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Why Is Fundraising of Crucial Importance to Universities?

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Top universities in Europe and the United States have attained universally acknowledged achievements in various areas such as teaching, research, and nurturing of outstanding graduates. Their success has been inextricably linked with the strong financial support of their respective foundations, which have freed such universities from the financial constraints and have enabled them far greater flexibility in the international recruitment of top-notch professors and students, and in the pursuit of innovative, cutting-edge research. A university foundation is like a perpetual engine that unfailingly powers a university’s pursuit of bigger goals geared towards sustainable development. The fact that many universities in neighboring regions such as Hong Kong, Singapore and Taiwan have joined the ranks of world-class universities poses a serious question to Macao: how can local universities increase their international competitiveness and join the ranks of world-class universities within the shortest time possible?

Following the practice of top universities to establish university foundations so as to obtain more financial resources has not only become the inexorable trend for tertiary institutions worldwide, but is also an important indicator of the degree of internationalization of any university.

University foundations: a perpetual engine that powers the development of top universities

Establishing university foundations is a time-honoured practice that has its origin in Europe and the United States. University foundations have historically played a vital role in the universities’ development. Take universities in Europe and the US. Donations have been one of the most important sources of incomes for universities in these regions. Harvard, the oldest university in the US, was named after its first donor John Harvard. In 1890, Yale established the first alumni foundation in the US to collect donations from individuals (alumni and non-alumni alike), other foundations, and enterprises. World-renowned European universities such as Oxford and Cambridge in the UK also have a long tradition of attracting donations through university foundations.

Development foundations of European and American universities were not deep-pocketed to begin with. The alumni giving rate and the size of donations tend to grow with the universities’ reputation as well as the increasing quality of their students. Take Yale. When Yale first established its foundation in 1822, it only possessed a miserly balance of less than USD 30,000. By the end of 2009, however, the balance had shot up to a whopping USD 22.6 billion. Moreover, the annual amounts of donations received by US universities are also closely linked to their rankings. It is not a coincidence that Oxford, Yale, Stanford, Princeton, and the University of Texas System, which have ranked among the top for many consecutive years in terms of the annual totals of donations, are also universally acknowledged top universities in the world. Harvard, the cream of the crop, received total donations of USD 25.6 billion last year, making it the recipient of the most donations among tertiary institutions worldwide.

Texas A&M University, a renowned university in the US, is an inspiring example of how a university foundation can propel a university to the rank of world-class university. Texas A&M University was founded in 1876. Before it established a university foundation in 1980, it was mainly a teaching-oriented institution. In the 1980s, the management of Texas A&M University, determined to transform the university into a first-rate one, formulated a 20-year development plan and established a university foundation. The huge donations from its alumni and society raised through the foundation helped the university to grow steadily. By 2000, Texas A&M University had already been ranked among the top 100 universities in the US, and the foundation had accumulated a balance of over USD 500 million. Now, Texas A&M University is ranked among the top 100 universities in the world, and the foundation is in possession of over USD five billion.

A university foundation is like a perpetual engine that eternally powers the university’s development and ensures that the university maintains its international competitiveness in teaching and research. Donations raised through such foundations can be used to internationally recruit top-notch chair professors, develop innovative teaching and research projects, sponsor academic departments to carry out various projects, and set up scholarships and incentive programmes to attract top students and procure world-class research equipment, thereby enhancing the overall teaching and research quality of the university. The growth of a university and the growth of its development foundation are closely related and mutually complementary. The higher a university’s quality and reputation, the greater the society’s recognition, and the higher the alumni giving rate. Similarly, the more financial resources a university can obtain through its foundation, the easier and faster the university can improve its quality and reputation.

Obtain more financial resources to reach the goal of becoming a world-class university

The University of Macau (UM) is the first public tertiary institution in Macao. Ever since its inception in 1982, UM has been committed to reaching the goal of becoming a world-class university. Next year will mark the 30th anniversary of UM—a landmark stage where the university will pursue more ambitious goals and better fulfill its educational missions. At this crucial juncture, UM established the University of Macau Development Foundation (UMDF). One purpose of establishing UMDF is to encourage its alumni, staff, students, and the community to work in unison to contribute to UM’s future growth through donation, and the other purpose is to foster a culture of giving to higher education in the society.

While UM has received numerous donations from individuals and institutions alike over the years, a culture of giving to higher education has yet to be further promoted among its alumni and the local community. In the 1990s, UM successively received generous donations from a number of eminent personages such as Mr. Ho Yin, Mr. K.C. Wong, and Dr. Stanley Ho, which for a time became the talk of the town. In 2006, UM alumnus Mr. Anthony Lau Siu-wing donated HKD 1 million as a token of appreciation of what he had gained from the alma mater, setting a good example to other alumni. Apart from alumni contributions, UM also has the good fortune to have the support of the SAR Government. Former Chief Executive of Macao SAR Mr. Edmund Ho, bent on increasing Macao’s international competitiveness in higher education and developing UM into a modern world-class university that produces future pillars of society, played an instrumental role in bringing about the birth of UMDF and went out of his way to help secure donations from multiple sources during the initial stage.

With the unreserved support of the Macao SAR Government, UMDF serves as a powerful engine that supports the university’s long-term development. The approval and implementation of the new campus project has brought about unprecedented opportunities for UM. In response, UM has refined the objective of its future fundraising activities: to help UM reach the goal of becoming a first-rate university and nurture excellent graduates for the local community. UMDF got off to a good start, with numerous benefactors collectively making donations of more than MOP ten million on the day of its establishment. This caused a positive ripple effect across the whole community. Within only six months of its establishment, UMDF raised donations of close to MOP 300 million, which is no mean feat even for Hong Kong and overseas universities with considerably more fundraising experience. The enthusiastic response of the community is a reflection of their recognition of the impressive achievements UM has attained over the past three decades.

Some people may question the necessity for UM, a publicly-funded university, to vigorously carry out fundraising, but in fact all top universities worldwide, whether public or private, are deeply aware that government funding can only cover routine day-to-day expenditures, and that major, cutting-edge projects must rely on the support of society. Indeed, statistics show that from 1992 to 2005, the balance of foundations of private universities in the US increased some 2.9 times, while the same figure for public universities increased 4.2 times. These figures show that public universities in the US have long since realized the importance of exploring other financing avenues apart from government funding. There is no denying the fact that for any university that aspires to join the exclusive “world-class club”, successful fundraising is the key.

Alumni giving rate, an important indicator of a university’s ranking

Fundraising is a long-term project. Apart from major gifts, university foundations should also value small gifts from various channels and encourage the participation of alumni and the local community. In pursuing a brighter future for higher education, every donation, whether big or small, is like a brick indispensable to the construction of a tall building. The process of fundraising is not just one of accumulating financial resources, but also, more importantly, one of building trust, recognition, hope and emotional bond. Every seemingly insignificant donation is a nourishing drop of water that will, over time, help bring a culture of giving to education into bloom.

Take Stanford. Stanford University attaches great importance to fostering a tradition of donation among its current students and young alumni. It also has a match-fund programme to encourage donation. For example, in 2002, it called on every graduating student to donate at least USD 20 to the university. At the same time it announced that for every donation that equalled or exceeded USD 20, President Peter Bing would contribute a double-amount matching fund and the parents’ advisory committee would contribute an equal-amount matching fund. Take another example—The University of Hong Kong (HKU). HKU’s “mustard seed campaign” that appeals to many prospective donors gives its alumni and staff the freedom to choose the amount of donation they wish the make as well as the object towards which they wish to utilize their donations. Over the years, HKU has received donations of varying amounts, from as small as HKD 1 to as large as HKD 1 billion. University ranking lists in the United States also use “annual alumni giving rate” instead of “annual totals” as an important index in deciding university rankings. Although annual donations from alumni account for only 5% of the total annual donations received by a university, they reflect the alumni’s sense of belonging and confidence in the future of their alma maters. In 2009, the average alumni giving rate of the world’s top universities exceeded 40%, which shows that the higher a university’s ranking is, the higher its alumni giving rate.

UM can borrow the fundraising experience of world-class universities. In addition to soliciting major donations from community leaders, it should also encourage its alumni to start with small donations, thereby fostering a fine tradition of giving back to the alma mater. This way, when the alumni are in stronger financial positions, they will be likely to make bigger donations. In the long run, a culture of donation can be fostered throughout the whole community since alumni come from different walks of life. Having said that, we come to another important question: how should UMDF be effectively managed so as to make sure that the good intentions with which donors made their donations will not be failed? The answer is a set of rigorous management systems and a team of professional fundraising staff familiar with the university’s operations who can communicate the university’s outstanding achievements and missions to the alumni and society at large and make them understand that the university’s success and their individual success are inextricably linked and that giving to higher education is a noble cause. While carrying out fundraising activities, UM must ensure that donations are not obtained at the price of losing academic freedom. It must also ensure that all donations are used in a reasonable and appropriate manner.

Next year will mark the 30th anniversary of UM. I have heard that UM is already in the process of planning a series of celebratory activities, and one of the most important activities is the “fundraising for the 30th anniversary” campaign. Whether this campaign can achieve its intended results remains to be seen, but based on UMDF’s impressive fundraising results over the past six months, it is reasonable to predict that UM will likely do even better in its future fundraising endeavour. At the moment UM is developing at a fast pace and is poised to enter a brand new era. In order to realize its academic and research objectives and become a locally and internationally recognized first-rate university, it is essential that UM follow international standards and practices adopted by the world’s top universities and obtain more financial resources. I believe that with the support of UMDF, UM can surely build on its existing strength in teaching and research and turning the dream of becoming a world-class university into reality.


(This article has been published in the Macao Daily News at E06 on 7 Jul, 2010)