 1782.

vate donor selected, he or she has the The institution was renamed Rutgers

right to stipulate the cause for which College in 1825 upon the donation of

the donation is spent (American Coun- Colonel Henry Rutgers, and was an

cil on Education, 2014, p. 4).

ty was calculated to be approximately $3.9 billion. The total expenditure of Rutgers University during this fiscal year was likewise calculated to be a number slightly less than the $3.9 billion budget and revenue figure (Rutgers University, 2016). Student tuition and fees consisted of 29.3% of the projected operating budget and total revenue, state support consisted of approximately 20.3%, and foundation support consisted approximately 2% (Rutgers University, 2016). The

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amount of federal support is unclear as cus on soliciting financial help from but also recruit a team of donors as

categories on the 2017 budget such as wealthy elite and major corporations, well (Sargeant, 2016). As of June 2016,

grant and contract revenue might be the Rutgers University Foundation has the Rutgers University Foundation has

derived from both the federal govern- also invested in student labor to solicit attracted 1,168 donors to make five

ment and other parties such as corpo- smaller contributions. As part of the $1 year pledges and has raised $55 mil-

rations. While state support comprises billion fundraising campaign launched lion (Sargeant, 2016).

of one-fifth of Rutgers University's

in 2010 entitled "Our Rutgers, Our Fu-

Even with advancements in the

operating budget, the amount of finan- ture", students have been hired to

university's fundraising strategies that

cial support New Jersey allocates to- work in a rented call center and con- successfully solicit donations, the Rut-

wards its flagship university has been tact alumni, students, and their fami- gers University Foundation still faces

dwindling every year since the Great lies for contributions (Hall, 2015;

many challenges. Fortunately for the

Recession (Rutgers University, 2016; Heyboer and Sherman, 2014). Ulti-

Rutgers University community, there

Rutgers University Foundation, n.d.- mately, "Our Rutgers, Our Future" have been no known public or legal

a). In 2008, New Jersey appropriations was more than successful; a total of disputes between the university and

for Rutgers University equated ap-

$1.03 billion was raised instead of just its affiliated foundation. However,

proximately $340 million whereas by $1 billion (Merrill, 2015).

since the Rutgers University did not

2010 it equated approximately $290

A Star-Ledger analysis of Rutgers fundraise as actively as other universi-

million and by 2013 $260 million,

University Foundation's records re- ty foundations affiliated with institu-

which was lower than the amount in veals that the vast majority of dona- tions of public higher education, its

1995, as shown in Figure 1 (Rutgers tions go to research and academia.

endowment size is much lower in

University, n.d.-a). As the amount of Within the past ten years, for instance, comparison to that of other public in-

state support Rutgers University re- the Rutgers National Institute for Early stitutions of higher education. In fact,

ceives dwindles, the level of their en- Education Research has received $33.8 it is especially low for a public univer-

dowment is ever more critical for

million, the Charles and Johanna

sity as large as Rutgers University. The

funding the university's student aid, Busch Memorial Fund for biomedical Rutgers University endowment as of

research, teaching programs, and tech- research has received $24.8 million, 2016 was worth approximately $1.07

nologies as well as in sustaining expe- and the Rutgers Fine Arts department billion (Rutgers University Founda-

rienced faculty and supporting univer- has received $18.8 million (Heyboer tion, 2017). Approximately 60% of Rut-

sity facilities (libraries, laboratories, and Sherman, 2014). The most gener- gers University's endowments are re-

classrooms, etc.) (Rutgers University, ous corporate donors include the Rob- stricted, mostly towards special schol-

n.d.-b).

ert Wood Johnson Foundation which arship funds (Rutgers University, n.d.-

Nevin Kessler, President of Rut- gave $84 million, the Pew Charitable b). The Rutgers University Foundation

gers University Foundation, indicated Trusts which gave $33.6 million, and also may not exceed a spending rate of

that, even though the Rutgers Univer- Novartis Pharmaceuticals which gave 4.3%, a number slightly below the av-

sity Foundation had been in existence $14.6 million (Heyboer and Sherman, erage number reported by the National

since the early 1970s, Rutgers Universi- 2014). Now that Rutgers that has en- Association of College and University

ty did not seriously invest resources in tered the Big Ten Conference, there Business Officers survey of 805 colleg-

fundraising until the middle of the

have also been increased efforts by the es and universities (Rutgers' Endow-

1990s (Heyboer and Sherman, 2014). university to solicit donations from ment 2017).

Since President Kessler's leadership in donors who support university sports.

While this number may seem im-

2013, the Rutgers University Founda- As part of The Big Ten Build program, pressive, consider that in 2016 other

tion has undertaken a more active role the Rutgers University Foundation

Big Ten schools that are similar in size

in contacting alumni and potential pri- aims to attract 10,000 donors who will and scope to Rutgers University boast

vate donors. Before Kessler arrived, for pledge donations for five years. One much higher endowments. The Uni-

instance, top donors had to reach out successful sub-initiative of the Big Ten versity of Michigan, for instance, has

on their own behalf to the Rutgers

Build program has been the "Captains an endowment of $9.7 billion and the

community, like U.S. Trust President Program" of 2016 which is entirely

University of Wisconsin Foundation

Keith Banks who donated approxi-

organized by the Rutgers University has an endowment of $2.4 billion

mately $300,000 between 2005 and

Foundation and aims to raise $100 mil- (National Association of College and

2015 on his own initiative (Hall, 2015). lion by finding 100 leaders to not only University Business Officers and Com-

While Rutgers University officials fo- donate at regular monthly intervals, monfund Institute, 2017). Although

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Rutgers University's endowment rank- financing methods such as raising tui- ing also imposes restrictions on the

ings rose from 102nd place in 2013 to tion prices and, of course, leveraging asset allocation freedoms of public col-

86th place in 2016, the university still university foundations (Campos,

leges and universities. States often re-

has much to develop before it can

2015).

quire, for instance, that public funds

catch up to its Big Ten counterparts

Given the critical importance of are allocated towards financial invest-

(Rutgers' Endowment, 2017; National private donations to the financial

ments that are less risky with lower

Association of College and University health of a public college or university, returns, which severely limits an insti-

Business Officers and Commonfund it is expected that the ways in which tution's ability to achieve an educa-

Institute, 2017). By some estimates, if endowments with restricted principals tional vision (National Committee for

University of Michigan froze its cur- are invested will expand. Over the last Institutionally Related Foundations,

rent endowment size, it would still

century, endowment assets have

2014). In a similar way, although a uni-

take Rutgers University twenty years evolved from land grants to commodi- versity might experience greater free-

to match its own endowment to that of ties and private equity to venture capi- dom in investing and spending private

University of Michigan (Heyboer and tal, commercial real estate, and foreign donations, stipulations on private do-

Sherman, 2014). The lesson here is that securities (American Council on Edu- nations have potential to prevent the

public colleges and universities that cation, 2014, p. 7). As the trend in favor leadership boards of public colleges

started to solicit private donations ear- of supporting university foundations and universities from fully directing

lier have an advantage.

continues, it is expected that institu- the development of the school's curric-

Discussion

tions managing the growth and invest- ulums and research facilities among

Public colleges and universities, ment of privately donated funds will other facets (Schaeffer, 2015). Never-

born out of a land grant system, were continue to both experiment with and theless, if leadership of a public college

originally established to train citizens seek out new financial products. More- or university neglects the importance

for jobs in agricultural and mechanics. over, although the past decade's Great of soliciting private donations, then it

For many American families during Recession impacted private giving

is likely that they will be unable to

the late nineteenth and early twentieth patterns and endowment values, espe- match the financial capabilities of their

centuries, such training through higher cially for smaller public colleges and competitors. After all, if the Rutgers

education was more of an auxiliary

universities, post-recession reports

University Foundation leadership had

option rather than an expected next strongly indicate that private fundrais- begun to emphasize private fundrais-

step (National Research Council, 1995). ing for institutions of higher education ing in the 1970s rather than the 1990s,

The influx of baby boomer generation will continue to expand (Applegate, then their endowment size would not

students eager to be trained in higher 2012; Flahaven, 2009, p. 10). Lesser

be so behind that of other similar pub-

skilled jobs toward the mid-late twen- known public colleges and universities lic state schools like University of

tieth century was thus a contributing with smaller student body sizes, how- Michigan (Heyboer and Sherman,

factor to the financial challenges faced ever, are not as likely to build a strong 2014). Particularly collecting private

by public colleges and universities

fundraising program. So while larger donations through a university foun-

along with political pressures and an and more renowned public colleges dation is advantageous in that institu-

increasingly selective academic culture and universities might be able to uti- tionally related foundations are not

(Bass, 2010; Campos, 2015; Ehrenberg, lize private donations for achieving required to publish private donor

2002). Although public funding in real long term strategic visions, the public identities. This enables their affiliated

terms for public institutions of higher colleges and universities that lack re- public college or university to attract a

education has increased, the allocated sources and connections (which are the broader range of private donors, even

funds are not enough to support the majority) will find relying on private those from out of state (Schaeffer,

number of students. In particular state donations through a university foun- 2015).

schools, like Rutgers University, who dation is not reliable (Mitchell, 2015). Present Challenges

are heavily dependent on state appro-

Without public funds for higher

Unclear provisions in the contract

priations, have suffered due to state education on the federal and state lev- between public colleges and universi-

budget cuts (Rutgers University Foun- el, the growth of public colleges and ties and their affiliated foundations can

dation, n.d.-b; Conroy, et al, 2015). Un- universities in the United States as

lead to major challenges. It is therefore

der this context, public universities

well as the higher educational oppor- very important that when establishing

and colleges are seeking alternative tunities for citizens will be limited. For an institutionally related foundation,

all of its benefits, however, state fund-

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the contract between the newly estab- tions of higher education. A private versities lack the resources, personnel,

lished organization and the university donor with enough capital has poten- and alumni base to launch successful

is detail-oriented and clear to all in- tial to influence the curriculum and fundraising campaigns (Mitchell,

volved parties, otherwise issues over teaching agenda of a public college or 2015). Under the leadership of Presi-

contract language may arise. Blurred university. Billionaires David and

dent Nevin Kessler, the Rutgers Uni-

transparency requirements in a con- Charles Koch, for instance, are re-

versity Foundation might have been

tract are one contributing factor to le- nowned for making large donations able to greatly advance its ability to

gal disputes over institutional identity which promote conservative causes. In fundraise effectively, but it is also im-

and power. For instance, during the the past, they have actively funded

portant to remember that Rutgers Uni-

early 2000s the Clark College in Van- academic research and programs to versity has a very large alumni base

couver, Washington engaged with its spread libertarian ideologies

and ample facilities among other re-

institutionally related foundation

(Schaeffer, 2015). At Kansas Universi- sources that might have contributed to

Clark College Foundation (CCF) in

ty, infiltration of the Koch brothers' the success of its recent campaigns

heated debate over the details of the ideologies in the Center for Applied (Heyboer and Sherman, 2014). In the

contract language between them

Economics was met with pushback

United States, community colleges are

(Cady, 2005). Clark College demanded (Shulman, 2015). A student-run organ- especially at risk for experiencing diffi-

full access to the CCF's records, espe- ization called Students for a Sustaina- culties in soliciting private donations.

cially since the CCF had acquired a ble Future accused the Kansas Univer- For example, LaGuardia Community

substantial amount of assets ($59 mil- sity's foundation as utilizing the Koch College hosts 50,000 students (nearly

lion) and since the CCF president's

brothers' resources to politically influ- as much as Rutgers), but approximate-

salary was higher than that of Clark ence the economic center's curriculum. ly 66% of these students come from

College's president. In turn, the CCF In short, the Kansas University's foun- families that earn $25,000 a year or

refused to share their financial records, dation was sued by the student group less. The largest donation LaGuardia

asserting its own authority, its respon- for access to its nonprofit records, and Community College had ever received

sibility to protect private donor identi- countersued by Economics Depart- since its establishment over 45 years

ty, and the fact that the contract did ment Director Art Hall who demanded ago was a $100,000 donation from Ar-

not require such transparency (Cady, that the records be kept private

thur Stamm, husband of LaGuardia

2005). At the conclusion of the dispute, (Schaeffer, 2015). On August 28, 2015, alumni Marilyn Stamm (Bellafante,

the CCF refused to modify the contract the court settled that University of

2014). In community colleges and

language and moved its office to a

Kansas would publish a select number smaller public schools, the chances of

nearby county property (Cady, 2005). of financial documents and emails re- producing wealthy alumni or attract-

The CCF incident shows the im-

lated to the Koch brothers' donation ing students from affluent families are

portance of investing time in clearly (Shulman, 2015). Indeed, from the per- slimmer than that of public institutions

outlining the transparency require- spective of a public college or universi- for higher education with an estab-

ments of the contract between a public ty, accepting private donations and lished name. Moreover, students who

institution of higher education and its using them in accordance with the do- complete an associate's degree at com-

institutionally related foundation. If nor's wishes is a unique balancing act. munity college and then transfer to

the leadership of Clark College fore- On one hand, public institutions of

complete a bachelor's degree at a four-

saw the importance of clearly defined higher education want to encourage year institution often feel a closer con-

transparency requirements with the donations by giving private donors nection with the four-year institution

CCF when the contract was first draft- flexibility. On the other hand, as seen rather than the community college.

ed, then it is possible that the dispute in the Kansas University example, pri- They are therefore more likely to do-

between Clark College and the CCF vate donors have potential to dispro- nate to the four-year institution, which

could have been avoided, or at least portionally encourage one ideology further lowers the chances for commu-

alleviated. Both parties would have over another in a school's curriculum. nity colleges like LaGuardia Commu-

had clear expectations as to which fi-

Beyond this, building a culture

nity College to solicit private dona-

nancial reports and documents are

among alumni and current students tions (Bellafante, 2014).

eligible for sharing and which are private.

Stipulations on private donations present another challenge for institu-

that value gifting the college or univer- Conclusion

sity with private donations is a chal-

Ultimately, it is unlikely that the

lenging task. As explored in previous need for public colleges and universi-

sections, most public colleges and uni-

7

ties to solicit private donations will disappear as well as the need for university foundations. Although overall public funding in inflation-adjusted terms has increased, the funding per student has reduced over time. Public colleges and universities have realized that establishing university foundations are necessary to solicit enough private funds that meet the rising demands for a higher education (Campos, 2015; Leachman, et al, 2016; Bass 2010). While university foundations are advantageous in that they protect donor identity and provide more flexibility for donated capital, they are also limited in that donations are subject to the stipulations of the private donor (National Committee for Institutionally Related Foundations, 2014). Moreover, public universities often must engage in a power balancing act with university foundations, unless the contract terms and transparency requirements between each institution are clearly outlined (Cady, 2005). If a public university is interested in establishing or developing an already existing institutionally related foundation, it is certainly important to be aware of these components. As university foundations continue to bolster university operations, it can be expected for there to be progress in terms of their investment patterns, fundraising strategies, and especially in terms of managing their relationship with the associated college or university.

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