Twelve tips for successful giving in higher education

Twelve tips for successful giving in higher education

Higher education can be among the most rewarding and meaningful areas for your philanthropic dollars. It can also be one of the most challenging sectors for both donor intent and grant compliance. Careful attention is mandatory to ensure that college and university administrators do not ignore, creatively interpret, disregard, or directly violate your intent. 

“Universities can be difficult about complying with donor intent because they have such a wall built around themselves,” cautions donor Tom Lewis of the T. W. Lewis Foundation. “They often don’t want anyone to interfere with their agenda.” 

For alumni donors in particular, “higher-education philanthropy is more emotionally tricky than other types of giving,” warns Jacqueline Pfeffer Merrill, director of the Campus Free Expression Project at the Bipartisan Policy Center. “People have an emotional pull to their alma mater, and it can be easy not to think strategically. Our advice to donors is to approach their giving without rose-colored glasses on.” 

Despite the challenges, donors who are committed to supporting higher education should not shy away. America needs wise philanthropists who invest judiciously in this area. So how can you give while protecting your donor intent? Here are 12 tactics you may consider using to safeguard your higher-education giving. 

1. Avoid the traps of unrestricted and endowment grantmaking

Unrestricted gifts could make sense in other philanthropic realms, particularly if you are working with recipients whom you know well. But they carry significant risk in the higher-education space. Know that your philanthropic dollars are easily fungible. Giving officers often steer donors toward unrestricted gifts precisely because they offer maximum flexibility to the recipient institution. Unless you are specific with your desires and write them out, your gifts could be used for something you find abhorrent.

“Rather than writing open-ended checks,” advises William E. Simon Foundation President Jim Piereson, “donors should target their contributions in ways that allow them to designate the programs and professors they wish to support.”

Endowment gifts are equally problematic for donor intent: In their essay “Questions to Ask Before You Write the Check to Higher Education,” Jerry Martin and Anne Neal warned, “There is no way to ensure proper use for all eternity.” Once a donor is out of the picture— either through death or disinterest—funds may be mismanaged or deliberately diverted to purposes other than those originally specified.

Endowing a professorship in perpetuity fails to consider the possibility that a field of study may become far less popular or relevant over time or that “the next professor … may have an entirely different agenda,” says Fred Fransen, a philanthropic consultant in the higher-education arena. Piereson notes that such gifts are also inefficient. Shorter-term gifts will have greater impact than those that “lie fallow for a few years while the funds accumulate and afterwards … pay out just 5 percent of their value on an annual basis.”

2. Create a funding stream rather than a lump sum gift

Donor intent and accountability are best served by grants made in increments over a limited term, with continued donations dependent on scheduled progress reports. “I learned the hard way to focus my philanthropic investing, give annualized grants, and demand detailed reporting,” notes Jack Miller, chairman of the Jack Miller Center

You may, for example, structure a $10 million grant to start a new program over a 10-year period to provide $3 million up front to enable the university to hire personnel and create the necessary infrastructure. You can then schedule the remaining $7 million in regular payments, periodically reviewing to ensure the school is on track.

“Start small and start short,” Tom Lewis suggests. If one of his foundation’s grantees fails to make adequate progress toward stated goals, Lewis has the right to terminate the agreement and halt all further payments.

3. Create an independent nonprofit

Donors have also created institutes informally connected to—but administratively and financially independent from—institutions of higher education. 

The Witherspoon Institute is one such nonprofit. Founded in 2003 by individuals associated with Princeton University’s James Madison Program and several national foundations, its proximity to the Princeton campus allows it to draw on the university’s faculty expertise and offer occasional events in collaboration with its departments and programs. But Witherspoon has ample resources to operate its own research and education programs, and offers higher education donors a distinct financial bonus: grants made through Witherspoon to support faculty members at Princeton or other universities with which the institute is collaborating carry a maximum 10 percent overhead charge.

The Foundation for Excellence in Higher Education assists in supporting such independent institutes, among them the Abigail Adams Institute (Harvard), the Houston Institute (Rice), the Zephyr Institute (Stanford), and the Elm Institute (Yale).

4. Give through an intermediary funder

An intermediary funder might be a mission-driven, donor-advised fund sponsor such as DonorsTrust, the National Christian Foundation, or—for left-leaning donors—the Tides Foundation. You might also consider a trusted charity that shares your principles and with whom you have an established relationship. Giving to a college or university through such an intermediary is a good choice for higher-education donors who lack the time, expertise, or inclination to monitor and administer a complex, multi-year grant agreement. An intermediary can assist you in:

  • Defining your intentions
  • Evaluating potential grantees
  • Brokering the relationship between you and your grantee
  • Monitoring compliance with grant terms
  • Making payments on a defined schedule

5. Designate a contingent beneficiary

You may also consider naming a contingent beneficiary with the legal standing to sue if your original grantee fails to follow your wishes.

Acting as a contingent beneficiary, Hillsdale College brought a suit against the University of Missouri in 2017 alleging misuse of a $5 million endowment left to the university by Sherlock Hibbs in 2002. The gift was intended to create six professorships filled by disciples of the Ludwig von Mises school of economics. Hillsdale maintained that professors hired so far fail to meet that standard, and that the university should, as the gift terms provide, repay the funds already spent (over $4 million) plus give up all funds remaining in the endowment (now over $9 million) to Hillsdale College. 

In December 2019 the two institutions announced they had reached a settlement stipulating that Hillsdale will receive $4.6 million—half of the remaining endowment. The University of Missouri continues to insist that the Hibbs funds expended thus far were spent “consistent with Hibbs’ intent,” and has committed to holding a symposium focused on Austrian economics at least every two years. While evidence produced in the course of litigation suggests that there may well have been some violation of donor intent, Hibbs’ decision to name a contingent beneficiary to monitor the original grantee (and take legal action if needed) successfully limited further erosion of his legacy gift.

6. Give while you’re living

It may seem cynical to assume that institutions pay more attention to living donors, but it is true that mischief in higher education philanthropy often occurs after a donor’s death. College faculty and administrators are more likely to discover new “pressing” needs that outweigh the instructions of the original benefactor once that person is no longer in the picture.

The solution is simple: do your giving while you’re alive—when you can personally assess the best opportunities, form relationships with administrators and staff, make the investments, monitor performance, and reevaluate your decisions as needed. Giving while living also affords you the unique chance to have an outsized influence through larger gift amounts, and it brings you more joy to see for yourself the impact of your philanthropy.

7. Shop your proposal to multiple institutions

Higher-education donors frequently focus on their alma maters, which may not be the best institutions for the programs they are considering. In these instances, donors are likely to encounter administrators who persuade them to modify their gifts to suit institutional priorities. “Don’t focus on just one university,” advises Fransen. “The dynamics of the negotiation are different if there are multiple options on the table. These conversations, when you’re shopping, are very revelatory about which schools are interested and which just want your money.”

At the same time, if you push an unenthusiastic institution to accept your gift and your terms—especially if you are paying for the entire undertaking yourself—you will most likely be dissatisfied with the half-hearted effort that results. One acid test for whether a university is truly on board is to require joint funding—an arrangement where the university commits its own funds to the project as well. Tom Lewis strives to do this with all his higher-education grantmaking.

8. Form trusted relationships

Success in higher-education giving requires forming trusted relationships with individuals within the university. Most important, look for friendly faculty members who can advance your ideas internally. They are the most critical players—they will execute your project and are the ones most likely to serve as guardians of your donor intent because you share the same goals.

At the same time, remember that faculty members may leave or be reassigned. Tenured faculty are less prone to switching institutions, but it does happen. Any unwritten understandings you had with an individual will be forgotten when personnel changes. So cultivate relationships with deans, provosts, college presidents, and trustees to build more support and continuity for your project.

9. Respect academic freedom

The wishes of donors are sometimes at odds with academic freedom. While you have every right to bring your own values to your philanthropy and fund only those faculty members and programs that align with those values, you cannot interfere with internal academic processes. 

As Martin and Neal noted, “You will not be permitted to appoint faculty, prescribe reading lists, or determine which courses are required.” You may define a broad subject area—American political history or free enterprise, for example —but you cannot dictate the actual curriculum. Generally, well-endowed universities will refuse to allow any donors to be involved in the selection and approval process for academic appointments. In some instances, however, donors have been permitted to attend selection committee meetings and/or have a voice in the final decision among candidates that others have already deemed qualified. This is a matter a donor must discuss with the recipient institution as the grant agreement is being developed.

In all cases donors may wish to consider using a version of the statement now included in Koch Foundation “center” grant agreements to make their position on academic freedom both clear and transparent:

Consistent with the Donor’s principles of supporting open inquiry and a diversity of ideas in higher education, the Donor’s grant is intended to help promote a republic of science at the University where ideas can be exchanged freely and useful knowledge will benefit the well-being of individuals and society. Thus, the Parties agree that the academic freedom of the University, the Center and their faculty, students, and staff is critical to the success of the Center’s research, scholarship, teaching, and service.

10. Be patient

Often, a natural tension exists between the instincts of donors—frequently business-savvy men and women with an entrepreneurial streak, accustomed to moving quickly and having their orders obeyed—and the glacial process of academic procedures. Moreover, the shared governance structure in higher education—where a board of trustees or faculty senate might have a say in a university’s grant proposal and its gift acceptance—can cause added frustrations.

The best course forward is to take your time, trust your relationships, and avoid trying to micromanage the process. A solid gift agreement may involve multiple conversations and a great deal of editing. Tom Lewis spent two years in discussions with multiple people at the University of Kentucky before he committed his gift to establish the Lewis Honors College and its Center for Personal Development.

11. Consider less typical gifts and institutions

Academic centers, buildings, professorships and scholarships are the staples of higher-education giving and will always be popular choices for donors. But look more broadly at the possibilities. Gifts that: 

  • support independent study and leadership development among students can have potent effects on individuals.
  • support graduate students committed to individual liberty, the rule of law, and economic freedom can alter the ideological profile of the future professoriate.
  • promote debate—whether student or faculty directed—can bring new and different points of view to a campus and change its level of intellectual diversity and free speech.

If campus intolerance is a special concern, you might follow the example of the John W. Altman Charitable Foundation, which now makes adoption of the University of Chicago Principles of Freedom of Expression a condition for all its higher-education philanthropy. “Giving to higher ed doesn’t have to be directed to an institution or to putting a name on a building,” says Jack Miller. “Who knows what that institution will be doing or how that building will be used in 50 years? Better to sponsor annual programming on campus that teaches values I believe in.”

Also, look beyond the elite four-year colleges and universities to find high-performing community colleges, trade schools, technical institutes, and online programs where your gifts can have great impact. Many of these institutions are on the cutting edge of economic progress and make important contributions to regional prosperity through workforce development and upskilling programs. Community colleges in particular offer one of today’s most underutilized investment opportunities for higher-education funders.

Consider the example of donor Karen Wright, CEO of the gas-compressor manufacturer Ariel Corporation. Wright has invested millions in community colleges and trade schools in central Ohio, including Stark State, Central Ohio Technical College, Zane State, and the Knox County Career Center. Wright’s contributions helped create a Career and Technical Education curriculum that shepherds graduates into well-paying jobs without the need for a four-year degree. And a North Carolina donor, Penny Enroth of the Palmer Foundation, has invested more than half a million dollars in building a trades-instruction facility at Sandhills Community College for students pursuing credentials in production technology, electrical contracting, advanced welding, and other vocations that our economy desperately needs today.

12. Seek advice from trusted sources

When you read the dire stories of infringed donor intent it is easy to get discouraged, especially in higher-education philanthropy. But there are excellent resources available to advise donors in this area. They include faculty members directing campus programs that honor donor intent, private consultants, funders who have successfully navigated the hazards, and nonprofit organizations such as DonorsTrust, the Fund for Academic Renewal, the Institute for Humane Studies, the Jack Miller Center for Teaching America’s Founding Principles and History, and The Philanthropy Roundtable.

If you are looking for a worthwhile program at your alma mater or elsewhere, if you have questions about specific issues like free speech on campus, or if you are having trouble developing your grant agreement—no matter where you are in the process—you can reach out to a trusted source for information and guidance on defining and securing your charitable intentions.