Universities and Philanthropy

I flew to San Francisco (yet another hardship assignment) to participate in a panel on “Accountability in Grant Making to Institutions of Higher Education” a couple of weeks ago. This was at the annual meeting of the university fund raisers who specialize in “corporate and foundation relations” sponsored by the umbrella organization, CASE: the Council for Advancement and Support of Education. CASE works to assist colleges and universities in their (financial) “development” (=”advancement”) activities.

I suspect that most faculty members are blissfully unaware of their institutions’ elaborate mechanisms for development work, apart from those activities that directly support their own research. Humanities faculty are doubtless at one extreme on the scale of awareness, with scientists clustered firmly at the other end. In the wealthy institutions, both public and private, the development efforts are mostly focused on raising endowment funding, although of course the same institutions are also trying hard to maximize annual giving. There are a lot of reasons for continuing to work hard at the smaller gifts that constitute much of annual giving, but the main one is that these funds are (unlike so much endowment funding) unrestricted, so that the institution can spend them as it wishes. Given the steady increase in the size and wealth of all of the most prestigious institutions, fund raising has become a critical activity.

My own expertise in this area derives from my research on the history and functioning of private philanthropic foundations. I have been working on the history of the large American foundations for a good many years now, and along the way I have become a more-or-less knowledgable observer of contemporary foundation behavior. Five or six years ago at the spring meeting of the American Philosophical Society (see links here and here), Paul Brest and I presented a pair of papers on recent changes in foundation performance—Paul was then (and is still) the president of one of the country’s largest foundations, the William and Flora Hewlett Foundation, and he is one of the wisest and most interesting of foundation leaders. He is also one of the growing number of foundation philanthropists who stress the need for philanthropy to be “strategic” in order to be “effective,” in contrast to early thinking that privileged long-term research and program over the current emphasis on significant, measurable results over the short term. I, on the other hand, have tried to make the case that foundations should, in addition to seeking short term impact, continue to direct some significant portion of their philanthropic investments toward more speculative (double entendre intended) investments unlikely to produce results quickly. The advocates of strategic philanthropy have criticized much traditional investment as at best slow and at worst completely unproductive. And of course they have had a point.

Our discussion in San Francisco was supposed to be about the concept of “accountability,” although that is always a slippery concept in philanthropy, since American law gives donors almost complete flexibility in determining what to do with their philanthropic investments. For the most part, philanthropic foundations are accountable only to their own trustees, so the real question (and the one Paul and I discussed) was what foundation investments in universities made most sense.

There are some family foundations willing to make endowment grants to higher-education institutions or grants to support bricks and mortar, but almost all foundation support of universities has taken the form of grants for specific research projects. This is a classical example of “restricted funding”, and it has declined in recent years as the foundations, attempting to be more “strategic” and “effective,” have either forgone research funding (on the grounds that it is too long term and, in any case, uncertain to succeed) or invested in non-university research organizations such as think tanks (on the grounds that they are better at contract work, and more likely to deliver “products” on schedule). There is no doubt that universities have hurt themselves in the search for private research funds by creating the impression (and frequently the reality) that their faculty divert grant monies to purposes other than those intended by the donors, and/or simply fail to deliver the sought-for results on time (or at all). In my judgment, this phenomenon results both from the fact that good research is usually slow and uncertain, and that researchers are sometimes quite irresponsible in meeting their obligations to supporters.

There isn’t space here for a full account of Paul Brest’s presentation, which I found especially catholic and thoughtful. But I should mention that he outlined four approaches to strategic philanthropy. The first was to “scale up” existing programs that have succeeded in reaching clear goals. The second was to test new theories about what works. The third was to attempt to influence systemic change either through advocacy or direct philanthropic investment. The fourth approach was supporting basic research, the traditional method of large philanthropic foundations, but even here Paul had a slightly different take—he favors builiding up institutional capacity for knowledge development, not by grants for specific research projects. He believes that freeing up faculty to do research ought to be the goal of basic research support.

Since we had an audience of university foundation-relations specialists, we had a series of pertinent and interesting questions. But I am always struck by how hard it is even for such individuals to acquire adequate knowledge of the ongoing policies and practices of philanthropic foundations. This is partly because the national press, apart from a few newspapers, does not support a philanthropy “beat,” and partly because private foundation support appears so small in contrast to government research support (almost entirely in the sciences). Philanthropy also deserves more scholarly attention than it normally gets.