State funding drop will mean more fundraising efforts for UI
URBANA — Faced with a state appropriation that now mirrors an amount from the mid-1990s, the University of Illinois plans to redouble its private fundraising efforts.
In his first appearance before trustees, new UI Foundation President Thomas Farrell on Thursday outlined ambitious goals: double cash donations and double the endowment by the end of the decade or within 10 years.
Achieving those goals "is going to take a lot of buy-in and support from the university community," said Farrell after the meeting.
Doubling the endowment and cash gifts would have a big, welcome impact on the university, said UI President Robert Easter. The much-needed boost will go a long way toward providing scholarships for students and sustaining the physical infrastructures of the campuses and the quality of the classroom experience, he said.
"For much of our history, the state and taxpayers have generously supported us," Easter said. That capacity may have diminished in recent years, but the need to provide an affordable, quality education and be a premier research institution continues.
"Those goals can't be achieved without financial resources," Easter said. In recent years, "we've had to increasingly turn to private fundraising to do that."
In Gov. Pat Quinn's recent budget proposal, the UI would see a $32.7 million reduction in direct appropriation for the next fiscal year. Since 2002, the university's annual general state tax support has declined about $181 million. As proposed, Quinn's budget would bring that number to almost $214 million.
As for this fiscal year, the state currently owes the UI about $485 million, according to UI Chief Financial Officer Walter Knorr. On Thursday, board Chair Christopher Kennedy pointed out that the receivables, the amount the state has owed the university, has not dipped below $350 million in the last four years. The UI is receiving about $300 million on time, which is "roughly what we're going to raise from private donations," he said.
In 2012, the foundation and university raised about $311 million in new business, such as gifts, commitments and pledges.
At the end of 2011, the foundation, the university's private fundraising arm, wrapped up its largest campaign ever — surpassing the $2.25 billion goal and raising $2.4 billion. But there's plenty of room for growth in terms of cash gifts, alumni giving rates and other areas, officials said.
"We're really short of where we need to be," said Urbana Chancellor Phyllis Wise while reviewing fundraising data for Urbana. One of the campus' goals is to renew its efforts on principal gifts, pursuing donations of $5 million or more.
"Our number of 'leadership donors' is smaller than what you'd see at peer institutions," Farrell said. And UI fundraisers need to be more effective at engaging more people in foundations, corporations and other areas of philanthropy "so the breadth of our outreach is broader," he said.
In addition to the new UI Foundation president, another newcomer to the fundraising team is Dan Peterson. The vice chancellor for institutional advancement for the Urbana campus is "shaking it up," Wise said, by "making us think of advancement in a more strategic way." That means building relationships between the donor and development officer and learning about donors' passions, she said.
The university endowment is around $1.5 billion and to double it by the end of the decade would require the foundation to bring in an 8.9 percent return over seven years. Or, to double the endowment over 10 years, it would need a 5.8 percent return over those years.
In January the foundation hired a chief investment officer and the organization has been moving toward a strategy of managing the endowment internally.
The endowment's payout is around $61 million now and doubling the endowment would bring the payout up to about $110 million.
As for cash gifts, money that is immediately available to the university, Farrell said the university needs to be more aggressive about pursuing such gifts. In 2012, $211 million in cash gifts was received.
Farrell, who joined the foundation in January and came from the University of Chicago, said he and his staff are working on a "road map exercise" that would involve holding workshops and meeting with campus teams in the coming months. That process will lead to a plan with specific recommendations. The guiding principle throughout this process, he said, is excellence.
"We're seeking to create a development and advancement operation that's defined by excellence," Farrell said.
News-Gazette reporter Julie Wurth contributed to this report.