University Business - October 2010 - (Page 34)

MONEY M AT T E R S Developing and managing endowed scholarship funds By Kathy Kurz Who’s On First? G IVEN THE MULTIPLE goals and multiple players involved in developing and managing endowed scholarship funds, there are lots of opportunities for communication gaps, poor service, and less than optimal use of the funds. In an ideal world, endowed funds and annual gifts given for scholarship support would be used to take the place of unfunded aid in the offers made to students, freeing unfunded (and therefore unrestricted) resources for other purposes. However, many institutions are not able to achieve this eﬃcient outcome for a number of reasons. In some cases, the funds raised have such heavy restrictions on use that the ﬁnancial aid oﬃce is not able to ﬁnd eligible candidates. In other cases, the ﬁnance oﬃce does not notify ﬁnancial aid of the available resources until late in the year, after ﬁnancial aid oﬀers have already been made. In still other cases, the ﬂow of information is such that funds are not used, or are used sub-optimally from a net tuition revenue perspective. So how can administrators avoid these pitfalls and establish best practices in handling this vital resource? Here are nine critical elements to consider. 1. Make sure institutional policies support the centralized distribution of endowed funds. On some campuses, academic or student life departments are encouraged to work directly with donors—or through development oﬃcers that are dedicated to their particular academic units—to raise scholarship funds that then are put under the control of that department, rather than being centrally managed by the ﬁnancial aid oﬃce. Some endowed awards have such restrictive criteria that it’s impossible to ﬁnd an eligible student. Over time, a decentralized approach often leads to funds not being used at all (because departmental leadership has changed and no one knows about the funds) or being given to returning students who are doing well academically as an add-on to other aid they are already receiving. Using the funds in this way not only fails to free up unfunded aid resources, but also is very unlikely to have any impact on enrollment and revenues, as upperclassmen who are doing well academically tend to already have high retention rates. So, requiring central management of funds, regardless of who is involved in cultivating the donor, is step one. 2. Require a minimum contribution for establishing an award that will be suﬃcient to ensure an annual scholarship of at least $500 or $1,000 under the institution’s spending guidelines. When such minimums are not in place, it becomes very diﬃcult to build a meaning- ful award into a student’s package. Funds end up being “frittered away” as one-time awards or prizes for graduating seniors. 3. When the award is being developed, work with donors to keep the awarding criteria general and based on information captured in the student system. Regardless of the donor’s requested criteria, build in a clause that will allow the funds to be spent if a student meeting those criteria cannot be identiﬁed. It is not uncommon for some endowed awards to have such restrictive criteria that it’s impossible to ﬁnd an eligible student, or for the criteria to be such that additional steps (such as an application) are required in order to identify appropriate candidates. A personal favorite example is one award that required potential candidates to submit an essay about what their Italian heritage meant to them. Winners then had to attend a ball in their honor, and the cost of a gown or tuxedo rental was more than the value of the scholarship! By keeping restrictions to attributes captured in the student system (major, GPA, ﬁnancial need, zip code, etc.) it becomes much easier to administer awards. Good communication between advancement oﬃcers and the director of ﬁnancial aid can help ensure the funds will provide the greatest possible beneﬁt to the institution while also meeting the donor’s wishes. 4. Routinely communicate any changes to funds or the creation of new funds to all appropriate parties. Kathy Kurz is vice president of the enrollment management consulting ﬁrm Scannell & Kurz, Inc. She can be reached via the ﬁrm’s website, www.scannellkurz.com. universitybusiness.com 34 | October 2010 http://www.scannellkurz.com http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - October 2010

University Business - October 2010
Contents
Editor’s Note
College Index
Company Index
Advisory Board
Behind the News
Sense of Place
Viewpoint
Money Matters
Survey Savvy
Perfecting the Pitch
Business Continuity Plan Refresh
Welcome Alumni
Community Colleges
What’s New
End Note

University Business - October 2010