Endowments: They’re not just for elite universities anymore

No. 196.

That’s where the first community college appears on an annual ranking of the nation’s top college and university endowments.

The $486 million in the Miami Dade College Foundation’s endowment is far, far below the $38 billion top-ranked Harvard University reported in its endowment in fiscal year (FY) 2018. And though it’s unlikely that any community colleges will approach $1 billion anytime soon, two-year institutions are steadily growing their endowments to help fund everything from scholarships for low- to moderate-income students, to fledgling-but-promising programming.

The 2018 NACUBO-TIAA Study of Endowments showed that the more than 800 participating colleges had a median endowment of $142 million; among community colleges it was $12 million (the corresponding averages were $771 million and $19 million, respectively). Nearly half of the overall disbursements went to scholarships and other financial aid programs, while two-thirds of schools reported higher spending in 2018, with a median increase of 6.6 percent.

The public two-year colleges with the largest endowments included:

All but one of these colleges saw their endowments grow over the previous year, the data show. Among the 810 colleges and universities participating in the 2018 NACUBO-TIAA survey, community colleges clustered at the end of the list, with endowments in that section ranging from $12.3 million at North Iowa Area Community College, to about $3.7 million at the John Tyler Community College Foundation (Virginia).

Community college endowments overall have grown an average of 76 percent adjusted for inflation (171 percent overall) over the past 20 years, from $5.3 million in 1998 to more than $14.3 million in 2018, according to figures compiled by the Center for Community College Advancement at the Council for Advancement and Support of Education (CASE).

“We are definitely seeing growth in endowment size. It’s very encouraging to see,” says Marc Westenburg, director of the community college center at CASE, who adds that typically between 100 and 120 two-year colleges participate in CASE’s annual survey. “If you look at overall funding sources over the last 20 years, you certainly will see a steady decrease in state-level funding. Some schools no longer consider themselves state-funded, so much as state-assisted. A greater diversity of revenue streams is needed.”

A broader view of alumni

That has meant community colleges are turning to advancement and fundraising to augment their revenue streams, so they can continue operating, first of all, but also to be nimble and innovative, and incorporate new programming, Westenburg says.

“Individual donors are starting to ask really probing questions regarding the return on their investment,” he says. “Donors are not necessarily giving because that’s what’s expected but trying to find the most bang for their buck. Community colleges are an excellent investment when you look at the transformative power of education, and the impact on the community.”

Funding sources are a mix of individuals, corporate and foundation donors that reflect colleges’ respective communities, and that’s a positive thing, Westenburg says. He cautions that some colleges have an unnecessarily limited definition of “alumni” as only those who receive a degree or certificate, which can make statistics on giving somewhat deceptive.

“The segmentation processes have become de facto definitions,” he says. “CASE takes a broad view of alumni as anybody who has a prior academic relationship. When you look at the distribution of giving as reported by community colleges, maybe 4 to 5 percent of that pie is identified as alumni, with 40 percent coming from individuals. But we know that a large proportion of those individuals who are not considered alumni are, in fact, alumni of that institution.”

Westenburg strongly recommends that community colleges align fundraising with their overall strategic plans.

“When you have synergy between the foundation and the college, and the college president, that relationship is integral to fundraising success,” he says. “That catapults community colleges to maximize their potential in fundraising. When you don’t have that — if you don’t have a fundraising plan, or if your fundraising plan is operating at odds with your strategic goals — that can definitely affect what your overall success is going to look like.”

Scholarships to entrepreneurship

Northampton Community College has seen its endowment soar from the $51.9 million a year ago to $62 million thanks to a capital campaign launched in 2016, with a little help from the bullish stock market, reports Sharon Beales, vice president of institutional advancement for the college and executive director of the college foundation.

In mid-October, Northampton was within $100,000 of the campaign’s $17-million goal and expected to “blow past that goal” by year’s end. About $13.5 million of that will go toward scholarships.

This fundraising prowess is nothing new for the school, Beales says, noting that the amount has steadily grown over the decades, with an earlier “bump” of about $14 million in the early-mid 2000s when the school did a capital campaign.

“We have a pretty influential foundation board, as far as members of the community, and a finance committee that understands that value of the endowment and has done a good job of managing it,” she says.

Northampton enjoys support from a blend of foundations, corporations and individuals, some of whom are alumni, Beales says, adding that the school’s alumni association has its own scholarship fund. To help ensure that alumni support continues, this year for the first time Northampton held pizza parties for scholarship recipients and talked about paying it forward.

“Last year, we had a scholarship (alumna) who came back and paid back everything she had received in scholarship dollars,” she says.

Without the endowment, Northampton would still function because none of the money is used for operations, Beales says.

“The opportunity for students to attend the college would be reduced because we give so many scholarships out each year,” she says. “Students at the lower economic levels would definitely not have the support we’re able to give them.”

There could be programmatic hits, as well. For example, $2.5 million of the money raised in the current campaign will go toward launching a new Center for Innovation and Entrepreneurship at the college, along with a matching grant from the Pennsylvania Department of Education. The money has been used to renovate the first floor of an old steel building in Bethlehem that has housed the college’s fabrication lab, which has been expanded significantly as well.

“It’s a resource for the community,” Beales says. “We also have a lot of students, when you ask them what they want to do — a culinary student says they want to open a food truck, but they have no idea what that truly (entails). The center gives them the resources to understand what that means, and is it something they truly want to do.”

From restricted to unrestricted

Pellissippi State Community College Foundation in Knoxville, Tennessee, also has experienced significant growth — up 11.8 percent to $10.6 million in FY 2018, according to the NACUBO-TIAA survey. Aneisa Rolen, foundation executive director, credits sustained leadership, strategic thinking, prudent investment managers — and, of course, the donors themselves, who run the gamut.

“We have a very focused fundraising agenda that keeps both the staff and the board honed in on our objects, especially in regards to major gifts,” she says. “And we’re trying to emphasize more and more about land-giving, which is another long-term objective for growth.”

Pellissippi State has benefited greatly over the years from U.S. Department of Education Challenge Grants because donors like the prospect of matches to their investments, Rolen says, adding that stewarding endowment donors is just as important if not more.

“It’s not easy to raise money for endowments,” she says. “Many people are fixed on the immediate needs.”

Most of Pellissippi State’s endowments are restricted, and most often those are scholarship-focused, although some fund departments or line items, like new equipment, or professional development, Rolen says. But longer-term, Rolen hopes to convince more donors to make unrestricted endowment donations.

“That is the real challenge: to train our donors to know and understand that can make or break the overall health of a community college foundation,” she says.

Ultimately, community colleges need to get to know donors and their passions, Rolen says, citing the example of Norm Naylor, a veteran who established an endowment to help veteran students motivated partly by Challenge Grant matching funds — and has since become actively engaged in helping the college raise funds.

“When they become affiliated with your organization, and you understand their passions, it’s easier to open up that consideration,” she says. “Whether they have an interest in veterans, or their passion is student hunger — it’s knowing and understanding what that desire is, to make sure what they’re building now will continue into the future.”

About the Author

Ed Finkel
is an education writer based in Illinois.