Putting philanthropy to work for university research in Europe
This report is a call to arms. Its aim is to help release the untapped potential of philanthropy for research funding in universities. Its main audience is people in universities: the university leadership, faculty, and fundraising units who are actually involved in fundraising activities or are considering the potential of philanthropy for funding university research. It is also addressed to people in government, whose policies influence the propensity and potential impact of philanthropic funding. It is however also addressed to philanthropists, highlighting how they can make a difference in supporting excellence in research in European universities.
The report’s starting point is a point of urgency. Europe is falling behind in world-class research and to reverse this trend urgent action is needed. The EU has recognised this and has put together an ambitious strategy, setting specific objectives and putting in place policies to create a European Research Area (ERA). This involves creating world-class research infrastructures and research institutions, effective knowledge sharing, jointly-established research priorities and jointly-implemented programmes, an adequate flow of mobile researchers, and an opening of the ERA to the world.
Most of these developments require funding, and in addition to funding from the government and from the private sector, philanthropy or ‘giving’ is a potentially important source, but it is not nearly as well developed in Europe as elsewhere, particularly in the US. This lower giving in Europe is clearly related to the European institutional context, with its high taxes and its tradition of public spending for education and research. In addition it is often said that whereas there is a culture of giving in Europe, it is not generally so for education or research.
In Europe, an important proportion of research is done in universities. Hence philanthropy is particularly important in the context of funding university research. In the past, however, there has been resistance to the idea of raising funds from philanthropic sources, though nowadays a growing number of universities are rediscovering philanthropy, partly due to shrinking public budgets and partly due to an understanding that excellence requires a diversification of funding streams. A number of European universities have also been quite successful in their efforts to raise funds via this route.
At the same time, philanthropists are also discovering that they can make a difference in university research. There have already been significant gifts to education in many European countries, and the situation is rapidly evolving. Part of this evolution is connected to the wider context of the reform of university research systems.
University research in transition
Europe’s universities are a central pillar in building the European Research Area through their responsibility for the supply of trained researchers and their core missions in fundamental and collaborative research. In performing these functions, Europe’s universities play a crucial underpinning role in enhancing the economic competitiveness of Europe.
European universities are however struggling as they try to respond both to a rapidly changing international environment and to tighter funding conditions by national public authorities. Globalisation, demographic change and the demands of the knowledge economy imply an increased demand for mass higher education and life-long learning, at the same time as putting a premium on high-quality research activities. In turn, this leads to increased competition for faculty, students and reputation.
Just as demands on the university system in terms of both quantity and quality are escalating, public funding of tertiary education in most countries is at best stable and at worst declining in real terms. This is forcing universities to respond in a number of ways: by attempting to differentiate their sources of funding, and by re-examining their mission and operations, in a search for new and expanding markets.
Public authorities are more focused on outputs and are increasingly giving universities greater responsibility for their own long-term financial sustainability, particularly in research. There is more recognition of the need to allow universities greater autonomy and accountability, so that they can respond quickly to change, as well as recognition of the need to provide incentives for partnerships with the private sector.
At the same time, both universities and public authorities increasingly understand the need to communicate and exploit the relevance of university activities, particularly those related to research, by having a greater engagement with industry and sharing knowledge with society, and by reinforcing the dialogue with all stakeholders.
The long-term financial sustainability of universities is thus one of the key challenges they have to face today, in particular when it comes to their research activities. It implies a diversification of their funding, notably by working within a framework of greater public-private partnerships. Public-private partnerships can help universities leverage private funds for research, enhance their quality of teaching and learning, and increase access to higher education, thus strengthening the core missions of universities.
It is in this context that the potential role of philanthropy in funding university research becomes important, not least because it can help the finances without compromising the predominant characteristic of education research to be for public good. Today the philanthropic sector funds a lower share of university-based research activities in Europe than in the US, with a few notable exceptions like the United Kingdom and Sweden. Philanthropy can however be a substantial source of funding for universities and needs to be developed as an integral part of a university’s overall strategy for diversifying its funding.
Different fundraising models
There are a number of alternative ways for universities to relate to prospective donors, and these can be codified in four different ‘models’ of interaction. They are distinguished in terms of issues such as donor types, the university actors taking the lead in philanthropic fundraising, the degree to which specific donors are targeted, the extent to which donors specify the use of donations, and the formality of donors’ procedures and the research specificity of the fundraising activities of universities.
At one end of the spectrum, the ‘Alumni’ model refers to the continuous collection of small donations from a large pool of university alumni and friends. The lead university actors are generally alumni relations offices or dedicated fundraising units. The use of donations is typically non-designated, the criteria for making donations are personal and dependent on the interests and wishes of each individual donor, and interactions with potential donors are structured but informal (e.g. mass mailings of standard letters, e-mails).
At the other end of the spectrum, the ‘Major Gift’ model focuses on the efforts made to attract donations from extremely wealthy individuals. This model represents the major gift fundraising approach of most universities and accounts for the majority of donations. It is characterised by the commitment of the university leadership to the process and the development of personal relations with wealthy individuals. The donations targeted are generally larger than those targeted by the other models and their use tends to be highly specified by donors though still in line with the overall strategy of the university.
The ‘Foundation Research’ model resembles the ordinary, everyday activity of researchers seeking funds. Typically researchers apply for grants from research funding bodies. Many of these are public institutions, but frequently applications are also made to some of the larger and better-known foundations, whose funds stem from philanthropic sources. The lead university actors are thus individual researchers and professors, and application procedures are highly formal and structured, involving strict rules of procedure and highly specified selection criteria guaranteeing that the use of funds is in line with the foundation’s aims.
Finally, the ‘Multi-mode’ model reflects a mode that involves a medley of both sources of funds and university actors, with many different options available for universities to choose from. It can involve university professors seeking funds for individual research projects from some of the smaller and less well-known research-funding foundations, but it can also involve approaches to these foundations and to corporations for philanthropic donations of a more general nature, and these are often made by university offices and even by university leaders.
All four models are usually present in institutions that have a tradition of philanthropic fundraising. It is not necessary, or perhaps even desirable, for universities attempting to raise funds from philanthropic sources for the first time to devote equal amounts of effort to all four modes simultaneously, but it is advisable for universities to have a long-term vision that eventually accommodates all these models.
Best practices in fundraising: Getting started and getting help
Despite the differences highlighted in the four models of interaction, it is still possible to draw some general lessons on university fundraising methods and practices.
It is clear that getting started with fundraising is often the hardest job of all; it requires the devotion of considerable time and resources before results are visible. Many universities have no experience in the area, and fundraising pioneers often have to overcome internal resistance, sometimes at the highest level of leadership in an institution. A minimum period of 2-3 years seems to be required, together with appropriate financial and human support, for a fundraising unit to operate properly. Comparing notes with others in a similar position – for instance through the good offices of CASE (Council for Advancement and Support of Education) – builds up skills and confidence and helps prevents institutions from ‘reinventing the wheel’.
Early investment in time and resources needs to be coupled with an ‘investment in excellence’. In other words, universities have to work to establish those characteristics that will become ‘selling points’ from the vantage point of potential donors. The key is for universities to demonstrate what it is that sets them apart (outstanding leadership; passionate and experienced faculty; talented and motivated students; relevant programmes; a healthy financial footing; proud and loyal alumni and friends); and then provide a vision that builds upon these strengths. This, in essence, is the university’s modern challenge: to understand and know how to communicate the university’s role in a post-industrial society. Without this, no university has the credibility to become a point of reference or to attract funds.
Engaging the university leadership and involving all university people in fundraising is critical. Academic leaders need to take ownership and responsibility for philanthropy on their individual campuses. They are the ones that will create a compelling vision; manage the academic priority-setting process; articulate and interpret the case for support; identify prospects; facilitate faculty development partnerships; maintain and advance relationships; do the asking; recognise and thank donors.
Success in moving past embryonic fundraising programmes for educational and research purposes is fundamentally about changing the culture on individual campuses concerning the need for educational and research philanthropy. You cannot change the attitudes of current students or alumni unless there is a corresponding attitudinal change amongst academic leaders, faculty and staff. The hallmark qualities of successful fundraising programmes begin with an institutional commitment to financing development initiatives. Long-term success lies in a real partnership between a permanent professional development team working in concert with the academic leadership and the entire university community.
In this context, external help is important. In addition to the network of colleagues provided through CASE, fundraising consultants can help universities apply a strategy, put in place a process for ‘asking’, as well as fundraising structures and ensure that they are operational. This involves discovering potential strategic funders (companies, people, foundations), researching them, making the case for funding, asking for funds, managing the relationship, etc. They can help at the beginning of the process of fundraising by doing market testing and looking at internal university structures. They can help in the middle of the process by conducting or outsourcing research to identify donors and by helping to train university staff; and they can help at the end by reviewing the whole process.
 European University Association (2007), “Viewpoint on the European Commission’s “Green Paper” on “The European Research Area: New Perspectives”, EUA