This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent. Fundraising for Universities Brussels, April 25th 2002

2 Agenda  University fundraising practices abroad  Fundraising mechanisms  Do’s and don’ts in academic fundraising  Conclusion

3 The share of non-public financing in total funds of public universities in the US has increased by 10% in the nineties

4 50% of donations to US universities come from individuals

5 Private contributions per student have grown at over 50% per decade

6 About 50% of private funding is used to finance current operations

7 The top 3 fundraising public universities in the US raise as much private money as the total budget for universities in Belgium # Students:

8 Based on US benchmarks, Belgian universities could significantly enhance their private fundraising KULULB

9 US fundraising is not done exclusively by private universities

10 10 out of the top twenty fundraising institutions are public universities = public = private

11 Even the most prestigious European universities have significantly lower private funds than top US public schools

12 US universities’ fundraising is facilitated through a large number of tax-optimal donation options Outright, tax-deductible gifts Property giftsBequests Charitable Lead Trust Constant income producing gift Variable income producing gift Gifts to universities that optimize taxes Charitable gift annuity Charitable remainder annuity trusts Pooled income funds Charitable remainder unitrusts

13 Most universities have a well developed website to explain fiscal issues to potential donors

14 Top fundraising and quality education are highly linked “Wealthy” universities can ensure high quality education through: Best professors Best research and education facilities

15 Therefore most universities have set up Boards of Trustees to give an answer to key quality and independence issues  How demanding can a funding company be? -Can it require a class-room to bear its name? -Can it require a university research team to work together with its employees? -Can it have any preemptive rights on the results of the research program that they have helped financing? -Can it have an influence on the university recruitment policy?  Will private funding be specifically invested in selected projects?  Under which conditions can a funding company play an advisory role for a research program?

16 Research and education quality is guaranteed through independent control: Harvard example  Ensure that the University remains true to its Charter  Give formal consent to major initiatives and to appointments  Provide advice to the Corporation  Elected by alumni Board of Overseers President and Fellows of Harvard College (“The Corporation”)  Organise Research and education  Raise funds

17 Agenda  University fundraising practices abroad  Fundraising mechanisms  Do’s and don’ts in academic fundraising  Conclusion

18 External fundraising is only one source of non- public financing for universities Tuition fees External fundraising Entrepreneurial activities Revenue from (sale of) spin-offs Investments Sponsored research projects Private sponsors Alumni donations Corporate sponsors Foundations

19 Alumni and other individual donations Small Medium Large Heritages USD Alumni Parents Anonymous Online forms Mailings Typical amount Typical sources Typical approach USD Local entrepreneurs and wealthy individuals (often alumni) Invite potential donors to social events Create “honor” around donation Research and dare ask “at the right level” – >1M USD Local entrepreneurs and wealthy individuals (often alumni) Alumni groups (“class of 76 donates USD 1 M)” Luck, but often linked to alumni status and/or university reputation Relationships 0 - >20M USD Very wealthy families with a history of charitable giving Luck, but often linked to alumni status and/or university reputation Provide professional assistance (eg. set up trust that provides life- long income for donor)

20 About 5% of alumni contibute yearly For every alumnus, approx. 50 USD is raised Average alumni donation = 1000 USD  5% of all alumni contribute yearly

21 European schools have much lower alumni contribution levels than US schools

22 Corporate donations are often linked to a « tangible » return Pure welfare“Tangible” return Exclusive access to students (eg. exclusive Pepsi sales in return for large donation) Primary access to research results (Novartis-Berkeley donation) Set up new research facilities to increase the number of engineers … Image building Tie company name to respected institutions/professors -“Banc of America Dean” -“KBC chair” Toyota donation of USD 1M, without strings attached Anonymous donations Typical approach Use relationships to get access to corporate leaders Actively approach them with a well prepared file

23 US foundations’ most important target is education

24 Agenda  University fundraising practices abroad  Fundraising mechanisms  Do’s and don’ts in academic fundraising  Conclusion

25 5 « Do’s! » in academic fundraising Invest Create structure Build/cherish relationships Be creative Distribute equally Invest in a good team and support -Professional fund-raising team -Alumni databases - Facilitate and clarify the giving process -Online payment -Yearly forms -“What do u get in return?” Provide “tax” optimization advice to donors Try to elaborate creative solutions to best suit a possible corporate donor 10 year “no Coke on university” in return for a USD 25M donation from Pepsi U of T fundraiser gets a daily list of wealthy patients in the university hospital Chair: 500K-2M+ EUR Professorship: EUR Fellow: EUR 50% of donations come from individuals Contact wealthy individuals Make donors feel special, keep them informed “Social events” for the wealthy Lectures for donors Newspaper articles Buildings named to donors Pictures/ plates of donors in school Most donations go to science and business departments. Distribute them across all departments because they are important for a university (reputation) as well - Exam- ples:

26 Investing in fundraising clearly pays off Dartmouth: Fundraising team of 100 FTEs For every 12c invested, 1USD is raised

27 European fundraising teams are underdeveloped

28 5 « don’ts » in academic fundraising Take it for granted Interfere with academic independence Use everything at once Work without clear ethic rules Take any sponsor US universities typically put 1/3 of fundraising in endowments for later use (scholarships etc) Harvard endowment: USD 19 B U of Texas (Public): USD 10 B Don’t just let donors come, approach them in all possible ways Dare to ask for money Fundamental research should remain primary focus Outsiders should never influence research results Novartis USD 25M donation to Berkeley in return for first right to negotiate licenses on discoveries was highly criticized Exam- ples: -- Avoid weapons, tobacco producers etc. because the long term reputation of the university might be at stake Set up a Board of Trustees to ensure proper use of funds -

29 Agenda  University fundraising practices abroad  Fundraising mechanisms  Do’s and don’ts in academic fundraising  Conclusion

30 Fundraising is a, necessary, reality Fundraising exists in Europe, mostly under the Anglo-Saxon model, but is far underdeveloped There is no relationship between lower quality of education and increasing fundraising The foremost important fundraising source are your alumni Conclusion