Colleges Target Aging Rich in Huge Fund-Raising Drives

Every college and university in the nation, it seems, is looking for the almighty dollar.

Or, for that matter, the yen, pound or franc.

Whether public or private, big or small, the nation’s institutions of higher education are into raising money as never before. And they are doing it both here and abroad, sometimes to the chagrin of alumni who must face an increasing barrage of solicitations from their alma maters.

The reasons are both obvious--rising costs at a time of declining government help--and more subtle, involving the aging of America’s wealth.

This fall, Pepperdine University launched a slick fund-raising effort with a goal that would have been unheard of a decade ago: $300 million in new contributions. The University of California at Berkeley is preparing for the most ambitious campaign in its long history, aimed at bringing in $1 billion by the turn of the century. Last year alone, Stanford raised $221 million.

Loyola Marymount University is about to start a campaign in which the goal will be $128 million, a huge amount of money for a school of its size. USC is gearing up for a megabuck campaign that will begin next year.

At the other end of the country, Harvard, being Harvard, began a fund-raiser this year that puts the rest of them to shame--a mind-boggling $2-billion goal that would be added to the school’s already-huge endowment.

“There are campaigns starting off every single day,” said Charles Stephens of Indiana University’s Center on Philanthropy.

Those fund-raiding machines are going to be running at high speed for the next 20 years or so. The reason: The timing will be right for an aging segment of society to be parting with its money.

Demographers say that a huge amount of cash, in excess of $5 trillion and perhaps as much as $10 trillion, will soon begin changing hands from one generation to the next in the United States. The nation’s colleges and universities are angling to get a piece of that very large pie. Their prime target is wealthy people without children.

“The generation that is getting older right now is an extraordinarily wealthy one and, in an unprecedented way, that wealth is going to be transferred,” said Brad Barber, director of institutional advancement for the University of California. “Even if we exclude those who have children, it’s a staggering amount of money.”

Colleges and universities feel the need to attract more money because of pressure from other demands on the public till. Coupled with that, the double-digit returns on investments made by colleges and universities in the ‘80s are now a thing of the past.

A report by the Common Fund, a nonprofit group that provides investment services to colleges and universities, said there will be “enormous pressure” to raise huge amounts of money in the coming years, largely to support endowments and scholarship funds.

“We believe the 1990s could be the most difficult climate for higher education in five decades,” the report said.

Giving to education already ranks second to religion as the major source of philanthropy in the United States. Last year, charitable donors gave more than $15 billion to education alone. “People give to education because they see themselves empowering others to do as they have done,” said Stephens. “I think there is as much a missionary attitude giving to education as there is giving to the church.”

But educators also say that, in the world of giving, both individual and corporate donors are becoming a much more fickle bunch. They say that the days of just being handed a check is rapidly becoming a thing of the past, that donors are demanding more accountability than ever before.

“The product will have to be much more defensible,” said Gene Wilson, former president of the Arco Foundation, which administers charitable gifts for the corporation. “You may want to build a gym or an art center or endow a chair, but the institutions now have to justify it.”

In California, the world of higher-education fund raising is a very mixed bag. The likes of high-profile private schools such as Stanford and USC have long had their fund-raising apparatus in place.

Recently, schools within the University of California system have had to switch gears and make money-raising a top priority as state funds have dried up. Of those, the two most successful have been UCLA and Berkeley, the biggest names in the system. Only last month, UCLA announced that it had received $95 million in gifts and grants during the last year. Berkeley raised $110 million for the same period. Taken together, the two schools accounted for about half of all gifts to the UC system.

So successful have the two campuses been in raising money that there is occasional talk that they should go it alone, becoming privatized universities separate from the other schools within the state system. But even advocates point out that political realities would make such a move highly improbable.

Lowest on the fund-raising ladder is the 21-campus Cal State University system, which until recently did almost nothing by way of soliciting contributions.

“When I arrived, we had campuses where they believed it was illegal for us to have development offices,” said Cal State Chancellor Barry Munitz, who took over his duties in 1991. “Now, it’s a whole new ballgame.”

Last year, the Cal State campuses raised $109 million, a relatively modest amount in the world of educational fund raising but nonetheless a Cal State record. Presidents of all the Cal State universities have been given the mandate to raise 10% of their operating budgets.

Douglas Patino, a vice chancellor for development, said the system hopes to realize a 30% increase in money raised this year.

“That’s how much of a focus is being given to this by our presidents,” Patino said.

Still, some of the schools have had so little in donations as to be almost negligible. Cal State Bakersfield, for instance, was given only $20,072 last year. Cal State Dominguez Hills received only $67,490. And the school that raised the most, San Jose State, pulled in only $2.4 million.

That, from a system with more than 2 million alumni that account for roughly 10% of the state’s work force. Cal State fund-raisers say that in some cases, they began with little by way of even the most basic tools, such as names and addresses of graduates. They say the key now is to begin the process that should have been done all along--cultivating the alumni.

“You’ve got to date before you can propose marriage,” said James Glass, vice president for university advancement at California State Polytechnic University, Pomona.

Glass should know. Before joining the Cal State system this year, he spent much of his career as a professional fund-raiser. He said two major phenomena are happening these days in the world of raising money: the decline of the corporation as a bulwark for higher education and a major increase in looking overseas for support.

“I think the current experience in California tells us that corporate giving as a mainstay is, over time, not going to be as valued as it has been in the past,” he said.

Instead, fund-raisers are turning more to foreign sources. Glass said the reasons are simple enough. There is a core group of graduates scattered throughout the world and, until recent years, it has been an almost untapped resource.

At Stanford, the office of development established an international division 3 1/2 years ago.

Steve Suda, the director of Asian operations, said an astonishing 8% of all the money raised by the school last year came from the Far East. He also said there had been “an explosion of interest” in Asia among all manner of nonprofit organizations that see it as an untapped source.

Closer to home, fund-raisers said there is an increasing demand to present potential donors with sophisticated ways in which they can give their money away but, at the same time, get something in return. Many schools nowadays are adopting a program pioneered in the West by Pomona College more than 40 years ago.

Under the Pomona plan, and ones similar to it, donors turn over their assets to the school and in return receive an income for life as well as major tax deductions. When the donor dies, the money reverts to the school.

That, said Barber of the UC system, fulfills one of the prime criteria of asking for money.

“They are going to have to ask for it in a way that makes sense to the donors,” Barber said. “It has to make sense for a charitable reason and it has to make sense as a tax reason.”