RELATED STORIES
Dialing for Dollars-Porterfield Attracting Investors
Nearly 35 years ago, Georgetown’s board of directors chartered a new course for the university that aimed to take Georgetown into the top tier of elite American universities. But at the beginning of its third century, Georgetown finds itself struggling to finance its growth from regional Catholic college to prestigious research university.
Academic and administrative departments are cutting costs to reduce operating deficits – due in large part to the Medical Center – that have approached or exceeded $20 million since the mid 1990s.
Even as departments are short of cash, the university has touted its successes in fundraising. Last December, Georgetown completed its $1 billion Third Century Campaign, placing it among 29 institutions that have ever accomplished fundraising drives of over $1 billion.
So, many ask, can a university raise $1 billion and still struggle to lift financial burdens?
The answer it seems, is yes.
While officials at the Council for Aid to Education and the National Association of College and University Business Officers would not comment on an individual institution’s statistics, their statistics from the Council for Aid in Education reveal that giving at Georgetown is a relatively modest effort when compared to other institutions.
According to a survey released last week by the non-profit Council for Aid to Education, the amount of private giving to universities in 2003 remained at 2002 levels. Giving to Georgetown during 2003 broke this trend, and charitable giving increased to its highest levels ever. Even as alumni participation rates and the amount of contributions have increased, they still remain below those of other institutions of similar size and selectivity.
“The Little College That Could”
Daniel Porterfield, vice president for public affairs and strategic development, admits that other schools with “accumulated wealth” have a financial advantage over Georgetown. He argues, however, that if viewed from a historical context, Georgetown has done remarkably well.
“Let’s look back 40 years to the early ’60s,” he told a group of alumni admissions officers in January 2004. “Georgetown was then a very fine regional university known for the intellectual rigor of the Jesuits. Over a period of perhaps 10 years . many associated with Georgetown began to feel a hunger to deepen Georgetown’s intellectual reach and depth.”
According to Porterfield, by the end of the 1970s, Georgetown – with its “puny little 1976 endowment of $20 million” – decided to invest in better facilities, faculty and students.
“It was the beginning of a significant ascent,” Porterfield, who graduated from the College in 1983, explained in an interview with THE HOYA. “Roughly five years earlier, maybe around 1973-74, the school wouldn’t have seen itself as competing in the top 25. There was no U.S. News and World Report Top 25 in 1975, but if there were, we wouldn’t have been on it. But when they did come out with the Top 25 later, we were ranked.”
“How do you make that jump?” Porterfield asked. “Well, we invested in excellence, which meant investing in people, rather than simply building the endowment for some later period of investment.”
Georgetown, he asserted, did seek money, but it was spent investing in the future.
“When I was a sophomore, I lived off campus,” Porterfield said. “Basically, the resident community consisted of freshmen and seniors. This was seen as a barrier to getting international students or students from other parts of the country.”
Thus, Georgetown built four new residential buildings – Henle, Village A, Alumni Square and Village C – and remodeled another – Nevils – over the course of two decades.
The administration also became more selective in recruiting faculty.
“The tenure process was adjusted to emphasize not only excellence in teaching but also distinction in contributing to the leading ideas of one’s field,” Porterfield said. In addition, Georgetown adopted a policy of full-need financial aid, he explained.
Georgetown financed its expansion of programs and facilities by using all of its financial flexibility. Georgetown’s tuition was steadily raised to Ivy League levels.
Student enrollment was increased and fundraising was initiated. Georgetown used borrowing to cover the rest, leaving it today with almost $700 million in outstanding debt. Much of the borrowing financed construction projects.
“Village A is not named, say, `Arend Hall’ because we didn’t have a lead donor for Village A or Village C,” Porterfield explained.
“These financial facts bring us to the present moment,” University President John J. DeGioia said last Tuesday at the Faculty Convocation, “when we sometimes sense that Georgetown doesn’t have the resources of the institutions with whom we compete.” Both Porterfield and DeGioia nevertheless contend that Georgetown has succeeded.
“This is our historical legacy as an institution that broke into a new competitive arena against all odds – with staggering aspirations but not staggering wealth,” DeGioia said.
Significant Achievement
When seen in this light, the Third Century Campaign marked a significant achievement for a university without a long tradition of fundraising. Expectations were exceeded throughout the campaign. The university originally set a target of $500 million in 1995. But after easily raising $335 million during a three year “quiet phase,” then-University President Leo J. O’Donovan, S.J., judged that he could safely increase the goal.
When he publicly announced the start of the campaign in October 1998, he established a goal of $750 million. In the fall of 2000, he extended the campaign until June 30, 2003 and increased the goal by an additional $250 million.
The campaign failed to reach its goal by June 30, however, instead ending the campaign on Nov. 30.
Over 105,000 donors participated in the campaign, which broke all previous internal records.
Georgetown raised $298 million for its endowment, $210.5 million for facilities and $507.5 million for specific current use funds, according to figures provided by Jeff Donahoe, senior director of advancement communication for the Office of Alumni and University Relations.
Current use funds are available to spend immediately but have been earmarked for a certain capacity by the donor, “like a new shell for the crew team,” he explained.
Through gifts to the endowment, Georgetown managed to double its number of endowed faculty chairs, create a dozen endowed medical research grants, and implement 219 student scholarships. The university also financed a performing arts center and raised $50 million toward the $180 million Southwest Quad. It also collected funds for a new boathouse, multi-sport athletic complex and almost $50 million for a new $82 million business-school building.
A Pledge Is a Promise
But the Third Century Campaign did not represent an immediate net inflow of $1 billion to the university. Like all capital initiatives, much of the total consisted of contributions pledged by donors who promised to pay at some point in the future.
As DeGioia explained last week, “Much of the campaign total reflects future commitments that will be made over the course of the next five years. Of the $1 billion that we raised, we have received about two-thirds in cash at this point.”
Thus, some of that money will not be collected for several years. Of the money collected, most has been already spent.
“Of the $664 million we have received so far,” DeGioia continued, “more than $300 million was spent over the past eight years by all of us for current uses in each of our schools on all of our campuses, about $125 million was used to finance capital construction, and about $200 million found its way into the endowment.”
Predictably, giving has slowed since the end of the highly publicized campaign. According to Donahoe, Georgetown has raised $16 million since the end of the campaign last December. Despite raising half of the funds for a new business-school building, DeGioia admitted at a Faculty Senate meeting last fall that funding for a new science building had stalled.
For the current fiscal year, which runs from June 2003 until June 2004, the university hopes to bring in $125 million, which is $20 million less than the amount raised in the past fiscal year. To date, the university has raised $63 million this year.
How Does Giving at Georgetown Compare?
Joye Mercer Barksdale is the Director of Public Relations at the Council for Advancement and Support of Education, which bills itself as a leading resource in the fields of education fundraising, communications and marketing and alumni relations. She tried to put Georgetown’s giving initiatives in perspective.
“In terms of the size of Georgetown’s campaign, more and more institutions are setting goals of $1 billion or $2 billion, and they are meeting those goals,” she said. “However, I wouldn’t say that a $1 billion goal is exactly `common.'”
The record amount of giving in 2003 still leaves room for improvement.
Boston College, like Georgetown, started the 1970s with a small endowment. According to The Heights, Boston College’s student newspaper, the school’s endowment in 1972 was only $5 million. By last July, however, the endowment had grown to $960 million, almost $370 million more than Georgetown’s.
Ann Kaplan at the Council for Aid in Education accumulated data for the council’s annual Voluntary Support of Education survey, to which Georgetown submits its data. According to Kaplan, the university received $83 million in fiscal year 2003. This includes pledges made and collected in 2003 and pledges made in previous years but collected in 2003. Pledges that were not yet collected in 2003 were not included.
Based on this fundraising figure, Kaplan said Georgetown ranked 53rd out of the 955 colleges and universities that reported information. Georgetown fared better in terms of alumni giving, ranking 39th out of 955 institutions in terms of total alumni giving.
But Georgetown’s alumni participation rate ranks 218th. The discrepancy between these two rankings reveal that while Georgetown’s pool of participating alumni was relatively smaller, the value of their gifts was larger.
According to Kaplan, this reflects a growing national trend. “The only reason alumni giving went up last year,” she said, “was because the average amount increased. Participation remained relatively flat.”
Nevertheless, the $146 million pledged during fiscal year 2003 remains lower than contributions of many other institutions of similar size and selectivity. According to figures from the Center for Aid in Education, Johns Hopkins University collected over $319 million during fiscal year 2003; the University of Southern California, $305 million; and the University of Virginia, $260 million.
DeGioia admits the statistics look daunting.
“Today, right now, every single university ranked ahead of Georgetown has at least double our endowment,” he said to the faculty. “Emory’s is around seven times ours. Penn’s is six times ours. Harvard – 30 times as large. But believe it or not, we’re catching up, relative to where we started.”
The rate at which alumni give has also been slowly increasing, reaching 35 percent last year. This alumni giving rate is used by the rankings of U.S. News & World Report to judge alumni loyalty.
How to Raise a Billion Dollars?
The Office of Alumni University Relations solicits giving through the Annual Fund campaign and the Major Gifts initiative. According to Donahoe, the Annual Fund “generates around $20 million per year, a figure that is inching up each year as alumni numbers increase and as we find more alumni.”
OAUR also works to solicit major gifts from individuals, corporations, alumni and current parents. Donahoe said that donors most often contribute to programs in which they participated in as undergraduates.
While official student groups are not allowed to directly solicit donations from alumni, OAUR did allow Annual Fund donors to give directly to a specific club or organization last year.
The university also wants to establish better ties with its alumni. “Of course,” Donahoe replied, “we want more alumni to feel comfortable about giving to Georgetown. We want them to talk about the university in positive ways. Maybe someone they know will send their kid to Georgetown. We’re also looking for people to volunteer.”
Porterfield believes that these alumni are an investment.
“It is a fact that our assets are stronger now,” he said. “We are graduating stronger and stronger cohorts of students. Today we are raising money from our 1960s graduates because our 1970s and 1980s graduates haven’t come into their wealth yet.”
“That’s why we need the vantage point of history,” Porterfield explained, to help us see the university in the context of our sharp and distinctive upward trajectory.”
