State funding drop will mean more fundraising efforts for UI

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.

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vcponsardin wrote on March 08, 2013 at 10:03 am

As the U of I moves ever more closely to becoming a fully private university...  I wonder at what point it will cease to be the U of I and instead change its name to Khan University?  Or maybe Flex-N-Gate University?  The Fightin' Khans?  The Fightin' Gates?  Cool.  How long can the state continue to demand 100% control of the university's Board of Trustees when the state contributes less than 15% of the budget?

syzlack wrote on March 13, 2013 at 6:03 pm

It's pretty much a fully private university now.  There is still state funding for the undergraduate cannon fodder, but with a skim off that tuition to pay for the "world class scholars" yadda yadda.  But there is no reason to change it to Khan U.  The UNIVERISTY OF ILLINOIS" brand has too much market recognition and power to be let go.  The UI remains a going financial concern, and will continue to be so.  The state can mewl about control of the U, but money talks.  The only problem the U faces is the stripping of the economic value illusions and smoke and mirrors from the economic value realities of the present.  cf: the College of Law.  You might think you're a part of "Illini Nation" but then you're a fool.

Illiniwek222 wrote on March 08, 2013 at 11:03 am

I wonder how much more alumni cash (and matching employer donations) would be received if Chief Illiniwek was to come back.

Sid Saltfork wrote on March 08, 2013 at 12:03 pm

The State of Illinois might be better off by allowing the U of I to become a private university, and leasing the buildings to the university.  The U of I could continue to do as it pleases without the pesky public scrutiny.  The employees would have their pensions up to that date covered by the state with it's "pension reform", and begin employment with the private university employer under a 401k plan.  The private university would be subject to taxes as other private businesses are taxed as well.  It could be a "win-win" for all.

GeneralLeePeeved wrote on March 08, 2013 at 3:03 pm

Maybe not Sid, just because a college may be considered "private", it can still be considered as a non-profit institution....there are plenty of them across the country.

Sid Saltfork wrote on March 08, 2013 at 4:03 pm

If it is, or if it is not; doesn't matter.  The state is not adequately funding the university; and the university has not been transparent in the past regarding it's scandals, and actions.  Both the state, and the university may be better off by parting company with the state leasing the state paid for buildings to the university.  It would save construction, and reconstruction costs for the state.  The university could continue to do as it pleases without state oversight on the university's actions.  Heck, the university could bring in new management like it has in the past without the public indignation when the future scandals erupt.  It could re-instate the Chief.  It could continue to pay off failed administrators.  No citizen would have the right to complain.

syzlack wrote on March 13, 2013 at 6:03 pm

To repeat, for all intents and purposes it already is a private institution.  In the near future I suspect many departments and colleges will work their way toward being private entities in legal terms too.  These discussions are already underway in some colleges, and will no doubt increase in the future.  Money, and nothing else, except perhaps preening esteem, is the measure of all things in this country, and that's what nearly everyone at the U subscribes to.  It's certainly not some pathetic idea of a public school and the public good.  The University of Illinois is a going concern, seeking profits, it's in real estate development, venture capital funds, branding, etc. etc.  Give up those old ideas of the public good and fully embrace the god of the market.  You'll feel better in hell.

syzlack wrote on March 13, 2013 at 5:03 pm

None. Except for maybe $50 from Savoy.

spangwurfelt wrote on May 18, 2013 at 1:05 pm


Bulldogmojo wrote on March 08, 2013 at 8:03 pm

If the University wants more private donor money it should take more care to hire administrators who can stay out of the cross hairs of ethics investigations. What the Alumni want is to see their degree hanging on the wall and to not feel a twinge of embarrassment by it.

Get back to ethics and the money will come.

esotiro2 wrote on March 08, 2013 at 8:03 pm

Yes, many alumni are refusing to give to the University of Illinois because of the Chief scandal. I am one of them. While I love the Chief, the issue is that a small group of people railroaded the majority and decided to cave to the NCAA when we never even host championships. Until I personally see that the university changes direction and that it hires a more ethical, transparent administration, I will continue to direct my financial gifts elsewhere. I encourage others to do the same. 

SaintClarence27 wrote on March 10, 2013 at 12:03 pm

So you're refusing to give to an academic institution based on a racist sports mascot? Sad.

rsp wrote on March 13, 2013 at 10:03 am

You need to keep up on what's going on at the UI. Did you see the wrestlers? At the Assembly Hall I might add.

Other sports host tourneys all the time, too.