Running Head: THE STATE OF AFFAIRS FOR INSTITUTIONAL ADVANCEMENT

The State of Affairs for Institutional Advancement

Final Paper - CAHE 500
Aaron Carlson
Northern Illinois University
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THE STATE OF AFFAIRS FOR INSTITUTIONAL ADVANCEMENT

Introduction

Since the dawn of the boom in United States Higher Education, fundraising and donor

relations, known as advancement, has been an integral part of the growth and success of

American education institutions. Financial greats including Andrew Carnegie, Michael Quinlan,

and Warren Buffet have been some of advancements biggest customers. In 2013, donors gave

$34 billion to American colleges, the most ever raised in a single year (Rivard, 2014).

Advancement is “a strategic, integrated method of managing relationships to increase

understanding and support among an educational institution's key constituents, including alumni

and friends, government policy makers, the media, members of the community and philanthropic

entities of all types” (CASE, 2011). With today’s lean operating budgets and deep fiscal cuts to

state and federal support for public institutions, the importance of private dollars for institutional

success has never been greater. Institutional advancement must evolve and grow in order to

meet the increasing demands and economic strain being placed on institutions by the lack in

government funding.

History

Forms of advancement in American institutions stem back to European universities in the

twelfth-century. According to the Encyclopedia of Education (2002), at these institutions,

“founders were forced to approach potential donors for money and resources for college

operations. Wealthy individuals established endowments to support the universities of Paris,

Oxford, and Cambridge. The idea of the chief faculty member raising funds for the institution

was transferred to the early colonial American colleges”. Efforts at advancement were minimal

and usually done through a few, wealthy individuals. The beginning of advancement in colonial

America is debated, but most scholars agree it began at Harvard college in 1641, under the
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leadership of President Henry Dunster, who had an official job duty of “generating resources”.

According to Chan (2016), important philanthropists in U.S. history “(e.g., William Hibbens,

Hugh Peter, Thomas Weld, Elihu Yale) played a pivotal role in the creation of Harvard College”

(p. 4). Early philanthropic giving to institutions was more a networking and status tool than a

real mechanism to create change. Much of the private funds came from closer friends or business

partners of University administrators. Chan also notes, “philanthropy and fundraising for higher

education did not become an organized activity until the turn of the twentieth century when

educational fundraising became more professionalized through well-organized advancement and

development programs (Thelin & Trollinger, 2014)”. Alumni associations were first founded in

the 1820’s at the private institutions Williams College and Brown University. In 1897, an

alumni association was established at University of Michigan, the first at a public institution.

The phrase “development” was not popularized until the 1920’s when Northwestern University

in Evanston, Illinois became the first University to established a distinct department of

development and advancement.

The trend toward fundraising at private institutions continued, and saw fundraising enter

a new era when William Lawrence brought in over $2 million for Harvard at the turn of the

twentieth century. The popularity of fundraising at private institutions was due to their reliance

on private funding and the need to create large endowments to support future growth and

research (a source of funds that often had to make up for the lack of government funds). Kelly

(1998) describes how, "apart from a few exceptions related to annual giving, the first full-time

staff fundraisers did not appear on the scene until the late 1940's" (p. 149). The great expansion

of higher education from the 1920’s to WWII led to the need for specialty offices and fundraisers

who could raise the immense amount of money needed to sustain rapid growth and expansion of
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schools, programs, and campuses. This was especially true for private institutions, which did not

receive the ample amount of support and funding from federal and state governments. During

this time, many grant, research, and aid programs were established by the federal government to

support the education system, but it was often geared towards public institutions only. By 1970,

only 25% of reporting institutions had a centralized development function and office

(Brittingham & Pezzulo, p. 82).

Since the 1970’s, educational advancement has grown and evolved into what it is today.

The economic and energy crisis of the 1970’s, coupled with the economic shrinkage experienced

in the 1990’s, forced institutional budgets to tighten and for government support to drastically

decrease. For example, “in the mid 1980s, state funds represented approximately 35% of

university budget[s], whereas the current proportion is closer to 18%” (Brustmann, 2012).

Additionally, advancement divisions nationwide took a significant hit from the 2008 financial

crisis. Many institutions faced pressure to cut staff and scrap capital expansion plans to focus

efforts on core needs of the institution. Programs have rebounded a bit, but overall advancement

budgets, staff, and program expectations have been cut and a new, leaner way of fundraising is

the new way of operating in 2017.

Current Trends & Issues

According to data gathered from the Integrated Postsecondary Education Data System, as

recently as 2009, the amount of revenue that flows in via private funding sources accounts for

approximately 21 percent at private institutions and 4 percent at public institutions. While these

figures are small, they are growing each year and are on trend to continue to do so. One of the

most widely observed trends of twenty-first century giving has been funding tied to specific

schools, programs, or social causes. This is an increasingly popular trend in philanthropic

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giving, and therefore is a strategy institutions must implement to target and attract more funding.

A 2011 survey from the Council for Aid to Education’s Voluntary Support of Education found

that approximately 88 percent of gifts are restricted. (p. 6). Just as Harvard was the first

institution to engage in philanthropic advancement, it is also the institution which has received

the largest private gift to date by donor ($400 million donated by John Paulson to the School of

Engineering and Applied Sciences). His gift was to provide endowment, scholarships, and

research funding. Mr. Paulson’s gift to Harvard is just one of many in a category of targeted

gifts that are assigned to a specific school or programs. The list of large, targeted gifts also

includes Gerard L. Chan ($350 million to Harvard’s School of Public Health), and the William

and Flora Hewlett Foundation ($113 million to UC Berkley). Since 2006, “the Bill & Melinda

Gates Foundation, the country’s largest philanthropy with more $36 billion in assets, has spent

more than $472 million to remake U.S. higher education in hopes of pushing more students,

more quickly, toward graduation (Parry, Field, & Supiano, 2013). Specifically, the Gates

Foundation, whose vision is to help re-channel the public dollars that states spent into raising

college completion in an effort to lift more Americans out of poverty, has donated nearly $17

million to Jobs for the Future and $65 million to Next Generation Learning Challenges in hopes

for streamlining remedial classes in community colleges for needy students” (Chan, 2016).

Unique and specific gift recipients are where the large dollar amounts are being donated,

and these funds are often kept within the nation’s top-tier Universities. According to a 2017

Moody’s Investment Service study, these “mega-hauls” overwhelmingly favor the 40 richest

institutions, bringing in “an astounding 59% of all gift revenue in fiscal 2014”. Rising tuition

rates and debt levels have led some lawmakers, administrators, and students to question the

return on investment from higher education. Public-private partnerships have become an

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imperative for success in the competitive, cutthroat twenty-first century landscape. A solution to

the problem of rising costs and debt levels has been to focus on developing large, strategic

endowments. An endowment is a pool of gifted/donated money with the sole purpose of

investing it back into the institution to improve program quality, fund facility improvements,

endow department chairs, and support student scholarships. The Voluntary Support of Education

survey (VSE), sponsored by the Council for Aid to Education in 2000, reported that $8.3 billion

in gifts and grants were given to schools. In 2015, that number grew by 70%, leading to a 33

billion total, with just under half going to public institutions. According to the NACUBO-

Commonfund Study of Endowments, “endowments have become an increasingly important

component of public institution budgets, accounting for an average of 6.1 percent of operating

funds in 2015. The private money that comes in the door allows colleges and universities to do

more with less and to compete for students that otherwise have many options when considering

school choice”. According to Moody's Investment Service, campus buildings are getting older

and schools, especially small colleges, "continue to struggle to adequately invest in facilities and

equipment”. Enhancements and amenities that can make a school more marketable and valuable

to prospective students will help to increase application numbers, which means more students

and more tuition revenue.

Another contemporary issue facing advancement divisions is the conflict of interest that

can arise from the acceptance of donations from different corporations or organizations. For

example, the CEO of Nike, Phil Knight, donated $500 million to the University of Oregon for a

science and research school. While the funds will certainly be put to good use, a large donation

such as this one puts into questions the motives of the donor and how much control the donor

will have over the funds distribution and over the university as a whole. Critics of large gifts like
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these argue that the donor could exert immense influence over university policies, staffing,

branding, and most important, academic curriculum. Corporate gifts must be very strategic, well

planned, and the partnership with the external group must be strong, moral, and ethical. There is

no definitive answer to the questions surrounding corporate gifts, but institutions must tread

carefully if they choose to engage in this way.

Finally, an issue facing advancement that has grown in prominence over the past decade

is the reduction in staff dedicated to institutional advancement. Putting in place an effective and

experienced fundraising team is pivotal to the success of the division as a whole. Following the

recession in 2008, many institutions put in place hiring freezes and mandatory layoffs to reduce

costs. Personnel costs account for over half of most institutional spending budgets, so

departments not deemed necessary to the academic mission and function of the institution will

often face the deepest cuts in employment. Advancement has historically been a decentralized

division that encompasses fundraising, corporate partnership, marketing, communications, and

alumni relations. To combat the inflation that occurs from the decentralized employment

structure, Allen Consulting Group (2007) and Expert Group (2007) recommended “the creation

of a university foundation to handle and manage donations and trust arrangements, particularly

when greater university autonomy is not possible” (p. 14 & 44). Historically, many institutions

have had more decentralized advancement structure, so an institutional foundation, either

independently or internally staffed, could oversee fundraising drivers and strategic plan

leadership (Bass, 2016). Increasingly, foundations are getting respect as a viable and strategic

solution to reducing costs, staff size, and centralizing advancement operations. This is just one

of the many trends and issues that Vice Presidents for Advancement and University Presidents

will need to consider in the coming years.

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Recommendations & Implications

In Caboni (2017), the author reflects on the current state of advancement and the external

opinions that surround the industry moving forward:

“Advancement itself is not a core function of the academy; it neither teaches students nor

produces new knowledge. In business terms, all parts of advancement are staff functions

rather that line functions, something necessary to the function of the organization rather

than central to its mission…This alone may account for why the scholarly literature on it

is rather small compared to the literature on the student experience or academic careers”

(p. 4).

Since the 1980’s, state funding has decreased as a part of university budgets by 17%. That gap

needs to be filled, but tuition increases and staffing cuts will no longer provide a sustainable

means of increasing revenue. The most pertinent next step for advancement is to conduct

research and analysis on most effective practices, policies, and structures. Caboni (2014) reflects

on the metaphorical research drought that exists in the field when he writes, “a small but

dedicated cadre of scholars has dedicated itself to the study of advancement; however, the

majority of work continues to be produced by reflective practitioners rather than full-time

scholars” (8). Due to the fragmented and secretive nature of the industry, the field is fragmented

and many studies never get published. The research context and structure will vary based on

geographical location, rural/urban neighborhood, institutional history, 2/4-year standing, and

whether the school is a community, public, or private institution. Further, internal cultural

influences, including established traditions, history, culture, norms, sanctions, taboos, rituals,

rewards, and other aspects of organizational life (Cook & Lasher, 1996) can affect how

advancement needs to be executed and how research should be structured. Due to these
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fragments in the field, new and more formalized research that “bridges theory and practice is

vastly needed to understand the effects of giving on institutional types such as, Minority-Serving

Institutions (MSIs), religious institutions and community colleges, as well as specific units

within institutions such as, giving to athletic programs, in the emerging field of higher education

philanthropy (Drezner & Huehls, 2014). Additionally, while foundations have often provided

“stable and unrestricted funds to support scientific research (i.e., research grants), faculty

development (i.e., teaching and research), academic programs (i.e., new curricular) and

scholarships (e.g., Gates Millennium Scholars Program) since the great recession of 2008,

limited research have yet to examine the public purpose and value of philanthropy research in

higher education” (Proper & Caboni, 2014).

In practical terms, advancement divisions across the country can do two things

immediately to begin to address the issues they face from their shrinking budgets and increased

pressure to secure funding. First, institutions must be proactive. The days of repetitive alumni

events and mail solicitations are over. Increasingly, advancement needs to be digital, over social

media, and with specific purposes in mind. Micro fundraising is the future and is where donors

are statistically putting their dollars. Institutions must collaborate internally between

advancement, marketing, and various academic units to figure out how they can entice donors

and alumni to connect, emotionally and personally, with a specific social cause, group of

students, or school. Second, institutions must sell the importance of advancement divisions to

top university stakeholders. These include the board of trustees, department chairs, and the

university c-suite. Without buy in and engagement from internal partners, universities will not

be able to communicate externally with the purpose of attracting the attention of a donor.

Messaging, image, and timeline are of critical importance in a time of hyper-competition for
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dollars and resources. An institution that cuts staff and strips departments of their budgets will

not be set up to pitch, attract, and retain sustainable sources of private funding, which is

ultimately why these units have been in existence since the earliest years of our education

system.
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References

Allen Consulting Group. (2007). Philanthropy in the Higher Education System.

Bass, David. (2016). Partners in Advancement. Association of Governing Boards Trusteeship

Magazine.

Brittingham, Barbara., and Pezzullo, Thomas. 1990. The Campus Green: Fund Raising in Higher
Education. Washington, DC: George Washington University School of Education and
Human Development.

Brustman, Usula. (2012). The Gift of Giving: Philanthropy in the US Higher Education. Office
of Science and Technology Austria. Vol 3.

Caboni, Timothy. (2017). Institutional Advancement in Higher Education - Historical

Background, Areas of Institutional Advancement. Education Encyclopedia. Retrieved
from http://education.stateuniversity.com/pages/2088/Institutional-Advancement-in-
Higher-Education.html

Chan, Roy. (2016). Studying Philanthropy and Fundraising in the Field of Higher Education: A
Proposed Conceptual Model. 27. DOI: 10.4018/978-1-4666-9664-8.ch001.

Christensen, Clayton., & Eyring, Henry. (2012). The Innovative University: Changing the DNA
of Higher Education. Forum for the Future of Higher Education. Retrieved from
http://www.ncmeresource.org/lcbp/pdf/webinar1/The%20Innovative%20University-
Changing%20the%20DNA%20of%20Higher%20Education.pdf

Council for Advancement and Support of Education (CASE). 1994. CASE Campaign Standards:
Management and Reporting Standards for Educational Fund-Raising
Campaigns. Washington, DC: Council for Advancement and Support of Education.

Council for Advancement and Support of Education (CASE). 2011. What is “Advancement?”.
Washington, DC: Council for Advancement and Support of Education.

Drezner, D.N.; Huehls, H. Fundraising and Institutional Advancement: Theory, Practice, and
New Paradigms; Routledge: London, UK, 2014

Eaves-McLennan, Kristi. (2017). How Marketing and Institutional Advancement Should Work
Together. Insider Higher Ed. Retrieved from https://www.insidehighered.com/blogs/call-
action-marketing-and-communications-higher-education/how-marketing-and-institutional

Expert Group. (2007). Engaging philanthropy for University Research.

Miller, M. T. 1991. The College President's Role in Fund Raising. ERIC Document. ED 337099.
Washington, DC: ERIC Document Reproduction Service.
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Proper, Eve., & Caboni, Timothy. (2014). Institutional Advancement: What We Know. Palgrave
Macmillan New York, NY DOI: 10.1057/9781137374288

Selingo, Jeffrey. (2017). Three Worrisome Trends in U.S. Higher Education. The Washington
Post. Retrieved from https://www.washingtonpost.com/amphtml/news/grade-
point/wp/2017/06/16/three-worrisome-trends-in-u-s-higher-education/