Alumni desiring specific avenues for donation; university gap funds and accelerators a good option (from WSJ)

Observation: Timely Wall Street Journal article on the trend of alumni donors to more specific investments. I would suggest that one for the more effective routes is getting these alumni behind future research, education, and innovation, through university gap funding and accelerator programs.

In a soon to be released update to the Mind the Gap Report, including 119 gap funds/accelerators from 75 universities, data will show that 30% of the dollars that start these funds come through donations to the universities, with a majority coming from alumni contributions.

This observation demonstrates the vital role of the development and alumni offices in the future of university research and innovation. The importance of interplay between these groups and the tech commercialization, venture, and other corporate relations arms on campus around gap funding programs cannot be overstated.

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When it comes to donating money to their college alma maters, more alumni are attaching strings to their gifts.

Instead of writing a check and letting the school decide how to spend it, alumni are donating money with the stipulation that it be used for a specific purpose—such as funding an academic program, a professor, a sports team or even the school band. In this way, alumni can target an area of the school where they have a personal connection, or where they think their money can have the greatest impact.

Some 90% of the contributions that colleges and universities used for current operations last year were restricted gifts, compared with 78% 20 years earlier, according to the Council for Aid to Education, an education research and consulting group.

Amir Pasic, dean of the Indiana University Lilly Family School of Philanthropy, sees two factors contributing to that increase. First, donors are becoming more “investment-minded,” meaning they want their gifts to generate visible results. Second, big donors are accounting for a larger share of giving to higher education, and these outsize gifts often go for specific purposes. Many donors are particularly interested in funding research and student aid, says Linda Durant, vice president of development at the Council for Advancement and Support of Education.

Finding a cause

How might someone who wants to donate to their alma mater pick a target for their gift?

“Ask yourself what you want to see changed as a result of your gift,” says Ken Spruill, director of private-foundation management services at Hawthorn, PNC Family Wealth, a wealth-management firm based in Philadelphia. “Do you want to see the overall university’s performance higher? Do you want to support a major? Do you want to see more students go to college, so you might support a scholarship or fellowship?”

Once donors have a general area in mind, they need to make sure the cause fits with the university’s mission. Schools will be reluctant to accept donations to start a program if they don’t see a benefit.

Experts say prospective donors could ask school officials what they see as their greatest need or the area where they think a gift could make the biggest impact. “Do the answers mesh with your sense of making a meaningful difference through your giving?” says Dr. Pasic.

When alumni approach officials at Ripon College in Ripon, Wis., they often have a general idea of where they want to give. “But it’s rare that someone comes with a fully baked idea,” says the college’s president, Zach Messitte. So the school often starts by asking prospective donors about their experiences at the college, which professors were important to them and how the Ripon experience impacted their career.

Generous Alumni

Average giving by alumni per school

Note: Based on responses from 645 schools

Source: Council for Aid to Education

Dr. Messitte says an alumnus recently told the college that he wanted to donate in the math/science area and asked for help in refining his request. So Ripon officials helped him create an endowed math professorship for statistics in the name of his family. “It was a need we had, and it fit with him and his wife,” Mr. Messitte says.

Others approach the school with a detailed plan for how and when they want their money spent. Kyle Greene, class of 2015, says he wanted to help the cycling team, a major focus for him as a student. Last year, the team didn’t have a coach and was at risk of shutting down, Mr. Greene says, so he and his family came up with a $250,000 gift that would, among other things, fund a coach’s salary for three years.

The “gift came out of necessity and a passion for the team,” says Mr. Greene, a real-estate broker in Minneapolis.

Richard Rampell, a Palm Beach, Fla., accountant and a member of the Princeton University class of 1974, says he, too, has been able to support his alma mater in ways that are meaningful to him. He and his wife, also a Princeton alum, have donated money to a professor doing research on autism, because her brother suffers from the condition. Mr. Rampell, who played tennis at Princeton, helps finance the team’s trips to California, and he has donated to the economics department because that was his major in college.

“The way people generally give is to support programs that gave them a meaningful experience as an undergraduate,” says Mr. Rampell, a member of Princeton’s Planned Giving Advisory Committee.

Mr. Rampell says that recently an accounting professor at Princeton died and two of his former students endowed professorships in his name, “as he had such a profound impact on their lives.”

Put it in writing

To ensure projects are executed as a donor intends, a written agreement is key, experts say. Most schools have a standard gift agreement that can be tailored to describe the purpose of a gift, the kind of recognition the donor will receive, the expected impact of the gift and how results will be measured and reported to the donor, Dr. Pasic says.

It also might stipulate what kind of involvement the donor can have in the gift process, such as meeting scholarship recipients or visiting program sites. In most cases, the agreement also will contain language about what the school can do with the donor’s funds if circumstances around the program change.

“Crafting the gift agreement to reflect the donor’s intent and how the organization plans to use the gift is a vital piece of the puzzle,” Dr. Pasic says. “You don’t want to have to worry about pulling back from your gift or not having trust, because at some point you relinquish control.”

To gain a better understanding of how the college or university operates, a prospective donor could make a small trial gift, and see how school officials respond. “Do they thank you promptly and show you what impact your gift had?” Dr. Pasic says.

There will be occasions when a specific gift isn’t what a school wants or needs. Arthur Criscillis, a managing partner at Alexander Haas, an Atlanta-based fundraising consultant to nonprofit organizations, says he knows of a liberal-arts college where a donor wanted to finance the creation of an architecture program. “But it wasn’t within the purview of what the college wanted, needed or should do,” he says, so the school passed on it.

A donor has the most leverage when he or she makes a contribution in an area that is a high priority for the university, Mr. Criscillis says.

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