It's no secret that these are boom times for university fundraisers.
Donors are giving at a startling pace, empowering private and public universities to embark on capital campaigns that as recently as 10 years ago would have seemed absurd in scope.
Consider the University of Maryland's $1.5 billion campaign. A few weeks into its official launch date, the school has already raised $902 million. Meanwhile, Vanderbilt University recently kicked off a $600 million campaign to support its "undergraduate living-learning experience." Oh, and let's not forget about the record-busting hauls of more regional schools, like the University of Arizona, which met its $1.5 billion fundraising goal two years early in 2016. Or the stunning rise of USC to become a fundraising powerhouse that easily met a $6 billion campaign goal under its soon to be ex-president, C. L. Max Nikias.
Another ambitious undertaking comes to us from Amherst College, which recently launched "Promise: The Campaign for Amherst’s Third Century" with the goal of raising $625 million over the next five years. A closer look at the campaign reveals some the most timely trends coursing through the higher ed philanthropy space. Not all these trends are positive.
Impressive Fundraising Success
Amherst has already raised around half of its $625 million goal through "quiet" fundraising leading up to the campaign launch. It also netted a $100 million donation from an anonymous donor earmarked to match "gifts at very significant levels that are matching campaign priorities," according to Suzanne Newby-Estes, the executive director of advancement and campaign operations.
Of course, this is the oldest trick in the book: You only unveil the bold and ambitious campaign goal after you've already gotten lots of wealthy ducks in a row.
That Amherst has been able to do that suggests, among other things, that worries a while back about a donor backlash to student protests on campus were overblown. Writing that roiling college campuses were contributing to a decline in donations, especially at elite liberal arts institution, I quoted Carolyn A. Martin, Amherst's president, saying she was "not surprised" that student protests had contributed to a 6.5 percent decline in alumni giving. Meanwhile, participation in the alumni fund dropped 1.9 percentage points to 50.6 percent, the lowest participation rate since 1975.
That was a year and a half ago. The intervening months have proven to be relatively quiet across American campuses, which has surely been a relief for fundraisers. And Amherst's fundraisers have other reasons to be optimistic, among them, its Rolodex of affluent donors, including financiers Barry Volpert, Charles Ashby Lewis and Seth Klarman.
The school has also proven adept at broadening the donor pool and engaging younger alumni.
Last year’s Annual Fund raised $10.7 million, the most in the college’s history, attracting 11,326 donors and recording a 51.8 percent participation rate among alumni. The fifteen youngest alumni classes participated at a rate of 52 percent, which the school called "remarkable, given trends elsewhere." (That's correct. Recent studies have shown that fundraisers continue to have a hard time engaging the younger demographic.)
Lastly, Amherst has demonstrated a canny ability to secure mega-donations from anonymous donors. Back in 2009, the school received separate $100 million and $25 million gifts from alumni who wished to remain anonymous. Both pledges were earmarked for Amherst's endowment, which, for the record, currently stands at roughly $2.2 billion.
In other words, Amherst's most recent $100 million anonymous give was no fluke. Don't be surprised if the school nets a few more big ones in the next few years.
Pivoting Toward STEM
Nine-figure fundraising campaigns always make great copy due to the massive dollar amounts, but there's also a lot to be learned by digging deeper and understanding where, specifically, all this money is actually going.
In the case of Amherst, STEM seems to be a big winner—which is a familiar story these days.
The school's campaign focuses on the six key priorities. No. 1 is "Attracting and Supporting Outstanding Students and Faculty." N0. 2 is "Meeting Student Need in the Sciences and Math."
"This campaign specifically is looking to expand the faculty by a number of positions, and that is to meet the need in the STEM fields," said Amherst's Newby-Estes. "We are just expanding the faculty, and it's important to recognize that the needs of the institution change over time, so it’s not only just for STEM, it's just what the institution needs right now."
Amherst, of course, isn't the first liberal arts school to turn its attention to STEM education. Last year, the California-based Chapman University received a $100-million commitment from Dale E. Fowler, who graduated in 1958, and wife Sarah Ann. Slightly less than half of the gift was earmarked for an engineering school.
Indeed, we've talked quite a bit about "STEM pressure" across the donor community over the past couple of years. It's the idea that while studying Nietzsche and the ancient Greek dramatists is important, small liberal arts schools also need to be realistic and prepare students for an increasingly competitive digital workforce. Donors, the narrative goes, are following the jobs.
But what if these jobs never materialize?
An ever-growing body of research suggests that there are too many STEM graduates and not enough jobs. Ellen Ruppel Shell, in her Times piece entitled "College May Not Be Worth It Anymore"—a must-read for parents, students, and donors—lays out the case accordingly:
Technology increased the demand for educated workers, but that demand has been consistently outpaced by the number of people—urged on by everyone from teachers to presidents—prepared to meet it.
Nonetheless, donors keep giving big to STEM and liberal arts schools keep tweaking their centuries-old educational models. Why?
An uninspiring reason points to a kind of herd mentality. The narrative concerning STEM's importance has become so ingrained across the donor community that donors would rather err on the side of caution than deny graduates a pathway to meaningful employment.
Another reason is geography. As I noted on the heels of a wave of recent STEM gifts, all demand is local. Certain regions like Seattle face a very real STEM shortage. Given the fact that Amherst College is less than two hours from Boston and a few hours from New York, another knowledge economy hotspot, Amherst donors have reason to be confident their investments will pay real-world dividends.
Lastly, the benefits of STEM needn't be viewed as a zero-sum game. Studies continue to show that STEM courses can complement—rather than replace—a classic liberal arts education. Will many Amherst graduates become mechanical engineers or software developers? Probably not. Will they benefit from a broader and more integrated curriculum that includes STEM disciplines? Donors certainly think they will.
Tuition Keeps Rising
Which brings me to one final reason as to why donors are helping elite liberal arts schools expand their STEM footprint.
In 2014, the New York Times studied Amherst's cost model. It found that "even after Amherst’s prices have been adjusted for economywide inflation, the cost has jumped 34 percent in only 14 years." As a result, "Amherst is more expensive than it used to be for students whose families are paying the full price—and less expensive for students whose families are not."
Fast forward to the present day. The comprehensive annual cost of attendance now stands at $75,954–78,404. That's a price tag of roughly $309,000 for four years.
You can see why donors remain bullish on STEM education. How can they sleep at night knowing that an Amherst grad, equipped with a degree in French literature, will be on the hook for even a fraction of debt on that price tag?
This thought compelled me to go back and re-read the campaign's list of six priorities. Under "Attracting and Supporting Outstanding Students and Faculty," it alludes to "giving opportunities" like endowed funding to "support financial aid." It also boasts that its financial aid program is "among the most substantial in the nation."
Indeed it is. Amherst is among those schools that's made a point of trying to prevent its grads from ending up in debt. To help do this, it replaced the loan component of financial aid awards with scholarship aid. A full 71 percent of Amherst graduates in the Class of 2017 graduated with no student loan debt.
That's impressive, although one wonders about the other 29 percent of grads. And also what the future holds if tuition keeps rising. But in this fundraising campaign, at least, those issues aren't front and center. Most of the priorities are, as to be expected, calls for more spending—more faculty, new facilities, new "athletic and social spaces" and the like. Many higher ed critics, however, say it's exactly this kind of spending that ensures that tuitions keep climbing. Maybe that doesn't matter at a place like Amherst, which offers so much help to its students. But it still feels worrisome and unsustainable.
And so the big question isn't if Amherst will reach it $625 million. It surely will, and probably ahead of schedule.
Rather, given the slate of new capital projects on the drawing board, the more interesting question is this: Will Amherst donors use their formidable leverage to make sure the school doesn't hike tuition another 34 percent in the next 14 years? Or should they not even care about this issue?