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Why Fundraising Matters in Higher Education

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The news over the summer that Bethany College had reached the $47 million mark in gifts and pledges during our current $52 million capital campaign was an announcement worth celebrating--not least because we launched the effort rather inauspiciously about five years ago.

This first phase of a larger campaign that will eventually fund our master plan, "Bethany 2020," has already supplied needed dollars for scholarships, faculty development and other current operating support, facility enhancements and strengthening of our endowment, now the best among private colleges in West Virginia.

But when I took office as Bethany's president in late 2007, what normally would have been a very opportune time to launch a new campaign was overshadowed by an unfortunate complication--the widening American economic downturn.

Still, we forged ahead, encouraged by the trustee chair of our advancement committee, Elizabeth Athol, a Pittsburgh attorney and Bethany alumna, who wisely noted that such a campaign, even amid the kind of economic correction we were experiencing, was at its heart a means of raising new friends for Bethany. She trusted that her alma mater was strong enough to launch the campaign and, more importantly, to benefit from it as the economy recovered.

She was right. Although we had to redirect some of our funding priorities because of economic conditions, it proved heartening to have the loyal support of alumni and friends who stood by us with their gifts and long-term commitments. Our Board of Trustees and Alumni Council led the way with 100 percent participation in the campaign, and over a third of our alumni have contributed thus far. Faculty and staff, parents and families, foundations and organizations, among others, joined in as well. Now, with confidence, we look ahead to our next phases that will be needed to keep Bethany competitive in the decades to come.

Despite our success and that of many institutions who find themselves perennially in campaign mode, we are still often asked why fundraising is needed at all. "Why can't you simply charge more in tuition?" they'll say.

To do so risks pricing your institution out of what has become in most regions of the country a highly competitive educational marketplace. Even if we could raise tuition as a budget measure, we cannot realistically cover the true cost of a college education--reflected in library resources, equipment, faculty development, facilities maintenance, collaborative initiatives, and other real but often hidden costs and liabilities.

In any case, identifying a college's price point is not like doing so for a business. It's dangerous to offer too much institutional financial aid to offset the tuition sticker price; that practice, known as tuition discounting, in which a percentage of gross tuition and fees becomes the "aid" in the form of institutional scholarships, can come back to haunt a college in two major ways if the tuition-discount rate is too high.

First, you risk being perceived by your market as giving away the product for next to nothing. Worse, it's a red flag to accreditors and government monitors of an institution's financial health. Colleges and universities periodically announce tuition freezes (as Bethany has done for the 2014-15 year), but these are usually short-term incentives for enrollment by new and returning students and are offered within the context of a college's overall financial strength.

So for most colleges that are enrollment-driven and tuition-sensitive, fundraising is a budget imperative. And that goes for just about any college or university that has seen traditional sources of revenue decline.

Lenore Sobota in Pantagraph (August 10, 2014, www.pantagraph.com) writes that many public institutions have adopted private college and universities' fundraising strategy "as they try to hold down tuition costs, maintain access and leverage state dollars." She notes that community colleges, too, have found it advantageous to develop foundations for student scholarships and other priorities.

Beyond the budget necessity of securing private dollars is another very important reason for making the ask--it's a reliable means of verifying alumni loyalty and the confidence of others, too, in your institutional mission.

Although alumni may not ask detailed questions about an institution's finances, that their alma mater reaches out to them for support does matter in assuring them that the campus is viable and that, by extension, they are, too, when we honor these natural partners with our appeals. Non-alumni whom we call "friends" can also share the vision with their checkbooks. Despite the heightened convenience of giving through online means, many alumni still prefer to hear from their class-agent peers, or even to experience an evening phonathon call from a current student. It shows that alma mater cares enough to keep in touch.

Like many other practices in higher education, fundraising is increasingly defined by the latest trends: larger campaigns, bigger lead gifts on the front end, multiple phases, more comprehensive goals. The pace will only quicken as the pressure on institutional budgets and presidential performers increases. The traditional term of "advancement" as applied to fundraising and fundraisers might aptly be retired in favor of "institutional vibrancy." For without a hefty infusion of private dollars through personal giving, most colleges and universities cannot claim these days to be so.

Dr. Scott D. Miller is president of Bethany College and M.M. Cochran Professor of Leadership Studies. Now in his 24th year as a college president, he serves as a consultant to college presidents and boards, and edits "Presidential Perspectives" (www.presidentialperspectives.org), a higher education leadership series written by college presidents for college presidents.