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The Chronicle of Philanthropy: Mergers Turn University Foundations Into Fundraising Juggernauts
Author: Drew Lindsay, The Chronicle of Philanthropy
Posted: July 6, 2015

Read the original story in The Chronicle of Philanthropy. (subscription required)

The recession had a long, painful tail at Portland State University. It left a perennial budget shortfall and emotional scars as students and faculty protested tuition hikes, low salaries, and what they saw as administrative bloat. But its legacy includes a promising new fundraising structure for the university.

In 2013 — the same year that faculty marched in the streets — officials met to find new savings rather than implement across-the-board cuts. One proposal to save about a half-million dollars: fold the advancement team into the university’s independent nonprofit foundation. With approval by the university’s president and the foundation board in early 2014, the idea was executed quickly, with more than 50 advancement staff members joining the 13- person foundation team less than six months later. "I said, ‘Pull the Band-Aid; let’s do this merger really fast,’ " says Françoise Aylmer, the advancement chief and official named to lead the restructured foundation. "It was critical to maintain our fundraising momentum."

Spurred by budget woes, Portland adopted an increasingly popular strategy among universities: turn affiliated foundations into fundraising juggernauts. Traditionally, many of these foundations have had sleepy roles as gift repository and asset managers, according to David Bass of the Association of Governing Boards of Universities and Colleges. But that changed at many universities coming out of the recession; an AGB survey of 220 foundations found that more than half had taken leadership roles in fundraising from 2009 to 2014.

For the public university, moving fundraising outside ivory-tower bureaucracies offers freedom that potentially translates to more dollars. An independent 501(c)(3) can operate without regard to state higher-education regulations or the policies and salary schedules of a multicampus system. Also, the foundation board can be built almost exclusively as a fundraising instrument; university governing boards, by contrast, are often packed with political appointees and must focus on broad issues of operations and policy.

The University of Vermont studied these benefits for several years and made the leap in 2011. It created a new foundation to house all the fundraisers and development officials from across its various colleges and the athletic department. "This was an acknowledgment that we had to get really good at fundraising," says Richard Bundy, the foundation’s president. Three years later, with a board of trustees filled with university benefactors recruited to help raise money, the group brought in $55 million in gifts and pledges, a record for the institution.

A Higher Profile

At the 28,000-student Portland State, advancement staff members had to give up their state defined-pension plan to join the nonprofit foundation, but Ms. Aylmer says the organization — with its own human-resources department — put together attractive compensation packages and bonuses and brought over all but one person.

One key to the merger’s potential success will be the ongoing reshuffling of the foundation board to bring on individuals with the wealth, connections, and passion for the university to be effective fundraisers. "There’s only so much staff can do," Ms. Aylmer says. "You need strong volunteers."

Regardless, the board and restructured foundation have given fundraising a higher profile than when Ms. Aylmer was simply one of many vice presidents, she says. "We have a voice that is more diversified. And that brings us greater strength."

This story is part of “Built to Last,” a look at how some recession-battered nonprofits emerged stronger and more resilient.

(Photo credit: Fred Joe)