In 1874, Fr. Patrick Healy, S.J. became president of a small, regional college and preparatory school in the nation’s capital: Georgetown.
According to R. Emmett Curran, an emeritus professor of history at Georgetown and the author of “The Bicentennial History of Georgetown University” – arguably the foremost historian of the university – Healy irreversibly altered the outlook of Georgetown’s leadership.
“Healy had incredibly ambitious goals, not the least of which was constituting this institution as what he would call a `real university,’ bring law and medicine into the broader university and ultimately bringing Georgetown into the modern age of American education,” Curran said. “In a number of ways, he did this.”
For the first time, the university appropriated funding for the professional schools in law and medicine, modernized the curriculum to include more natural sciences and, most visibly, began construction of [Healy Hall](https://www.thehoya.com/news/father-healys-imprint-past-present-and-future/).
But Healy also knew there was a much larger challenge for Georgetown to become everything it aspired to be: dollars and cents. As it approached its hundred-year mark, Georgetown did not have the financial resources to support [Healy’s bold vision](https://www.thehoya.com/news/the-heritage-of-healy-one-man-and-his-mission/).
So Healy set out to do something about it. Curran described his initiative as a massive undertaking in fundraising – the likes of which the university had never seen – including a sea voyage to the West Coast to meet with benefactors across the country.
The stakes were high. The costs of Healy’s programs were mounting, particularly in the construction of Healy Hall, which was vastly exceeding projected costs.
“I have been borrowing right & left since you went away,” wrote Fr. John Mullaly, S.J., vice president of the university in 1879, to Healy during his expedition. “There is a good deal more to be done yet. Oh for the money to do it!”
The results of Healy’s fundraising campaign, despite his best efforts, were underwhelming.
“He only raised around $50,000, while Healy [Hall] itself cost over $400,000 at the time,” Curran said. “Outside of a few benefactors, [Healy] received virtually nothing.”
When Healy, plagued by poor health, resigned in 1882, he left his successor, Fr. James Doonan, S.J., with a university-wide debt of more than $300,000. Doonan sold two large pieces of university-owned land, a villa in Tenleytown and a farm on Hickory Hill, an area near present-day Glover Park.
Georgetown is facing strikingly similar challenges 120 years later: the search for space, the fight to overcome its historical financial constraints and the effort to become the fundraiser it needs to be.
**Time Is Money**
The struggle Healy faced was not new and would continue to haunt Georgetown into the 20th century. Fr. Joseph Haven Richards, S.J., who became president in 1888, launched a whole series of building projects. But his fundraising efforts fell far short of target as well, Curran said.
After World War I, the first formal capital campaign, the Campaign for a Greater Georgetown, was established. In 1920, the university formed the first development office to collect funds and created alumni groups in several states. But Curran noted that very little money was raised, or at least far less than expected and less than what top American universities were raising at the time.
“I think one of the most important, consistent factors for the fundraising shortcomings was the lack of enthusiasm among the more affluent Catholics to support higher education,” Curran said.
In his bicentennial history, Curran noted that most of the nation’s foremost Catholics were sending their children to Harvard, Yale and Princeton – Georgetown remained a small and regional mid-Atlantic institution.
In the 1930s, University President Fr. Colman Nevils, S.J., who Curran described as “the university’s first effective fundraiser,” had his plans and efforts stymied by the onset of the Great Depression. After World War II, Fr. Hunter Guthrie, S.J. made fundraising a truly integrated and institutionalized part of the university’s work, and in the 1950s, Fr. Edward Bunn, S.J. led the first postwar capital development initiative and became the first to tap federal education money, according to Curran.
In spite of these efforts, however, Georgetown’s financial story remains centered on the distance between Georgetown and its peers.
“By the 1960s we’re still comparing miserably to our academic peer institutions in terms of endowment,” Curran said. “In 1964, when [Fr. Bunn left office], we had under $10 million. Harvard, at the time, had around $800 million. We were way behind.”
When Fr. Timothy Healy, S.J. became president in 1976, Georgetown slowly began to enter the modern age of fundraising and financial management, Curran said. Healy was the first to apply modern investing methods to the university’s endowment, resulting in a rise from $33 million to $250 million by 1989. Healy’s tenure also coincided with arguably Georgetown’s most important transformation into an international university, fueled in part by a national men’s basketball championship in 1984.
**A Space Odyssey**
Ever since Georgetown embarked in the 1980s in an effort to become a major international research university, [physical space has been one of its principal challenges and constraints](https://www.thehoya.com/news/campaign-unfinished/).
This year, university officials are devising a campus plan for 2010-2020 that will detail the bounds of its expansion over the next decade. There is no doubt, though, that Georgetown’s options are limited on its present site, boxed in on all sides with most of the Main Campus site already developed. But the complete story of Georgetown’s history of expansion involves acceleration – the tremendous speed with which Georgetown went from a small college with ample space to a large and crowded campus. The question has quickly become whether space might have a value beyond its assessed worth.
In the 20th century alone, Curran noted, it was quite possible that the boundaries of the contemporary Georgetown campus could have turned out very differently.
The sale of what became part of Glover Park in 1882 was a milestone in this story. But there were several opportunities for the university to expand its physical site, most of which appeared in the latter half of the 20th century. Few ever materialized.
In August 1978, Georgetown was offered a $4.5 million option to purchase 8.2 acres of land owned by the Georgetown Visitation Preparatory School, the all-girls school on 35th Street. Charles Meng, assistant to Healy, told The Hoya in 1978 that Georgetown Visitation would hold the land until December to work out a deal.
eng, however, had doubts the deal would happen.
“We’re not sure we can support a purchase of that amount,” Meng said at the time. “We like it, but do we need it? That’s the question.”
He was right – the next January, the university’s board of directors turned down the offer. Curran noted that only a few years later, Georgetown had nevertheless amassed a debt commitment of more than $40 million.
Perhaps most remarkable was the case of Mount Vernon College, which is now an auxiliary campus of The George Washington University, located only a few blocks off of Reservoir Road. In May 1993, Georgetown loaned the college, a financially troubled all-women’s college, $5.5 million, according to a Washington Post article from 1993. In return, Mount Vernon put up its 24-acre Foxhall campus as collateral. Then-Georgetown University Law Center Dean Judith Areen described the original terms of the arrangement to The Washington Post.
“We are not a bank,” Areen told the Post. “We are doing this in a spirit of cooperation. . [But] if this isn’t enough to get them on their way . Georgetown has the ability to use the land.”
ount Vernon President LucyAnn Geiselman told the Post she approached Georgetown for a loan because the university had pledged to educate Mount Vernon’s current students and buy out or hire their faculty if the college went under. Areen added that Georgetown would be willing to create a “Mount Vernon Center,” focused on women’s issues, if the college was unable to right the ship financially.
Georgetown University President Fr. Leo J. O’Donovan, S.J. said in the same article that if the college went under, “we are determined to ensure that Mount Vernon’s traditional commitment to the education of women will continue as part of Georgetown.”
Three years later, things took an unexpected turn. In October 1996, GWU took ownership of Mount Vernon and paid off the college’s loan to Georgetown. Geiselman said she had further discussed the long-term affiliation with Georgetown, but “`[university officials] decided that the two schools had separate missions,’ Georgetown spokeswoman Sandra Hvidsten said,” according to The Washington Post.
Curran said he is unsure what transpired with the Mount Vernon situation and why the university backed off the original indication of support expressed by O’Donovan. “For whatever reason, when the time came, Georgetown wasn’t prepared to do it,” Curran said. Current university officials declined to comment on this case.
In 1997, the university acquired the former Wormley School on Prospect Street for $1.5 million, intending to convert it into an administrative space or academic home for the Georgetown Public Policy Institute. Neighborhood protests, however, blocked its renovation, and the university ended up selling the facility in 2005 for $8.3 million.
As the campus plan is assembled this year, the university is facing the space crunch like never before. Many university offices are now housed off-site in leased office buildings, and the Car Barn remains leased through 2018, according to university spokesperson Julie Bataille. Ryan Hall, the Mulledy Building and some of the Gervase Building, all located around Dahlgren Quadrangle, remain vacant as aging facilities that have yet to be renovated by the university.
[Local residents](https://www.thehoya.com/news/gu-10-year-plan-partially-approved/) have consistently voiced concerns to the Advisory Neighborhood Commission regarding increased numbers of students living off-campus, but space for additional on-campus residences remains limited. With the new home of the McDonough School of Business now open and the science center awaiting construction, future development of the crowded Main Campus site will be a challenge.
Howard Federoff, executive vice president for health sciences at the Medical Center, raised in a June letter the prospect of the entire Medical Center moving off campus in the years ahead, as he anticipates that the Main Campus will ultimately need the space and the Medical Center will outgrow the current location. University officials declined to say whether this move will be included in the campus plan.
**A New Era of Financial Management and Fundraising**
In its 2009 Endowment Fact Sheet document, the university highlighted the gap between its academic standing and financial resources. In 2009, Georgetown was [ranked 23rd](https://www.thehoya.com/news/georgetown-upholds-ranking-remains-top-25-best-colleges/) in the U.S. News and World Report rankings of national universities and 71st in [size of endowment](https://www.thehoya.com/news/gu-endowment-ranked-78th/) – one of the widest disparities in the country.
Chris Augostini, Georgetown’s senior vice president, chief financial officer and treasurer, said he believes the university is now in a better position than ever to [narrow](https://www.thehoya.com/news/gu-wins-award-for-rising-endowment/) this centuries-old gap.
Augostini noted how [financially behind](https://www.thehoya.com/news/endowment-approaches-1-billion/) Georgetown was for so many years compared to its peers, but also said that it makes the university’s achievements – particularly in the areas of student financial aid and academic excellence over the past 30 years – that much more remarkable.
“I think we [progressed] even though we were not a fundraising machine, unlike a lot of our peers. We came to the game very late in fundraising, and yet we dedicated significant resources in those core things called academic excellence,” he said. “Our last capital campaign, which raised [a billion dollars](https://www.thehoya.com/news/georgetown-finishes-1-billion-campaign/), was in many ways our first compared to our peers, who had probably been in their fifth or sixth [campaigns].”
In evaluating the broadest factors behind the university’s current financial position, Augostini immediately pointed to the sale of the Georgetown University Hospital in 2000 to MedStar Health as “one of the most important decisions [Georgetown] ever made.” In 1999, he said, at least 50 percent of the university’s financial activity related to the hospital and clinical work, and by that time, the business had become incredibly volatile, especially as an independent hospital that was not part of a medical system.
“In the late 1990s, we did absorb significant losses from our clinical activities. What this sale in 2000 ultimately did was position Georgetown to focus on its core academic work,” Augostini said. “It put us on sound financial footing to put us in a position to concentrate on what matters most to us.”
He cited the progress of the last 10 years, during which the university bolstered faculty salaries, continued to invest in financial aid, and brought more sophisticated financial management to the university – particularly in 2004, when Georgetown hired its first chief investment officer, Larry Kochard, and instituted the first permanent office to manage the endowment. Augostini noted that the university was particularly behind the curve in this regard, as they previously had a team of consultants and a board of directors subcommittee managing investments.
“You cannot make fiscal decisions by quarter. These sorts of investment decisions simply needed to be made on a day-to-day basis,” Augostini said.
But last year, everything changed with the onset of the worldwide economic recession.
“I think Georgetown, in the worst economic environment since the 1930s, will have responded to this crisis in a way much better than its peers,” Augostini said. “We have been very committed to making decisions around constraint . and yet doing so while remaining firmly committed to financial aid and our faculty salary plan, albeit modestly, all while many of our peers were laying off faculty and abandoning financial aid.”
Among many financial moves the university has made in the last year, Augostini highlighted four: de-risking the portfolio with an emphasis on liquidity, delaying some capital projects (like construction of the science center), delaying salary increases until January 2010 and trimming overall spending in selected areas like energy use.
Augostini reported that for fiscal year 2009, which ended in June, Georgetown will have an endowment of about $900 million, a 22 percent decrease from 12 months prior, with possible small adjustments in the figures as the final numbers are crunched. The endowment had first crossed the $1 billion mark in 2007. The operating loss will be around $12 million for the year, which he noted is less than originally anticipated.
The university’s management of debt has also changed in the past year. In the past, Georgetown has been heavily weighted in auction rate securities, which Augostini said required Georgetown to pay sometimes as little as 1 to 2 percent on its debt per year. As the crisis hit, however, investors were finding they could no longer sell their debt, so the university moved towards a fixed-rate debt structure, with a cost of around 4 to 5 percent per year.
“Upon reflection, we concluded very early on that we were over-weighted in ARS. Now our debt is more like 65 to 70 percent in fixed rate, and we feel this is the kind of exposure we want right now,” he said.
He further said this move, along with keeping debt at a controlled percentage of our operating budget, contributed to Standard and Poor’s decision in September 2008 to raise the university’s bond rating from BBB+ to A-.
“You’re just seeing what our peers are going to go through with the risky investments they’ve made over the past years,” Augostini said. “We’ve created something very special here and very unique. Candidly, I don’t think our position as a university has anything to do with money or facilities. People always say, `We don’t look like [other universities],’ and yet year in and year out, we compete at the same level. It is remarkable.”
Ultimately, for the financial gap to be closed between Georgetown and its peers, Augostini acknowledged, much of the gain will have to be in fundraising – very much as Patrick Healy attempted over 100 years ago.
James Langley, the university’s vice president of advancement, is responsible for coordinating these efforts. Langley said Georgetown has learned from its past shortcomings.
“We have learned that to be successful at fundraising, you can’t just build a fundraising apparatus – you have to have a very powerful alumni system, you have to have networks, you have to have activities in key markets around the country and around the world,” Langley said. “In other words, you have to go out, almost like a political campaign, and build a constituency.”
Langley said Georgetown has been engaged for the last three years in the quiet, early phases of another capital campaign, and is hoping to go public with the campaign next September. To date, it has raised $520 million, and Langley anticipated the total campaign target will be between $1.5 to $2 billion, which will include the $520 million already raised.
“The reason you do that is that if you just announce a walloping campaign with nothing in hand in a tough economy, people will be skeptical,” he said.
Langley described some of the additional elements of the forthcoming campaign: If the marker is set at $1.5 billion, for instance, he anticipates targeting $500 million for financial aid and scholarships, $400 million for faculty excellence, $300 million in capital and $300 million in special initiatives. He further noted that he expects at least 25 percent of the campaign return to come from large estate gifts.
[Whether this disparity – which has persisted since the first days of the university – can be bridged remains uncertain](https://www.thehoya.com/news/degioia-discusses-fundraising-efforts/).
The prospect of University President [John J. DeGioia](https://www.thehoya.com/news/degioia-outlines-vision-to-gu-faculty/) launching a [fundraising expedition](https://www.thehoya.com/news/degioia-previews-fundraising-campaign/) by sea through the Panama Canal, like Patrick Healy did in 1870s, may be unlikely. Whether the efforts of Augostini, Langley and DeGioia to grow the university’s financial resources will be successful remains to be seen. What is clear is that they are well on their way.
*- Hoya Staff Writer Dave Finn contributed to this report.*
**Correction:** This article originally stated that Fr. Patrick Healy traveled to the West Coast via the Panama Canal to raise funds for the university in about 1879. The canal was not opened until 1914.”