Fundraising expected to recover after dip
Published: Tuesday, September 4, 2012
Updated: Tuesday, September 4, 2012 18:09
The University recently reported that it surpassed its fundraising goal for fiscal year 2012, despite a large drop in fundraising during FY 2011 that had led to the weakest outcome in ten years.
The Office of Development and Alumni Relations released fundraising data citing the total amount of cash donations received in FY 2012 as $60,999,486.
Nancy Winship, senior vice president of institutional advancement, said in an interview with the Justice that this outstrips the goal set last year of $55 to 57 million. The $61 million figure is made up purely of cash that Brandeis received in FY 2012.
Just a year earlier, Brandeis had seen a precipitous drop in fundraising. Federal tax documents show just under $29 million in contributions and grants received by the University in the last fiscal year, the lowest point yet in a decline since FY 2008's high of nearly $100 million.
The federally reported numbers are not comparable to the numbers reported by the development office.
Winship and Associate Vice President of Communications Bill Burger say the tax filings for FY 2012 will show a substantial increase.
The dollar amount of contributions and grants reported in the 990 nonprofit tax forms includes pledges (legally binding agreements that donors make to contribute a set amount of money to the University, usually in installments over time), cash, write-offs (expected contributions that were unable to be paid) and government grants such as professorships.
The dollar amount of pledges counted in the 990 is the total amount of all installments expected over time. For example, if a donor pledged $10 million to be paid in ten yearly installments of $1 million each, $10 million would be counted in the 990 for the year it was pledged, whereas the Office of Development and Alumni Relations would count only $1 million for that year.
The cash number is much larger this year, said Burger, because cash donations are still coming to the University in installments from several years of pledges. Winship also said that the difference is due in part to a major fundraising campaign which has come to a close in recent years. The campaign brought in several large pledges, a significant portion of which went toward construction projects.
These included the $14 million Carl and Ruth Shapiro Admissions Center in 2009 and $24.8 million for the Heller School for Social Policy and Management from 2006 to 2007, according to information from the Brandeis Office of Capital Projects’ website.
According to Winship, only the cash figure of $61 million accurately portrays the state of Brandeis’ financial and fundraising health.
Frances Drolette, senior vice president of finance and Chief Financial Officer, wrote in an email to the Justice that, “the 990 as a research source will not provide the reader a cohesive statement to enlighten folks about the University’s financial or cash position, its annual revenue and expense activity, or its budget.”
Several nonprofit watchdog and charity ratings organizations, such as GuideStar and Charity Navigator, use the publicly available 990 form to report and analyze information about nonprofit finances.
Ideally, said Burger, the 990 numbers would line up more with the cash fundraising numbers in the future, as a more stable fundraising base is established.
“The goal now is building the pipeline full of gifts,” or pledges, said Winship. “In [University President Frederick Lawrence’s] first year, since the pipeline was empty, there were about $4 million in gifts that we knew would come in from pledges. … That’s a very, very small number.”
Of Lawrence’s fundraising efforts, Winship said, “He came into Brandeis at a time when, in some ways it’s so exciting because there’s so much change,” said Winship. “On the other hand, there’s never been more need for money, especially financial aid.”
According to Burger, the University distributes more than $70 million in student scholarships and grants every year, with more than 70 percent of undergraduates receiving some form of need-based aid. The average need-based award is approximately $30,000.
Over the past year, Winship said that the amount of pledges the University received has increased to about $12 million. “I would predict that where you will see real growth this year is going to be in that pledge line,” she added.
Winship explained this “pledge line’s” relationship to the University’s endowment. The endowment is made up of fundraising dollars, which are invested and are expected to grow at a higher rate than the rate at which the University draws from the endowment to cover its operating expenses.
“If you were at an older school, the endowment has been growing for 200 years or 300 years … for those schools, when there’s a drop in the market, it doesn’t affect their endowment very much,” said Winship. For a much younger school like Brandeis, these market fluctuations have a much larger impact.
A January 2008 U.S. News & World Report article agreed that “smaller schools have underperformed the stock market and a standard diversified portfolio for the past five years” because they “do not have such great returns of the past to protect them against future troubles.”
This year’s tentative goal for building the endowment is $15 to $18 million, according to Winship. These numbers have yet to be approved by the Board of Trustees.
“If you raise the money for financial aid and [professorships], then that’s the money that permanently strengthens the University ... because those are in perpetuity. That’s how you stabilize a university, and as a young university, that’s where we need to be,” said Winship.
According to a June 2012 Boston Business Journal article on endowments, Brandeis is the ninth-wealthiest school in Massachusetts, with an endowment of $703.6 million, an $83.45 million increase from last year. In national rankings, it doesn’t crack the top 70. Harvard tops both state and national lists, at a staggering $32.1 billion.
Correction: The article originally misstated the amount of financial aid that the University distributes each year. The University gives out more than $70 million a year in grants and scholarships, not $9 million. In addition, the University is still receiving cash installments from several years of pledges, not several decades, as the article originally stated, and the Ridgewood residence halls were not funded by these donations.