Why do universities receive such massive donations? “Why not us?” pondered Oxfam’s Micah Demmert. He has some ideas, and a solution.
First published April 15, 2019
I’ve worked in Leicester Street, Carlton, for over 10 years. There are a number of not-for-profits in the area. The 60L Green Building hosts the Australian Conservation Foundation, Environment Victoria, Birdlife Australia and more, while around the corner is Red Cross, Save the Children and Fred Hollows, not to mention where I now work, and have done since 2013, Oxfam Australia.
There’s another significant player in the area, too – a NFP whose income dwarfs that of all of our charities combined. Their real estate portfolio contains most of the buildings in the street, and they are responsible for most of the foot traffic in the area.
I first heard about Melbourne University’s fundraising efforts during the public phase of their Believe capital campaign. Launched in 2013 with a $400 million, five-year target, it achieved that target two years early. Instead of resting on their laurels, they are now shooting for $1 billion, and from all accounts are nearly there.
Not to be outdone, in 2013 the University of Sydney launched their capital campaign, Inspired, with a $600 million, five-year target. They achieved that target in 2017 and, as you all probably know, have now reached $1 billion as of January this year.
Being overshadowed by such behemoths of fundraising power, while working at the Australian Conservation Foundation, I pondered the question: Why not us? I haven’t stopped pondering on that since. I recently heard about a couple of extraordinary donations, one local, one global.
In 2012 Roy and Nola Thompson donated $400,000 to University of the Sunshine Coast to provide support for students at risk of not completing their degree due to financial pressures. The donation allowed 149 students to achieve their education goals and partake in their chosen careers.
Roy and Nola had made a small fortune in the Sunshine Coast as publicans and property developers over many decades. Their donation was generous. But then their opportunity to become big players in philanthropy was presented to them. In 2014, the University of the Sunshine Coast received a single $5 million gift from Roy and Nola Thompson – 10 times the size of its previous largest donation – and what did this $5 million go towards? A carpark. A multistorey, architect-designed, eco-friendly, revenue-streaming carpark.
When I came across this story in mid-2018, I had just finished listening to Malcolm Gladwell’s podcast, Revisionist History. In one episode of this incredible podcast Gladwell tells the story of Phil Knight. Knight is the CEO of Nike and the 35th richest man in the world. In 2017 he donated $400 million to Stanford University. This extraordinary donation will pay for just 100 ‘Knight-Hennessey Scholars’ – their tuition and living expenses. That’s right, US$400 million to benefit just 100 students a year.
These instances of philanthropy, both the Thompsons’ generous donation towards a carpark, and Knight’s massive donation towards a privileged few, did force the question: Is that the best we can do? Well the answer seems to be, unfortunately, yes. But it’s a little more complex than that.
If you look at any top list of philanthropic donations in Australia in any given year, you’ll see there’s not a lot of diversity in the causes represented. The arts, universities and hospitals make up the lion’s share of these lists.
So if we look at universities as an example of organisations that receive big philanthropic donations, you would think that they would rely heavily on that income, right? Wrong.
In 2015, nearly 50% of total charitable income ($134.5 billion in donations, bequests, student fees, memberships and government grants etc) went to education and 25% went to the health sector. That means that there are a whole bunch of other causes fighting over the remaining 25%.
However, donations and bequests only make up a very small portion of overall income. And for institutions that earn over $100 million in any given year, such as universities, they only derive on average 4%! The total proportion of income derived from donations and bequests in 2017 for University of Sydney was roughly 5%. For Melbourne University it was just 1% (see Graph 1).
To quote John McLeod, co-founder of JBWere’s Philanthropic Services division: “Universities, the arts and medical research are the beneficiaries of the biggest gifts. It’s not uncommon for a top-tier university to raise more than $50 million each year. Thanks to its alumni networks the tertiary sector is considered one of the most sophisticated fundraising machines in the market.”
So why do universities receive so many of these wonderfully large philanthropic donations when it seems as though they don’t really need them? The answer partly comes from the United Kingdom. Charities Aid Foundation (UK) conducted a study of philanthropy in 2017.
On average £10 billion is donated every year to a wide variety of causes. But the top choice for those able to make gifts worth £1 million or more is one that barely figures among the general population, and that is universities. In fact, universities receive almost as much as all the other causes combined.
The Ross-CASE report from the UK covers university philanthropy specifically, which in 2017 exceeded £1 billion for the first time, a 23% increase on the year before. After a comprehensive survey of university donors they discovered five main reasons why big-ticket donors prefer universities:
1 Credibility Universities are large, enduring large sums. They all have multi-million dollar annual turnovers, and are therefore capable of handling seven-figure donations – unlike the vast majority of charities, which have annual turnovers of well under $1 million.
2 Ambition The range of activities opportunities that accommodate the personal interests of almost every donor.
3 Contacts People give most readily to to the most ‘worthy’ needs. And alumni are a constituency that universities can approach for donations 80% of the £1 billion was from alumni.
4 X-factor The opportunity for supporters to invested in its work and goals, is attractive. And philanthropic support that can be integrated into the social lives of donors, such as attending dinners, graduation events and concerts, helps to build and cement relationships between both parties.
5 Asking for it Universities are simply better at asking for it because they have made greater investments in this funding stream.
So in Australia, when we see the rise of mega-donations and the likes of Andrew Forrest, Stan Perron, Judith Neilsen and others changing the landscape of giving, wouldn’t your organisation or cause like to have a slice of that philanthropic pie?
Whereas the kinds of things that a university or a hospital can do with a large donation is vast and impressive, this does exclude a large section of causes that could easily use the money, and in fact rely on it more.
But don’t be fooled. It doesn’t have to be only universities and hospitals receiving these kinds of gifts. As fundraisers, we can present legitimate and compelling cases for support. We can engage donors in ways that they may never have experienced, unlocking morals and memories that trigger the head-and-heart decisions needed to make big visionary gifts.
We are credible. The only thing that is incredible is our ambition, or at least it should be. We have members, donors, supporters, who together create a community, and an X-factor, of caring, concerned people. So when it comes to big donations maybe we just don’t ask for it?
Over the past five years my team and I have grown income by 150% (see Graph 2). This hasn’t happened by chance, but it also hasn’t happened by spending any more money. My FTE staff count has remained the same (1 x manager, 2 x 1.0 FTE, 1 x 0.6 and 1 x 0.5), as has my expenditure budget (circa $38,000). This success is just about looking across the sector for examples of best practice, and remembering to do the basics. Oh, and it helps if you have an amazing team, too!
So what did we do? In 2015 we implemented one of our biggest changes – thematic proposals. As an organisation trying to attract the interest of donors we don’t want to meet them with 100 different proposals in our back pocket. So we consolidated our work into eight thematic areas – our thematic proposals, which form part of our global impact portfolio.
So if a donor is interested in, say, preventing gender-based violence, they can support our gender equality thematic proposal. Instead of dozens of projects that each required tens of thousands of dollars, we now have just eight thematic programs that require several hundred thousand, or sometimes up to $2 million, each.
The same applied to the way we report back – there are now just eight thematic reports in our impact report. The donor feels a sense of connection to that work, but Oxfam then determines what project and in what country the money gets spent.
Of course a donor can still tie if they want to, but we have found that by creating annual thematic proposals and impact reports, it has saved a lot of time for our entire organisation, and led to a sense of engagement for the donors, therefore growing income.
In 2015, we created Oxfam’s first donor club. The Oxfam Circle is Oxfam’s stewardship program. Essentially it collates all of the benefits that many of the donors were receiving anyway (event invitations, time with our CEO, tailored reporting etc) and created some rules around them.
In 2016, we renewed our focus on building direct relationships. We took our first site visit to the field – this is our X-factor! We’ve now taken small groups of donors to Indonesia, Timor Leste, Sri Lanka, India, and later this year, the Mekong. We also went back to basics, concentrating our efforts on face-to-face asking, no longer being reliant on DM appeals.
In 2017, we started the tentative steps towards a capital campaign. “But wait!” you say. “Are you building things? Are you endowing a Chair? How can Oxfam do a capital campaign?” Well, the trick is to not just limit yourself to bricks and mortar. Oxfam asked our donors this: “What is it that Oxfam could do that could unlock your ‘once in a lifetime’ donation?” We are still going through this process, but it is unlocking BIG transformational donations – $2.5 million of additional income so far.
In 2018 there were some minor tweaks, the main one being we introduced some new ways for donors to donate – now you can tie your donation as a regular gift if it’s over $10,000 a year as a cumulative total, and we can facilitate multi-year pledges.
We are looking to launch our capital campaign later in 2019, heading into the public phase, with a campaign committee and broader communications.
So think about Ray and Nola Thompson’s dream, realised – a car park. Perhaps I’m being a little unfair, or most likely a little jealous. But what could $5 million do for Oxfam Australia in terms of helping the world’s poorest, or in the event of a devastating natural disaster? Or could it protect large swathes of the Australian environment? How many animals could benefit from $5 million? Or could it provide free legal advice for marginalised communities or refugees? As fundraisers, can’t we start to set our sights a bit bigger and achieve greatness too?
If there is one thing you take away from this, it’s that I strongly believe that the only thing stopping other organisations from receiving big gifts is belief. Sure there are some impediments, like a limitation on projects to offer, but that’s not the point.
We are credible, but perhaps we don’t show that to our donors as much as we should.
We are ambitious, but given that most progressive organisations have a humility complex, maybe it’s ok to not be so humble all the time.
We have our own contacts in staff, members, donors, board members and more. Have you considered how to steward them all?
We have an X-factor, or at least it costs next to nothing to create one. Dinners, small bespoke events, one-to-one chats, cups of tea. It all creates a community in which donors feel connected and part of something bigger.
Big donations are becoming the norm. We need to do more to be able to offer donors a viable alternative to, or at least as well as, donations to universities. So maybe we just need to ask for it?
Micah Demmert MFIA
Micah is the Major Gifts Manager at Oxfam Australia. He is also the Director of Emergent Fundraising, which provides mentorship and workshops on major gifts and bequests for small to medium-sized not-for-profits. Micah believes in instilling best-practice fundraising principles and professionalising the industry.