From the GG+A Quarterly Review, Spring 2009

The Role of the Trustee in Trying Times
Philanthropic Expectations and Economic Uncertainties Create New Challenges

Sidebar: Giving and More
Sidebar: Best Practices for Engaging Trustees in Fundraising

As the barrage of economic and investment challenges continues in calendar year 2009,  many educational, cultural, healthcare, and other nonprofit institutions are facing income reductions and budget cuts that were unthinkable only a year ago. Against this backdrop, trustees across all sectors are working more closely than ever with senior management to find ways to stretch resources, protect programs, and combat ongoing losses in endowment revenues – in addition to helping their institutions boost private support.  Evidence of tough decisions abound.

• In late December, National Public Radio announced the elimination of 85 positions and the cancellation of two news shows to close a projected budget shortfall of $23 million driven, in large part, by the erosion of corporate underwriting.  This move was particularly startling as it came just five years after the extraordinary infusion of more than $200 million into the NPR endowment through the estate of Joan Kroc.
  

• After 67 seasons, the Connecticut Opera has gone out of business, with board chair John Kreitler calling it “another casualty of economic conditions”  (“Connecticut Opera Closes Down Citing Bad Economy,” by Dave Collins, Associated Press, February 12, 2009).
  

• In a mid-February letter to the university community, Harvard University President Drew Faust announced plans to postpone a major new science complex, originally estimated to cost more than $1 billion, a delay that followed a series of detailed communications about the impact of market declines on Harvard’s famous “tubs on their own bottoms.” Several of Harvard’s schools have supported as much as 40% of their operating budgets with endowment income. 

• Board members of the Conserve School, a private boarding high school in Wisconsin, voted to close the school due to the dismal economic climate. Parents quickly filed a lawsuit claiming the trustees, who all wear multiple hats as directors of the school and directors and executives of Central Steel and Wire, acted in their own interests.  The company’s former chief executive funded a trust, heavily invested in Central Steel and Wire, a Chicago steel company, that has been providing financial aid to some 70 percent of students (“Parents Sue Trustees Over Prep School’s Shutdown,” by Geraldine Fabrikant, The New York Times, March 7, 2009).

• One of the most dramatic cases in point:  Trustees at Brandeis University voted unanimously in January 2009 to authorize the administration to conduct “an orderly sale or other disposition of works” from the university’s art collection, housed primarily in Brandeis’ 48-year-old Rose Art Museum.  The trustees’ decision, which potentially gives the university the option to sell some artworks, keeps the facility open but “more fully integrated into the university’s central educational mission,” according to a letter from Brandeis President Jehuda Reinharz to the university community.  More recently, The Associated Press reports that Reinharz has launched a new committee to explore keeping the museum open as a teaching and exhibition gallery (“New Committee Created on Brandeis Art Museum,” February 27, 2009).

Faced with continuing budget reductions and shrinking endowments, how can trustees help institutions bolster their philanthropic efforts and meet fundraising objectives? Even four years ago, one commentator wrote, “The old saying that trustees should ‘give, get, or get off’ hardly seems an adequate response to the complexities of today’s trusteeship” (Michael Worth, Securing the Future:  A Fundraising Guide for Boards of Independent Colleges and Trustees, Association of Governing Boards, 2005).  In this issue of the Grenzebach Glier Quarterly Review, we present the perspectives of the trustee, the chief development officer, and the chief executive officer on the role of trustees in the fundraising process and how that role continues to evolve.

Expectations of Support

A 2007 study by BoardSource, a Washington, D.C., nonprofit group that focuses on strengthening nonprofit boards of all types, found that trustees are not doing enough to raise money for their nonprofit organizations. The Nonprofit Governance Index 2007 reports that only three-quarters of trustees said they had made donations to their institutions, according to data provided by 1,126 chief executives and 1,026 trustees who belong to BoardSource (“Fund Raising and Lack of Diversity are Key Challenges for Trustees,” by Elizabeth Schwinn, The Chronicle of Philanthropy, November 29, 2007).  “Fundraising is the number one area of board performance that needs to be improved,” says Linda Crompton, president of BoardSource, whose 2007 study found little more than two-thirds (68 percent) of institutions surveyed require board members to make personal contributions to their organizations.

While it is common for cultural institutions and social service organizations to set specific giving expectations for board members, such policies are less consistent in the educational arena.  A recent article in The NonProfit Times cites two generalizations “everyone can probably agree on about virtually all nonprofits and their boards.  First, all board members should donate money to their nonprofit, at a level that is a stretch for them, to demonstrate their own commitment to its mission. Second, every board member should be willing to assist the executive director, development officer, or other staff person in approaching potential donors about monetary support (“Involvement in Fundraising” by Nancy Withbroe and Joel Zimmerman, September 1, 2008).

Anthony C. Gooch, a retired partner of Cleary Gottlieb Steen and Hamilton LLP, serves as chair of the board of the International Institute of Rural Reconstruction (IIRR), an organization that works to better the conditions of the rural poor and their communities in Africa and Asia. He also serves on the board of his alma mater, Sewanee:  The University of the South. Neither organization has formal expectations for trustee giving, but both aspire to 100 percent board participation.  

Formalities aside, he says Sewanee trustees step up to the plate when needed.  For instance, when a 3,000-acre parcel of land adjacent to the campus unexpectedly came up for sale, trustees quickly mobilized to purchase it. “Trustees took the lead and raised initial funds, then the university was able to attain funding from state agencies and other sources,” Gooch says. “That initial gift made the rest easier.”

John Moores, chairman of the San Diego Padres baseball team, chairs the board of The Scripps Research Institute, the world’s largest independent nonprofit medical research organization, and he succeeded President and Mrs. Carter as chair of the board of The Carter Center, a human rights organization. Neither institution has a formal policy for board contributions, although he admits “the notion of formalizing expectations is attractive.”

Moores made the first gift to Scripps’ $50 million initiative to recruit world-class researchers.  “At Scripps, a number of trustees have contributed and are leading by example,” says Moores.  “At the Carter Center, there is broad financial support by trustees, although individual capacity varies considerably.”   He notes that the Carter Center enjoys worldwide attention because of the iconic status of its founders, while Scripps is held in high regard by the scientific community and foundations, but needs to work harder to raise visibility and find new charitable funding.

A former regent of the University of Houston System and the University of California, Moores has a basic philosophy about board giving:  “If you don’t care enough to write a check, you shouldn’t be a board member. Everyone has some capacity to give.”  

Betsy Watkins, trustee emeritus of Bryn Mawr College and trustee of the Carnegie Library of Pittsburgh, Carnegie Museums of Pittsburgh, The Frick Art and Historical Center, and Pittsburgh Psychoanalytic Center served for many years as chief development officer for Shady Side Academy, a pre-K through grade 12 independent school in Pittsburgh. Watkins believes trustee giving sets a critical example. “Potential donors look at a board’s record of giving. They ask ‘If an organization’s own board isn’t doing more, then why should I?’”

The bar for board giving is, indeed, extraordinarily high.  According to the Council for Aid to Education (CAE), trustees of higher educational institutions provided an average of 15.4% of total gifts from individuals in 2008, ranging from 8.8% at public universities, to 19.0% at private universities, to 24.3% at liberal arts colleges. The National Association of Independent Schools (NAIS) reports that Trustees provided an average of 26.9% of all capital giving and 14% of all annual giving to private schools in 2008.  And, although there is no equivalent source of consistent data across cultural institutions, the information collected recently by GG+A’s Philanthropic Analytics group across a range of national and regional cultural organizations suggests that board members provide an average of 44% of all charitable gift support in that sector.

James S. Broadhurst, chairman of Eat’n Park Hospitality Group, was recently re-elected chair of The Pennsylvania State University’s board of trustees. First appointed to the board in 1998, in 2001 he served as head of Penn State’s Grand Destiny $1.3 billion campaign. When Penn State recently launched the leadership phase of its current For the Future: The Campaign for Penn State Students, Broadhurst wrote to all trustees asking for 100 percent board participation and announcing a committee of former board presidents who would solicit trustees.

Rodney P. Kirsch, Penn State’s senior vice president for development and alumni relations, notes steadily rising trustee support demonstrates “recognition of the important responsibility they have to give generously.”  From 1984 to 1990, Penn State raised $16 million in total trustee giving. From 1996 to 2003, trustee giving rose to $90 million. “Now, two years into our new campaign we are up to $80 million in board commitments with gift decisions from some members still outstanding,” says Kirsch.

Members of the board of trustees of the Midwest region of the Boys and Girls Clubs of America have clear written giving expectations that include making a personal gift and participating in two major fundraising events:  a chairman’s dinner and a chairman’s golf tournament. “We have had to educate our volunteers about the importance and impact of being able to say to others that our volunteer leadership has made personal and corporate contributions in support of our mission,” says Nancy Ali, vice president of resource development for the region.

Bryn Mawr School Board Chair Ann Hankin, an attorney who has been involved with the private girls’ school in Baltimore, Md., for some 14 years, says a trustee handbook clearly defines expectations for its board. “We ask for support commensurate with current giving capacity, and we ask that Bryn Mawr be the lead independent school supported by trustees,” she says, mindful that some board members are parents and/or alumni of other independent schools as well.

James C. Curvey, former president and current vice chair of Fidelity Investments, is a trustee of Villanova University, an overseer of the Boston Symphony Orchestra, and a member of the Corporation for Northeastern University, the Boston College Carroll School of Management Board of Advisors, and the President’s Council at Olin College.  He believes fundraising effectiveness depends on institutional and staff leadership more than the actions of individual board members. “If people in those positions are aggressive, the effort will be successful,” says Curvey, who has never been presented with formal giving expectations for any boards or leadership volunteer committees on which he has served.

And Brian Edwards, chair of Miranda Technologies, Inc., and vice chair of the board of governors of Concordia University in Quebec, says Concordia turned a corner some four years ago with the hiring of one of Canada’s top fundraisers, creating a greater awareness among trustees of the importance of their philanthropic involvement. “All highly successful board members are planning to or have made major gifts to Concordia, and many of their companies are donors. We see them as role models,” says Edwards, noting a large, widely-publicized gift from David O’Brien, who holds the honorary post of university chancellor.

Varied Board Structures Add Complexity

The giving picture is further complicated by varied board structures and mandates for board membership at some institutions.  Relationships among “boards,” some of which have fiduciary responsibility and some not, often can be complex and sensitive, and the boundaries and roles may not always be clear.

Last September, the board of the Toronto Zoo gave its longtime CEO the power to sever the zoo’s relationship with the Toronto Zoo Foundation and to launch an ambitious 10-year $250 million fundraising campaign, according to The Toronto Sun (Monkey Business Hurts Zoo,” by Sue-Ann Levy, January 22, 2009). The foundation has no problem with a plan to transfer its $12 million in assets to Toronto Community Foundation, but wants assurances the money will go to education, conservation, and well-being of animals, not to zoo operations.

Different expectations apply to different boards. For instance, board members of the Richmond Symphony Orchestra, a private organization that has received direct support from the city of Richmond, have a much larger annual gift expectation than board members of the Richmond Symphony Orchestra Foundation, chaired by Richard L. Morrill, chancellor and former president of the University of Richmond and chair of the Teagle Foundation, a foundation dedicated to improving student learning in the liberal arts. This arrangement is similar, in some ways, to the relative expectations for giving from trustees and alumni association board members at many institutions of higher education, even if expectations are not stated in specific dollar terms.

At a mid-size public university in the Northeast, the board, which perceives itself primarily as having governance responsibilities, is comprised of legislators, gubernatorial appointees, and a group of self-perpetuating trustees who elect their successors.  “Some trustees are frustrated that others do not see fundraising as part of their roles,” says the university’s president. In fact, in the last five years, he has made only three calls on prospective donors with trustees.

To counter a lack of board involvement, university officials are now investigating alternative structures, such as a foundation or development council, to focus on fundraising. “The current economy constitutes an enormous argument for anything you can do to build resources and long-term financial strength,” the president adds.

On the other hand, Penn State’s 32-member board includes five ex officio officers, six appointed by the governor, six appointed by agricultural societies in Pennsylvania, nine elected by alumni, and six trustees representing business and industry, who typically have  “above average giving capacity,” explains Kirsch.  Still, Broadhurst believes, “Trustees who cannot support the university at higher levels can be just as helpful by connecting the university with people they know in the community.”

Largely funded by the Quebec provincial government with a board serving primarily a governance role, Concordia is still defining the philanthropic responsibility of trustees. For now, “It is perceived as a negative to make financial support a key requirement of board service,” says Edwards.

Economy May Affect Fundraising Messages and Timing

Many board members find themselves involved increasingly in debates about the strategy and timing of fundraising programs as economic uncertainties continue.

“Boards need to be confident about their institution’s strategic response to the economic crisis so they can lead the way in calling potential supporters,” says Morrill.  “They can use the institutional response to motivate others.”   Morrill says it will be important to secure the critical components of all institutions. “You don’t want your most capable research laboratories dismantled due to lack of funding. Board members must find ways to preserve the family jewels.”

Broadhurst feels Penn State’s mission  “as a land-grant institution that believes in recruiting first-generation and lower-income students” is a great motivator for prospective donors.  “These types of students will require more financial aid to stay in school, and the board is focused on the importance of helping students pay for their education.  Getting results will remain challenging, but selling people on the importance of the cause will be easier.”

The difficulty, as Moores notes, is that “we are in uncharted territory. Trustees must recognize that organizations need help. There will be belt tightening and tough discussions by philanthropic boards across the country.”

With state budget cuts hitting hard, one public university president describes how “people are worried that neighbors are choosing between food and heat.  We are changing priorities because of the economic situation, with unrestricted cash flow to the bottom line becoming an absolute top priority.”

In the Seattle area, there have been many discussions about regional institutions that did not make their year-end 2008 fundraising goals, according to Deborah Jensen, president and chief executive officer of the Woodland Park Zoo.  “Foundations have seen a decline in assets, and many are shifting focus to individuals and families at risk. Many individuals have also chosen to give more to social service organizations.”

Currently in the quiet stage of a comprehensive campaign, Jensen’s zoo board will soon face some tough decisions.  “Initially, the campaign was built with a seven-year timeline,” she explains. “By fall, we’ll have a better idea of what the world will look like and whether we reduce our goal or slow down the campaign. We may be walking, not running,” adds Jensen, who garnered a strong positive response when she asked the board for year-end help to finish a 2008 capital project.     

Penn State faces a similar dilemma as it moves into the public phase of its campaign.

 “There is tug and pull between what our campaign goal will be and the timeline to accomplish it,” says Kirsch. “Before the economic downturn, a $2 billion goal in seven and one-half years was in the zone of reason.” Now the board must determine, “Is that the right goal? Should we lengthen the campaign timeline?”

Issues of affordability, growing demand for financial aid, and a decreasing pool of potential prospects is creating a “perfect storm” for independent schools such as Bryn Mawr, “forcing trustees to be more creative in their thinking,” says Hankin. “The partnership between the board and the school head will need to be even stronger.” 

Giving and More

While direct philanthropic support from board members is key, trustees are often expected to assume varied roles in boosting the fundraising efforts of their institutions.  The 2007 BoardSource survey found about half (51 percent) of the boards require their members to solicit donations for their organizations.  Slightly more organizations require board members to attend fundraising events (60 percent) and to identify prospective donors (61 percent). The level of trustee involvement in actual fundraising activities varies from institution to institution.

 “I was deeply involved in Villanova’s recent $300 million campaign. I hosted dinners for 300 to 400 people; I met with individuals in Boston; I did a whole array of things.  The level of participation depends on the individual and their interests.”
James Curvey

 “I have always found trustees more willing to identify potential donors than do actual solicitations. I have yet to serve on a board where 100 percent of the members understand we all have to help solicit.” 
Betsy Watkins

 “Real fundraising leadership falls to a small cadre of board members.  If you have 30 board members, there will be 10 who really carry the burden.  The majority of board members usually are not successful at solicitation.”     
Richard L. Morrill

 “Another expectation is that board members participate in fundraising and stewardship-type events and use personal contacts and business relationships to secure introductions to potential donors or people who could provide resources.”
Ann Hankin

Best Practices for Engaging Trustees in Fundraising

• Be clear about expectations for charitable support during the trustee recruitment process.  Regardless of whether an institution chooses to establish a set dollar minimum for annual giving from trustees, there are other measures that can be helpful.  For example:

 “We hope that you will make [this institution] one of your highest philanthropic priorities during your service on the board.”

 "We expect that every trustee will support annual giving generously, as well as make a capital commitment during his/her service on the board.”

•  Identify fundraising as a board-wide responsibility, even if the development committee takes the lead in establishing fundraising goals and policies.  Be certain that fundraising progress and obstacles are discussed routinely at the board level.

• Emphasize that every trustee has the potential to participate productively in donor engagement, whether it be through identifying prospective donors, participating in cultivation efforts, supporting a solicitation with a personal note or phone call, or playing a lead role in work with a specific donor.

• Educate trustees about the respective roles of the chief executive officer, the development staff, and board members in the fundraising process.  Trustees may hesitate if it seems they are expected to act on their own on behalf of the institution, rather than in collaboration with others. 

• Celebrate involvement in fundraising through routine reports to the development committee about the work of individual trustees.
  
  

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