New Center Aims to Give Higher-Education Donors More Power

A new nonprofit group that will broker gifts between philanthropists and colleges plans to use big donations as a carrot to get “complacent” colleges and universities to become more serious about achievement.

The Center for Excellence in Higher Education, which is based in Indianapolis, is receiving a combined $5-million over five years from the Marcus, John Templeton, and John William Pope Foundations.

Frederic J. Fransen, executive director of the center, says he believes colleges have allowed their quality to diminish, even as their costs have risen, and that donors must take a more prominent role in reinvigorating higher education.

“We want to use philanthropy as a lever to get universities to pursue excellence in a much more intense way,” Mr. Fransen says.

The center held at a news conference in Washington last month to introduce itself, even though it has been operating quietly since January.

Michael Leven, vice chairman of the Marcus Foundation, in Atlanta, says the Center for Excellence in Higher Education can help philanthropists use their donations to counter the “biased political correctness” that he believes is far too prevalent in American universities.

Mr. Leven, who is also chairman of the center’s board, deplored Columbia University’s decision to invite Iranian President Mahmoud Ahmadinejad to speak at the campus last week, and he suggested that donors who share his views might consider “affecting the outcome of that kind of thing by directing their gifts appropriately, to get an equal voice.”

“We don’t want donors to stop giving to universities, but we do want them to direct their gifts to issues that they think are important,” says Mr. Leven.

The Marcus Foundation was established by Bernard Marcus, co-founder of Home Depot, and has made grants in support of free enterprise.

The Templeton foundation, based near Philadelphia, was created by John Templeton, who made a fortune running mutual funds, and supports research that attempts to reconcile religion and science.

The Pope foundation was started by John William Pope Sr., who owned a chain of retail stores and died in 2006. He also established the John William Pope Center for Higher Education Policy, which believes that the academy “has strayed from its chief goals of scholarly inquiry and responsible teaching.”

Legal Challenges

The center will help donors structure their gifts to insure that colleges honor their intentions as time passes. Mr. Fransen believes donors should either have some continuing say in how donations are being used, or pay out large gifts over time so that they can pull their money if a college does not honor the original agreement.

Legal battles over whether colleges have strayed from gift agreements have been making headlines recently. The most prominent case involves Princeton University and the Robertson family, heirs to the A&P supermarket fortune.

In 1961 Charles S. and Marie H. Robertson made a gift, which is now worth more than $800-million, to Princeton to endow the Woodrow Wilson School of Public and International Affairs. The Robertson heirs say their parents wanted the gift to be used only for graduate programs within the Woodrow Wilson school, and they contend the university is inappropriately using the fund to pay for other programs. Princeton denies the claims. The lawsuit is pending in the Superior Court of New Jersey in Mercer County.

Similar lawsuits involving the descendants of donors are now being pursued at Tulane University, in New Orleans, and Randolph College, in Lynchburg, Va.

Robert K. Durkee, vice president and secretary at Princeton, says the dispute with the Robertsons is “an odd case” for the center to cite. “Part of the argument that the center wants to make is that it would help donors figure out how to get things written down,” he says. “The irony of citing the Robertson case is that what the Robertson family is trying to do now is to overturn what their parents wanted to do, and what in fact got written down.”

William Robertson, a leader of the lawsuit against Princeton, did not immediately return calls for comment.

Giving by Alumni

The idea for the Center for Excellence in Higher Education grew out of meetings on higher education that Mr. Fransen coordinated for the Philanthropy Roundtable, an association of donors.

His background includes earning a Ph.D. from the Committee on Social Thought at the University of Chicago and serving as a senior fellow at the Liberty Fund, which specializes in bringing scholars together for interdisciplinary seminars about liberty and the structure of a free society.

Mr. Fransen believes that donor dissatisfaction is contributing to a decline in the proportion of alumni who give to their alma mater. While American colleges received a record $28-billion in donations last year, the proportion of alumni who give dropped to 11.8 percent, from 16.7 percent in 1996, according to the Council for Aid to Education’s annual report “Voluntary Support of Education.”

John Lippincott, president of the Council for Advancement and Support of Education, an association of fund raisers, says the actual number of alumni who give has risen, but the proportion is dropping because colleges are working hard to find older alumni and add them to their databases. Such newly contacted alumni are less connected to their institutions and are therefore less likely to give, he says.

“I don’t think higher education could be raising $28-billion per year if we weren’t any good at stewarding relationships with donors,” Mr. Lippincott says.

$50-Million in Pledges

Mr. Fransen believes the center can play an important supporting role in providing insights about academe and the business of higher education to donors, just as estate planners help donors with the financial and tax implications of a gift.

Already, about five or six individuals who may make pledges to colleges this year worth about $50-million are using the center’s services, Mr. Fransen says, and he expects most of those commitments to be finalized by the end of the year.

The center currently has just one other professional staff member, but Mr. Fransen expects to hire five or six employees within five years, if the center meets his goal of advising on donations worth several hundred million dollars per year.

The center is not currently charging a fee for its work, but Mr. Fransen expects eventually to charge donors to whom the center provides consulting advice a fee of 1 to 2 percent of the total gift.

In other cases, the center may take ownership of a donor’s funds, and charge a management fee, as community foundations do. “Our objective is to provide a range of options to donors who want to be involved in different ways,” Mr. Fransen says.

He expects colleges and universities to welcome the center’s involvement in the negotiation process.

“We’re raising the standard for what it’s going to take to close the deals,” Mr. Fransen says. “But a good president or development officer ought to appreciate that.”

Mr. Lippincott isn’t persuaded that such an adviser is needed.

“I really would think most donors would want to have confidence in the academic leader of the institution itself, as opposed to a third party,” Mr. Lippincott says.

Mr. Fransen says he will recommend a variety of tactics to help ensure that colleges honor donors’ intentions over the long term.

For example, he says that a donor who is considering endowing an academic program might instead put the money in a fund with a third party, but commit to having enough money at the university to cover the program’s costs for three to five years.

“In the worst-case scenario, if a donor loses interest, the university would still have a few years in which to responsibly shut down the program or look for other donors,” Mr. Fransen says.

Robert Kreiser, a senior program officer at the American Association of University Professors, says he finds that arrangement more palatable than one in which a donor takes an active role in overseeing an academic program, which he says raises questions of academic freedom.

But Mr. Kreiser notes that a guarantee of only short-term financing might make it difficult to find a highly skilled individual — someone interested in eventually earning tenure — to run a new academic program.

“You can’t plan ahead,” Mr. Kreiser says.

The Center for Excellence in Higher Education also plans to run grant competitions, in which it will pool money from donors interested in a particular cause, and invite scholars to compete for funds.

Possible grant competitions could include research on new business models for higher education, and ways to revamp engineering education.

Charles L. Harper, senior vice president of the Templeton foundation, says he eventually would like to see the center making grants worth $200-million per year through such competitions.

“We want to mobilize a lot of money,” he says.