Like many states across the country, Iowa’s higher education system is in quite a predicament. The state’s public universities lost more than $30 million in base state appropriations during the last legislative session, and its institutions, including Iowa State University (ISU), have requested tuition increases for the next five years.
ISU Foundation President Larissa Holtmyer Jones said the system’s woes have forced administrators to think outside the box when it comes to funding.
You can probably guess what comes next.
As if on cue, two donors have ridden to ISU’s rescue. First, Jerry Ivy and his wife Debbie, who provided a conventional $50 million naming gift to Iowa State University’s (ISU) College of Business. Second, Frank E. Ferguson, who, operating very much outside the box, gifted an equity stake valued at $145 million to create a permanent endowment for the College of Liberal Arts and Sciences, among other things.
In what by now sounds like a familiar refrain, both gifts underscore two main trends in the higher ed giving space. First, the growing influence of alumni mega-donors who can save beleaguered public university systems from full-blown fiscal catastrophe. And second, the startling rise of regional philanthropy between the coasts.
I’d like to dig a bit deeper into each, starting with the gift from the Ivys.
Raising a College's Profile
Jerry Ivy earned his bachelor’s degree in industrial administration from ISU in 1953, and is the president and CEO of Auto-Chlor System, a provider of cleaning solutions to the food service, lodging and hospitality industries. His wife Debbie serves on the executive team. A previous gift from the couple, who live in Los Altos Hills, California, established the Ivy Chair in Business.
The $50 million gift will establish an endowed fund that will eventually provide approximately $2 million annually. The school will rename the university’s College of Business after the couple, the first named college at ISU.
Dean David Spalding cited the name change as critical to boosting the college’s stature and reputation. “When I came to Iowa State, the president and the provost challenged me to raise the profile of this college. And there is nothing that raises the profile of a college like being a named college.”
All in all, it’s your standard naming gift that will hopefully be devoid of the kind of controversy we have seen elsewhere. The second gift to ISU, on the other hand, is somewhat of an anomaly in terms of its funding source. As a result, it may appeal to cash-strapped university administrators looking under the (figurative) couch for alternative philanthropic models.
An Outside-the-Box Gift
ISU alumni Frank E. Ferguson founded Curriculum Associates LLC, a Massachusetts-based education firm, in 1969. Ferguson attended ISU from 1947 to 1950 and majored in science journalism, with a minor in education and psychology. His wife also attended ISU, as did his parents and son.
Rather than cutting a check, Ferguson decided to donate his share of the company to his alma mater. (The technical term, here, is "management-led transaction to an independent buyer.")
"I don’t know when the first thought occurred," said Ferguson, now 90. "But at some point, it became clear to me and my wife that it indeed would be a meaningful thing for Iowa State and a plausible way for the company to be in good hands."
Consider this one of the benefits of operating a private company. As previously noted, rich people whose assets are tied up in the companies they founded may be reluctant to sell stock to give big. Ferguson had no such misgivings. Once the transaction officially goes through in coming months, the school will immediately have to liquidate the assets. "We’re being bought out, essentially," Holtmyer Jones said.
But it gets even better. Officials originally believed the share stood at $93 million, but were pleased to learn that it ballooned to $145 million, thanks to favorable market conditions. ISU Foundation President Jones compared the shift in the gift’s worth to selling a house and discovering differences between appraised and market values. (I love it when that happens.)
In addition to creating a permanent endowment generating $5 million to $6 million annually for the College of Liberal Arts and Sciences, the gift will triple the amount of scholarship dollars, expand career development support and strengthen the school’s artist-in-residence program.
In related news, the university announced separate gifts from Kent Corp. ($8 million), the Iowa Corn Promotion Board ($4 million) and Sukup Manufacturing Co. ($2 million) to support a new educational research facility for feed milling and grain science. The gifts will add to the ISU Foundation’s "Forever True, for Iowa State" campaign, which seeks to raise $1.1 billion by July 2020.
And now, thanks to the largesse of the Ivys and Ferguson, ISU seems well on its way to this goal—but don't break out the champagne just yet.
In a recent presentation to the Board of Regents' Tuition Task Force, University of Iowa President Bruce Harreld said the proposed tuition increase would mean a bump in tuition from $7,486 for the 2017-18 school year to $10,537 by the fall 2022 semester—a 41 percent increase for those keeping track at home.