Colleges should pick students over stone
This article was first published by Banker and Tradesman on Sep 9, 2018
Any top university will tell you that the easiest way to raise money is by naming buildings after big donors. But in today’s world of suffocating student debt, what we really need are scholarships. If students can’t afford college, a new building bearing the name of the donor becomes irrelevant to both the college and donor.
Colleges know well that student debt is out of control, surpassing $1.6 trillion with only half of it being actually repaid. And students know the negative effects from the debt in terms of money pressures, delayed families, forgone house and car purchases, divorce and suicide.
However, the student debt crisis does not affect how colleges raise money. It never has. In the gilded age, the rich, such as Cornelius Vanderbilt, had an entire university named after them. Colleges long ago replaced cathedrals as preferred places to memorialize the names of the rich and powerful. Today, hedge fund donors need charitable projects big enough to minimize taxes. College buildings fit the bill while also providing bragging rights and guaranteed college admission for family members. Of course many are genuinely philanthropic and excited by the purpose for which they give.
College development offices follow the course of least resistance. If a donor wants his or her name on a building, they will find a building that needs to be built or renovated. They may prefer scholarship aid or unrestricted giving, but they know enough not to force the issue. They work in a highly-pressurized business in which thousands of professionals must complete multi-billion dollar endowment campaigns under tremendous competition. A $20 million contribution for a cafeteria or a $200 million gift for a science center are coveted home runs.
But now there exists a compelling reason for development departments to rethink this strategy. Most of their donations come from alumnae(i) yet, most newly minted graduates are in debt. Those who become rich or super rich may be sympathetic to donating for scholarships remembering their own plight. Big scholarship gifts for tax protection are certainly possible as the debt of the students and alumnae(i) of any single university can amount to hundreds of millions if not billions of dollars. With taxpayers reluctant to shore up the national student debt problem, colleges could convince donors to focus on scholarships as a way to avoid a crisis in their own college finance.
Development officers can find ample ways to celebrate scholarship givers not only by naming scholarships after them, but by finding innovative ways to celebrate them as the true benefactors. One example would be to name a building “Scholarship Hall” with each floor named after a benefactor.
Higher education experts speculate that colleges across the country will have to shut their doors. Seeing other institutions close may make graduates wonder about their own college. College investment offices must protect their college by investing in the future of students, not stone for buildings.