UNIVERSITY FUNDRAISING: SOME OBSERVATIONS AND COMPARISONS

As all of us are well aware, financial resources are critical to our educational, research, and service missions at George Mason. In economic terms, if there is no input, there can be no output: No one gets something for nothing. Moreover, there is an increasing impetus for faculty to become more “entrepreneurial” by both the Board of Visitors and the central administration, i.e., faculty will be expected to do more to obtain grants and contracts to support their own research and professional activities as well as the university in general. Thus, it is important for faculty to understand the nature and structure of Mason’s current fundraising operations.

Financial support for our mission comes from two primary sources: Government and the Private Sector. Our concern herein is with private funding from individuals who and corporations and private foundations that give money to aid faculty research, bolster academic programs, provide student scholarships and fellowships, purchase equipment, and so forth. Although most donations are cash, some “in-kind” contributions may also be received. These contributions are generally channeled through the George Mason University Foundation, a nonprofit, tax-exempt, legally independent entity which exists solely to benefit Mason. Most universities have similar entities to raise funds from private sources; all such entities are designated as 501(c)(3) organizations by the Internal Revenue Service (contributions to entities so designated are tax-deductible); and the IRS requires that such groups file a Form 990 tax return each year. The GMU Foundation’s Form 990 for tax years 1997 to 2002 is online at http://www3.gmu.edu/development/gmufound.html. The latest year available is 2002.

Since 2002, GMU has been (and still is) conducting a “Comprehensive Campaign” — see http://www3.gmu.edu/events/campaign/home.html. Rather than view the basic GMU Foundation financial data in isolation, the Senate’s former Clerk, Debi Siler, sought information from some of the SCHEV-selected “peer institutions.” This information is available in the Senate office (West Bldg. Room 257) for anyone to review.

A PEER GROUP COMPARISON OF UNIVERSITY FOUNDATIONS’ INCOME AND WEALTH

Two statistics are of critical importance: Total Income and Net Assets. Total Income includes all contributions, gifts, grants from all sources (including government), both cash and in-kind; rents; asset sales; gains (which can be negative if there are losses) on investments; dividends, interest, and so forth. Net Assets is the amount of money the foundation would have left if it paid all its outstanding obligations, that is, Net Assets is the foundation’s “wealth.”

Table 1 shows Total Income and Net Assets for the GMU Foundation for the years 1997–2002 (most recent available) and the same information for a dozen SCHEV-approved “peer” institutions’ foundations. Note that GMU Foundation’s Total Income fluctuates from year to year, as is true of all university-affiliated foundations. Thus, it is useful to use the average Total Income over the six-year period 1997–2002, which is $17,292,023, as the basis for comparison with other institutions. With regard to Net Assets, the appropriate figure is $68,149, 623 — the

Table 1

Statistics on GMU Foundation and Twelve SCHEV Peer University Foundations, Various Years

University	Year	Total Income	Net Assets
SUNY - Albany	2001	$8,303,605	$28,868,484
	2002	11,257,478	30,401,467
SUNY - Buffalo	2002	46,025,163	222,570,747
	2003	78,607,576	231,576,819
Univ. of Connecticut	2002	38,759,483	241,970,707
Univ. of Iowa	2002	67,349,770	585,803,215
Univ. of Kansas	2002	27,305,762	808,519,745
Univ. of New Mexico	2002	22,091,743	77,395,572
Univ. of Oklahoma	2002	69,363,248	581,252,435
Univ. of Rhode Island	2002	12,544,131	69,037,412
Univ. of South Carolina	2002	15,088,079	190,603,004
Univ. of South Florida	2002	27,482,503	296,290,392
Western Michigan Univ.	2002	14,010,367	142,307,617
Univ. of Wisconsin - Milwaukee	2002	9,880,002	38,466,291
	2003	11,884,781	41,334,375
George Mason Univ.	1997	25,031,546	55,726,964
	1998	10,875,370	61,381,022
	1999	10,504,790	61,689,879
	2000	27,613,888	72,509,970
	2001	15,529,312	66,694,540
	2002	14,197,236	68,149,623
GMU Average 1997-2002		17,292,023

amount for tax year 2002, i.e., the most recent end of period figure.

As is evident from Table 1, in terms of Total Income, GMU ranks roughly in the middle of the 13 university foundations — on a par with the University of South Carolina Foundation which brought in $15.1 million in 2002. In terms of Net Assets, however, GMU ranks near the bottom, because only two universities — University of Wisconsin–Milwaukee and State University of New York–Albany — had lower Net Assets in 2002. GMU’s Net Assets are comparable to those at the University of Rhode Island and the University of New Mexico. Note that the level of Net Assets varies widely across this group of “peer” institutions: The wealthiest school is the University of Kansas with Net Assets of $808.5 million in 2002; the poorest is SUNY–Albany with $30.4 million in 2002.

Note also from Table 1 that the GMU Foundation’s Net Assets have not grown very much in the six-year period 1997–2002. The $68.1 million in Net Assets held in 2002 is actually lower than the $72.5 million held in 2000; apparently the GMU Foundation’s investment portfolio, like most stock portfolios of similar organizations, fell in value when the dot.com stock market bubble burst. Between 1997 and 2002, Net Assets rose by 22.3 percent — less than 4 percentage points per year on average. Although money is coming into the Foundation, apparently the funds are being spent almost as fast as they are coming in. Thus far, the nest egg that can be used for a rainy day or for future programs is not growing at a rapid pace.

FUNDRAISING COSTS AND BENEFITS

Fundraising is not a costless activity, although considerable sums are raised for the GMU Foundation and for the foundations at peer institutions at little or no cost when individual faculty or groups of faculty obtain outside funding from various sources to support their activities and process the funds through their university’s foundation. [Most private foundations which disperse funds will not make grants to an individual; most require that the grant go to a 501(c)(3) entity.] Administration and management of the GMU Foundation is also not costless, even though the University provides office space and other support services to the Foundation. For our purposes, the IRS Form 990 contains information on three categories of expenses: “Management and General”, “Fundraising” — the resources that the foundation uses for its operations and for fundraising — and “Program Services,” i.e., the funds which support the educational mission. Thus, the sum of “Management and General” and “Fundraising” expenses measure the resource “inputs” or “costs” associated with the foundation and its activities, and “Program Services” measures the “benefits” that the university derives from the foundation. A measure of relative “efficiency” can be obtained by looking at how many dollars of benefit are obtained from each dollar of cost, i.e., the ratio of “Program Services” expenses to “Management and General + Fundraising” expenses, as shown in Table 2.

Table 2

Management & General + Fundraising Expenses and Program Services Expenditures for the GMU Foundation and Its “Peers,” Various Years

		Mgt & Gen’l +	Program	Program Services/
University	Year	Fundraising	Services	Mgt & Gen'l + Fundraising
SUNY – Albany	2001	$1,473,109	$3,687,504	2.5
	2002	1,387,526	2,608,279	1.87
SUNY – Buffalo	2002	14,053,747	45,637,973	3.25
	2003	16,557,537	53,043,967	3.2
Univ. of Connecticut	2002	9,403,656	26,290,403	2.8
Univ. of Iowa	2002	11,705,841	61,736,769	5.27
Univ. of Kansas	2002	12,725,026	87,691,216	6.89
Univ. of New Mexico	2002	3,074,489	17,183,753	5.59
Univ. of Oklahoma	2002	4,016,438	57,565,253	14.33
Univ. of Rhode Island	2002	803,330	15,758,727	19.61
Univ. of South Carolina	2002	2,435,332	15,216,643	6.25
Univ. of South Florida	2002	5,545,494	22,950,028	4.14
Western Michigan University	2002	463,224	21,474,845	46.35
Univ. of Wisconsin - Milwaukee	2002	1,231,731	7,947,801	6.42
	2003	1,045,849	7,130,817	6.82
George Mason Univ.	1997	956,089	6,602,096	6.91
	1998	1,368,973	6,920,649	5.06
	1999	2,121,028	8,514,255	4.01
	2000	3,220,942	10,599,247	3.29
	2001	2,945,757	13,720,365	4.66
	2002	2,426,777	13,560,048	5.59

As is apparent from Table 2, the benefit/cost ratio varies widely across universities. For example, at Western Michigan University in 2002, $46.35 was spent to aid the institution for each dollar spent on management, general, and fundraising expenses by the foundation. At the other extreme, each dollar spent on fundraising and management and general expenses returned only $1.87 to the academic mission at SUNY–Albany in 2002. Apparently there are wide variations in how costs are reported across universities so that these numbers are not truly comparable across institutions. [This issue is discussed in some detail below.] However, benefit/cost ratios over time at the same institution are comparable.

For the GMU Foundation, $6.91 in support was given for academic programs per dollar spent on the management, general expenses, and fundraising expenses of the foundation in 1997. But, in the following three years, the “bang for the buck” trended downward: In 2000, only $3.29 was spent on academic programs per dollar spent to operate the foundation. As is evident from Table 2, the Foundation’s costs rose more rapidly than program services spending. The drop in interest rates which reduced the Foundation’s interest income likely limited the Foundation’s ability to increase program services spending. The benefit/cost ratio rose to $5.59 in 2002, but that figure is still considerably below the $6.91 figure for 1997.

FUNDRAISING MANPOWER

A major reason that the operating costs of university foundations vary widely across institutions is that efforts to raise funds from private sources which are then placed in the foundation are done not only by the foundation itself but also by development offices and by local academic units (LAUs), such as individual colleges and schools. To obtain some information on development staffs at our peer institutions, Debi Siler consulted university phone books and other sources to obtain the information in Table 3.

Table 3

Development Staffs

	Development	Foundation	LAUs	Total
School	Office Staff *	Staff	Staff*	Staff
SUNY – Albany	35	11	13	59
SUNY - Buffalo	31	27	14	72
Univ. of Connecticut	None	67	14	81
Univ. of Iowa	None	86	30	116
Univ. of Kansas	None	18	20	38
Univ. of New Mexico	None	14	15	29
Univ. of Oklahoma	40	21	18	79
Univ. of Rhode Island	11	None	5	16
Univ. of South Carolina	24	None	29	53
Univ. of South Florida	None	None	18	18
Western Michigan Univ.	None	13	6	19
George Mason Univ.	32	7	13	52

* On Foundation’s payroll if no Office of Development.

As shown in Table 3, some of our peer institutions have no one on the paid staffs of their foundations. Those with no (or small) reported foundation staffs, however, tend to have relatively larger “development office” staffs. And, likewise, those with no “development office” staffs tend to have large foundation staffs. All institutions have fundraising personnel assigned to local academic units. The size of the fundraising cadres ranges from a high of 116 at the University of Iowa to a low of 16 at the University of Rhode Island. Of the 12 universities in the list, 6 have more fundraising personnel in total than GMU, and 5 have fewer. Note: The headcount figures shown in Table 3 include ALL personnel involved with the fundraising function, both fundraisers and their staffs.

If the fundraiser’s salary is assigned to a local academic unit, her or his salary is likely charged to that unit rather than to the foundation which receives the grants or contributions that she or he obtains so the foundation’s expenses are lower. Table 4 contains information on the individuals who are involved with the GMU Foundation and University Development in the central administration, and their salaries and benefits, at the time these data were collected in early Summer 2004.

Table 4

Development Positions at George Mason

Central Administration

			2004	Value* of
Last Name	First Name	Position	Salary	2004 Benefits
Officers:
Cooper	David	Associate VP	$ 114,000	$ 27,178
Drane	Melissa	Dir. Of Leadership Gifts	87,000	20,741
Epps	Macon	Assistant Director	29,220	6,966
Jamison	Creston	Development Services Director	88,500	21,098
Jobbitt	Judith	VP Development; GMUF President	175,500	41,839
Kavanaugh	Michele	Assistant Director, Annual Fund	46,010	10,969
Kehoe	Kathleen	Dir., Scholarship Development	49,250	11,741
Labouchere	Anne	Director, Dev. Research	53,680	12,797
Lee	Tracy	Dir., Corporate & Found. Relations	76,180	18,161
Mullins	Taris	Exec. Dir., Partnership Development	69,500	16,569
Murphy	Una	Leadership Gifts Officer	67,700	16,140
Pearson	Jane	Director of Donor Relations	72,000	17,165
Perlik	Barbara	Asst. Director, Dev. Research	41,049	9,786
Roe	David	GMUF Financial Officer	101,000	24,078
Smith	Zavin	Annual Fund Coordinator	33,060	7,882
St. Ours	Denise	Asst. Director of Donor Relations	49,510	11,803
White	Tracy	Controller	78,000	18,595
Woitek	Kirsten	Director, Annual Fund	72,500	17,784
		OFFICER TOTAL:	$1,303,659	$310,792
Staff:
Barr	Elizabeth	Phonathon Manager	$ 30,675	$ 7,663
Bond	Susan	Gift & Records Analyst	17,589	4,394
Carter	Mildred	Gift & Records Analyst	34,168	8,535
Coppage	Diane	Assistant to David Cooper	36,810	9,195
Creque	Jason	Office Services Specialist	24,336	6,079
Cummins	Gayla	AP Manager	38,162	9,533
Haid	Suzanne	Assistant to J. Pearson & D. St. Ours	27,939	6,979
Hendrix	Patricia	Assistant to Judy Jobbitt	35,695	8,917
Hughes	Krista	Development Researcher	38,855	9,706
Lumicao	Sarah Jane	Gift & Records Analyst	27,608	6,896
Thornburg	Diane	Alumni & Dev. Records Manager	44,615	11,145
		STAFF TOTAL:	356,452	89,042
		DEVELOPMENT OFFICE TOTAL:	$1,660,111	$399,834

*23.84% of Administrative Faculty Salary & 24.98% of Classified Staff Salary.

Table 5 contains similar information for fundraising activities in Local Academic Units at Mason. As with any organization, people come and go, e.g., David Cooper is no longer with the GMU Foundation. These data, however, are not meant to be exhaustive or definitive by any means, but rather suggestive of the FTE and the salary costs associated with fundraising throughout the University.

Table 5

LAU Fundraisers and Staff at George Mason

				2004	Value* of
Unit	Name	Position	Salary		2004 Benefits
CAS	Teresa Linehan	Director of Development	$ 82,400		$ 19,644
CNHS	Mary Earle Farrell	Leadership Gifts Officer	73,514		17,526
CVPA	Brian Marcus	Assoc. Dean for Development	113,300		27,010
	Julie Ann Green	Director of Development	51,943		12,383
	Megan Thornton	Development Associate	34,000		8,493
GSE	Shermita Rochelle	Director of Development	70,656		16,844
ICAR	Richard Gundon	Director of Development	73,000		17,403
IT&E	Jennifer Lamb	Director of Development	80,000		19,072
	Josephine Boukhira	Development Associate	33,743		8,429
Libraries	Adriana Ercolano	Director of Development	56,160		13,389
SOL	John Wertzberger	Director of Development, Asst. Dean	81,800		19,501
	Jessy Abellard	Assistant to John Wertzberger	40,900		10,217
SOM	Holly Davis	Director of Development	92,050		21,945
SPP	Roger Stough	Assoc. Dean, Research & Dev.	64,261**		15,320**
		TOTAL LAU DEVELOPMENT	$801,066		$192,212

*23.84% of Administrative Faculty Salary and 24.98% of Classified Staff Salary

**40% of salary and benefits because of other responsibilities

Note that, in addition to salaries and benefits, other costs are also incurred in fundraising, e.g., secretarial assistance, telephone service, and travel. The point is simply this: All those who are on the University payroll to increase the resources available to the University to fulfill its mission should be held accountable for their performance, just as the faculty are held accountable for their activities each year. The Faculty Senate adopted a resolution advising President Merten that the Unit Profiles developed for each LAU should also contain information on fundraising personnel, their goals, the costs associated with their fundraising activity, and the results that the fundraisers produce in terms of cash or in-kind contributions and grants or contracts.

Although the Faculty Senate can (and will periodically) review and provide information on the University’s overall fundraising activities and performance, as in this brief study, the faculty in each Local Academic Unit should closely monitor the activities and performance of their own LAU development office.