University Business - June 2008 - (Page 28)

ENDOWMENT MANAGEMENT The Windfall Gift and other campus leaders What large gifts mean for endowment managers By Ann C. Logue T’S AN ELECTION YEAR, SO we’re hearing a lot about income and wealth inequality in the United States. The rich seem to be getting richer, in part because a few sectors of the economy are creating incredible wealth for those who participate in them. These people want their wealth to have an impact on charities that they support. While the various candidates sort out whether and how this affects the country at large, college and university development officers know that this creates the potential for fewer, but larger, gifts. The Council for Aid to Education’s most recent Voluntary Support of Education survey seems to show a similar concentration of givers. It reported that in 2007, total contributions to higher ed institutions were $29.8 billion, a 6.3 percent increase from 2006. But those donations are concentrated. The 20 most successful fundraising IHEs brought in a total of $7.7 billion, or 25.8 percent of all contributions from the 1,000 campuses surveyed. Capital contributions were up and represented 45 percent of donations, or $13.7 billion. Participation I A short-term revolving fund was the suggestion a major donor made to Yeshiva University (N.Y.) about how his endowment gift should be set up. a planned-gift consulting firm in Memphis, Tenn. A gift agreement has to be in place, but a standard agreement might not fit. “I don’t think either the institution or the donor is savvy to the ramifications of those institution-changing gifts,” he says. Instead, agreements need to be negoti- When a big donation comes in, every stakeholder wants a piece of the money. was down too, to 11.7 percent from 11.9 percent, which would indicate that fewer donors are giving more money. When large gifts are made to a college or university, they’re typically “once in a lifetime, for both sides,” says Barlow Mann, chief operating officer of the Sharpe Group, ated and should include language covering how any problems will be resolved in order to avoid litigation or hurt feelings in future years. Whether or not the gift is received during the donor’s lifetime, Mann adds, ongoing cultivation of the donor and the donor’s family is more important than con- tractual language in minimizing conflicts. And it may lead to a second generation of support for the institution. Still, when a large gift comes in, every stakeholder wants a piece of the money. That’s just human nature. If a donor has entrusted an institution with megamillions, it’s not in hopes of spending on the institutional equivalent of convertibles, mansions, and handouts to ne’er-do-well relatives. SPENDING RULE RULES For the endowment manager, assuming the gift has no restrictions on the rate of spending, a large donation is nothing more than money to be put to work. But sometimes the gift comes with its own spending rule. In 1997, the University of Oregon received a $100 million donation from Phil Knight, the founder of Nike, and his wife. 28 | June 2008 universitybusiness.com http://universitybusiness.com

Table of Contents for the Digital Edition of University Business - June 2008

University Business - June 2008
Contents
College Index
Company Index
Advisory Board
Editor's Note
Stats Watch
People Watch
Endowment Management
Viewpoint
On the Hill
Future Shock
2008 Annual Directory of Higher Education Consultants
Independent Outlook
Sense of Place
Cover Story - History in the Making
Getting Serious About Service
Sustainability and Energy Management
Internet Technology
What's New
Calendar of Events
End Note

University Business - June 2008