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Campaign update for W&M students

Dear Students,

Taylor ReveleyRobust drum-beating and bugle-blowing accompanied the public launch of William & Mary’s fund-raising campaign last October in a Great White Tent on the Sunken Garden.  Thus, you know your alma mater is working hard to:

  1. Strengthen alumni ties to one other and to the university,
  2. Increase the rate of participation in annual giving by undergraduate alumni to 40%, and,
  3. Raise $1 billion.

This is a frisky effort.  No other public university as small as W&M has tried to raise a billion dollars.  And no university, public or private, without either a medical or engineering school has tried to do it (medicine and engineering have unusual allure for donors).  So we call our campaign “For the Bold.”

Why are we doing this?  How does philanthropy work?

Our Campaign Goals: What are we raising money for?

Our top priority is scholarships – to meet the full demonstrated need for all students, not just Virginians – so we can put a William & Mary education within reach of the full range of students capable of flourishing here.

We now do well in meeting the need of students from Virginia, but we do not do so well for out-of-state students.  We must dramatically increase our financial aid budget to support all our students.  Thus, scholarships represent 35% of the Campaign goal.

We must provide, too, for the teaching excellence characteristic of William & Mary faculty, who now earn less than their peers at comparable universities.  And we must provide for even more engaged learning, especially the kind that occurs when students become involved in faculty-led research.  Teaching excellence and engaged learning represent 20% and 22% respectively of our Campaign goal.

This is a Campaign about people.  Combined, William & Mary’s students and faculty, and the learning that occurs when their minds meet, account for more than three-quarters of the billion dollars we seek.

We need, too, to increase William & Mary’s global impact through leadership training, international study, and civic engagement programs.  Some important building projects are also included, such as the new Wellness Center, construction of which will begin this summer.  These two facets each represent 10% of the Campaign’s target.  Enhanced alumni engagement – the kind that you will expect and deserve as graduates – accounts for the rest.

There you have it, 100% of a $1 billion Campaign.

“W&M Finance 101”: Why is philanthropy important?

Counting all five schools of our university, including Marine Science, William & Mary’s budget for this fiscal year (July 1, 2015 to June 30, 2016) is $437.7 million.  While Marine Science (also known as VIMS or the Virginia Institute of Marine Science) is a vital part of our whole and is responsible for a significant part of the research we do, its budget ($44.3 million) is largely separate from that of the rest of the university.  This is because VIMS receives less than 5% of its funds from tuition and almost 45% from the state, with the remaining 50% coming from research grants and contracts plus a small but growing amount of philanthropic support.

On the other hand, W&M’s “main campus” (our Schools of Arts & Sciences, Business, Education and Law) pays its bills in a very different way.  The “main campus” revenue ($393.4 million) is shown below.

“State funds” and “tuition & fees” in this chart are reasonably clear.  More on “philanthropy” in a moment.

The chart mentions “auxiliary revenues & fees” as a quarter of the university’s budget.  These funds are generated by the non-academic aspects of campus life, and they are large at a residential university, where most undergraduates live, eat, and participate in a host of activities on campus.  Thus, auxiliary funds come largely from what some students pay for such things as housing and food, as well as the fees all students pay toward things like health and wellness services, athletics, and student centers.

“Sponsored programs” are competitively awarded grants and contracts received by faculty to support their research programs.  Most of the funds come from federal agencies (for instance, the National Science Foundation or the U.S. Dept. of State) along with some from the Commonwealth of Virginia and private foundations.

Now on to “philanthropy,” gifts from our alumni, parents and friends to help support William & Mary.  Until recent years, such gifts played a small role in funding the university’s budget.  This was because the state used to provide a far greater percentage of our budget (43% as recently as 1983), with tuition and auxiliary revenues supplying almost all the rest.  The situation has changed radically.  Now the percentage of our budget funded by philanthropy exceeds the percentage funded by the state (12.8% compared to 11.6%).  This gap will keep growing.  If we lacked the $50.4 million that philanthropy is providing W&M’s budget this year, the breadth and depth of the university’s life would be greatly diminished.

The Types and Timing of Giving: How does philanthropy work?

Philanthropy comes in these main categories:

(1) Annual giving: gifts of any size made in a fiscal year that are immediately available to help fund the budget.  A dollar given to the annual fund is a dollar ready right that moment to help fuel William & Mary’s budget.  This is the most democratic form of philanthropy because all of us can participate, whether we have $5 or $50,000 to contribute.  Joining in annual giving amounts to a vote each year for William & Mary.

We already have one of the highest rates of undergraduate alumni giving in the country (27.1% last year).  And it’s on the rise.  Our goal is to hit 40% by 2020 when the campaign ends.  That would put us behind only Princeton, Dartmouth, and Notre Dame in terms of alumni giving, and it would send a powerful message far and wide about the enormous loyalty of Tribe alumni.

William & Mary’s students, faculty and staff are pulling their oars, too.  Graduating seniors regularly achieve 70% participation or more, and the other undergraduate classes reach 25% or more.  Everyone can help to sustain William & Mary’s excellence with a gift of any size.

(2) Capital giving: gifts directed towards bricks-and-mortar projects.  Such gifts bring to life desired buildings or renovations on campus much faster than would be possible otherwise, if at all.  Some examples of buildings now in existence that would not otherwise have happened are Miller Hall, Cohen Career Center, Wolf Law Library, and the new Hixon Center at the Law School.  Tribe Athletics has benefited from a number of generous capital gifts, which funded Plumeri Park and its new indoor practice facility, the Laycock Football Center, additions and renovations to Zable Stadium, and the Martin Family Stadium.

(3) Endowment giving: gifts of at least $100,000, which are typically designated for a specific use and made over a number of years or in the donors’ estates (and thus are not available until he or she goes the way of all flesh).  Once the funds are received, each endowment gift creates, or adds to, a body of money (the “corpus”) that is held in perpetuity by the university and invested, which produces returns, some of which are taken to support the budget, usually 4% to 5% of the value of the invested funds.  So $1 million in endowed assets produces about $40,000 to $50,000 for the budget annually.  Assuming that we invest wisely and the national and international economies do well, we are able to take this 4% to 5% “draw” on each endowment each year and still increase its “corpus” sufficiently to maintain its value after inflation, ideally to do better.  Endowments are essential to William & Mary’s financial future, especially when it comes to funding scholarships and professorships.

Doesn’t William & Mary already have a large endowment?  As of June 30, 2015 (the end of the fiscal year), we did have $811 million.  This is an enormous improvement over where we were not so long ago.  In 1971, our endowment was just $11 million, amazingly little for a university of William & Mary’s age and distinction.

There are two helpful ways of looking at endowments – total assets and dollars per student.  A comparison of W&M’s current total assets and dollars per student to those of several other institutions is telling.  Few things provide more perspective about why our Campaign “For the Bold” now seeks to raise $1 billion.  Our endowment must grow to enable William & Mary to thrive in the centuries ahead.

Our need for greater endowed resources becomes even clearer when we take into account the sort of university William & Mary has become – one that is now a serious research, graduate and professional institution as well as a great teaching institution for undergraduates, with heavy emphasis on professors knowing students by name, engaging them in class and out, and involving them in serious research.  Thus, compared to other leading public universities, William & Mary has a remarkably low student/faculty ratio.

In short, W&M’s model of marvelous teaching, learning and research costs a lot.  Maintaining our 12-to-1 student/faculty ratio is expensive.  Providing tenured and tenure-eligible faculty with significant time and resources for research is expensive.  Involving undergraduates in serious research is expensive.  And our relatively small size means we have fewer students across whom to spread the non-academic costs of operating a school of our caliber.  The bottom line is we cannot maintain our current quality much less continue to move forward without ever growing philanthropic support.

When will William & Mary get the money flowing from the Campaign?

Some of the funds raised by “For the Bold” will be available for use on campus immediately.  But most will come over time.  Many pledges to the campaign will be paid over a number of years.  Other gifts, a sizeable percentage of the whole, will come in estates, and the funds will not be received until the donors’ deaths.  In other words, a billion dollars raised in the campaign is not a billion dollars promptly available to use on campus.

Will the Campaign only raise funds to meet its goals?

Campaigns rarely raise funds simply for their stated objectives.  Donors have their own views about the ends to which they want their gifts put.  We try hard, often with success, to persuade donors to give in the ways specified in the campaign.  Giving for scholarships, for instance, is always on our minds and tongues.  But when a gift is given and the university accepts it, then donor intent governs.  Then the university is bound as a matter of law and integrity to use the funds as the donor specifies.  A gift to fund scholarships can’t be used to build an athletic playing field, and vice versa.

Often in the past, though less so these days, donors made unrestricted gifts to be used as the school felt most important.  I am, of course, a great fan of unrestricted gifts.  But gifts of all sorts are welcome so long as they are compatible with the nature and mission of William & Mary.

“For the Bold” unites us to build on William & Mary’s historic preeminence a William & Mary of even greater modern preeminence.  This is important!  A William & Mary education – the kind of education that inspired people of high promise and ambition in centuries past – now matters more than ever to a better Virginia, nation and world.

- Taylor Reveley