Investing in the long term

Clark College Foundation donors Theodore and Clarissa Farnsworth supported athletics and nursing with their endowment that helped students such as Dustin Carlson, who is studying nursing. (Photo: Clark College)

Uplifting underserved populations is a compelling donor narrative, an effort buoyed in recent decades by endowments that fund scholarship opportunities and exciting new programming.

“We have a great story to tell about giving,” says Mark Erickson, president of Pennsylvania’s Northampton Community College (NCC), which increased its endowment from $51.9 million in 2018 to $65 million this year thanks to a capital campaign launched in 2016.

“I’ve worked at four-year institutions and research universities. Here you can endow 10 scholarships to one scholarship there. The impact of a scholarship on the life of a student is unbelievable,” Erickson says.

This is an excerpt from an article in the current issue of Community College Journal.

Although endowments at public two-year colleges cannot compare to similar funding at a typical powerhouse university — Harvard University’s endowment, for example, was valued at a record-high $40.9 billion at the close of fiscal year 2019 — community college endowments have grown an average of 76 percent over the past 20 years, according to the Council for Advancement and Support of Education (CASE).

Foundation creation among community colleges is a necessity in light of a 20-year decrease in state-level funding, observers say. While NCC works to keep tuition costs low, more than half of its students require financial aid just to attend.

Through its recently completed Transforming Lives Campaign, the college developed a diversity of revenue streams to add new chapters to its life-changing tale. Last year, NCC exceeded its fundraising goal of $17 million, accruing over $20 million from a generous group of foundations, corporations and individuals, some of whom are alumni.

Related article: Endowments: They’re not just for elite universities anymore

Most funding goes to the approximately 1,000 scholarships the college awards annually. Dollars from the campaign also are used for on-campus programming, including $2.5 million for the launch of a new Center for Innovation and Entrepreneurship at the college.

“Endowments are our secret sauce is what we tell alumni and donors,” Erickson says. “They give us those extra things that make us stand out, and an ability to move to that next level in how we serve students and our community, especially around the area of workforce. Fundraising power comes from student testimonials. There’s not a dry eye in the house after a student tells donors what’s going on.”

Working hard for the money

A group of area dentists established NCC’s foundation in 1969, aiming to finance a dental hygiene laboratory on campus. A multi-time recipient of CASE’s Excellence in Fundraising Award, the endowment has ballooned over the decades, gaining a $14 million bump in the early-mid 2000s during a capital campaign, notes Sharon Beales, vice president of institutional advancement for the college and executive director of the college’s foundation.

Northampton does a particularly good job of donor stewardship, boosted by a hard-working foundation board and finance committee dedicated to endowment management, Beales says.

“We have an excellent finance department — the people I work with understand what we do and how we do it,” she says. “Our endowment has always been managed well, and that’s not always been the case at every place I’ve worked at. There’s a good partnership between finance and development.”

Scholarships encompass the lion’s share of foundation funding at NCC, with qualifying students getting an average of $1,000 toward tuition. Among the college’s offerings is the Stabler Scholarship, which encourages recipients to contribute to the scholarship equal to the amount they obtained.

“We let students know there’s a donor involved (with their scholarship), and they can do the same for the people behind them,” Beales says. “If they can pay it back in the future, they’ll do it to pay it forward.”

Clark College in Vancouver, Washington, joins NCC in the list of public two-year colleges with the largest endowments. As of fiscal year 2019, the institution’s endowment assets grew to $68 million. A preliminary accounting for 2020 puts that figure at $64.6 million, a drop officials attribute to fluctuations in the marketplace caused at least in part by the coronavirus pandemic.

“We saw with Covid-19 how the market can react. It’s emotional and not necessarily based on all the underlining fundamentals of corporations,” says Lisa Gibert, chief executive officer of Clark College Foundation. “It looks like we’ll have a 1.5% loss in our investment portfolio alongside our annual endowment distributions.”

The virus crisis has eaten into the stock market, trickling down to funds that comprise some of Clark’s endowment. Generally, endowments consist of many — sometimes thousands — of different funds, many subject to donor-placed limits that colleges are legally required to uphold. Charitable donations are the primary source of endowment funds, with donors restricting gifts for specific purposes such scholarships, program support, faculty and staff development, and capital facilities.

“We invest for the long term — you just can’t get overexcited about peaks and valleys,” Gibert says. “We want steady performers with better returns.”

Every donation counts

Clark’s single biggest donation in its history came in 1996 from Roy G. Andersen, who made his fortune as a civil engineer in Washington state. The historic $25 million endowment gift from Andersen and his wife, Virginia, is earmarked for foundation operations and vocational program support.

Foundation officials worked for nearly a decade to process the gift, a provision of Andersen’s estate plan. Far from a giant check arriving in a tidy bow, monies were tied up in assets including land in Hawaii and a gold mine in Nevada. Gibert, foundation auditor at the time, never met Andersen in person, though she quickly learned about his respect for a skilled workforce.

“He talked about vocational skills, and how he loved to get his hands dirty,” Gibert says. “It’s critical that the foundation works long and hard with planned gifts so that the highest of integrity and ethics are involved every step of the way to ensure the donor’s best interests are in place. We held onto the land until we got familiar with the environment. Later, I met with his wife to tell her about the magnitude of the gift and how it provided us this margin of excellence.”

Established in 1973, the Clark College Foundation struggled financially for the first 20 years of its existence. Change came in the early 1990s when the foundation applied for a U.S. Department of Education Title III grant that matched funds with eligible institutions as a means of establishing an endowment. Gibert was told this was a “nerve-racking” time, as the foundation proposed to raise $2 million when day-to-day operations were essentially funded “hand-to-mouth.”

The college’s foundation ran a successful campaign, surpassing its goal by $50,000 and receiving $4.1 million in 2-to-1 matching dollars from the government. Andersen’s $25 million gift came along a few years later, though Gibert can’t stress enough the importance of every donation in bettering Clark — and community colleges overall — in how they serve students.

“Even a $1 million gift is earthmoving,” Gibert says. “A gift to a large university will get you a thank-you letter, but if you’re looking for impact within your community, I can’t think of a better investment. There’s not a single entity outside city or county government that touches every aspect of community life like a community college.”

Gibert says the college’s endowment supports a wide range of scholarships, programs and activities while providing operating support for the foundation. Funding also is used to secure land for campus expansion as well as enhanced equipment for academic programs.

Managing the endowment is a comprehensive effort where the college identifies organizational needs which are then reviewed by the foundation. Scholarships are always top-of-mind, notes Gibert, but other areas may gain importance due to program costs or additional factors.

“The foundation takes these needs and strategizes how best to secure current and endowment-related funding,” Gibert says. “Both current and endowment-related philanthropic support are critical. One helps to fund for today, while the other provides a level of confidence for the future. You could almost relate it to a ‘retirement account’ from an individual sense.”

Read the full article in CC Journal.

About the Author

Douglas Guth
is a writer based in Ohio.