University Endowment

Many years ago the trustees at several Ivy League universities found themselves confronted with the unexpected pleasure of having many donors who were fond of the thought that they could make a donation that would have a permanent place on campus by making a one time large contribution. As generous as this was, they found themselves in the 1970’s experiencing hyper inflation in the cost of maintaining those same buildings.

Consequently, many of the same institutions now have adopted a policy that if it requires a donation of $10 million, to place your name on a building you must also donate an additional $10 million to the endowment funds in order to provide maintenance funds for the building. Is this fair for them to expect a donor to provide for the maintenance and care of a building when their intent is to provide a resource to the school for them to use and in actuality take care of themselves.

Most building projects are short sighted in this whole area of fund raising because the effort to raise the funds for the buildings and infrastructure of an institution is all about the now and let some one else worry about the future. This concept has been creeping back into vogue because inflation over the past ten (10) years has been relatively modest but as the Federal Reserve Open Market Committee is wrestling with whether inflation is a problem, if you are involved in advising or working with an institution that has a large investment in buildings, capital, and long term assets that require maintenance, now is the easiest time to start dealing with the costs you will eventually incur.

This can be done simultaneously with other capital fund raising strategies but don’t kid yourself into thinking it will not be a problem. The most telling work in this regard are any organizations that went thru a building program in the 1985, to 2005, era and failed to add corresponding amounts to the endowment fund because the bull market of this period was disguising the real needs.

What is the Christian theme of this whole subject matter? Let’s start with the name on the building… there are some easy shots to be taken on the side of humility where the idea of having one’s name up on something takes away from the fact that what is funding this is actually the Lord’s. Remember the whole idea we struggle with about “God owns it all” including my portfolio? Proverbs 22:1 says that “A good name is to be chosen rather than great riches, and favor is better than silver or gold. The rich and the poor meet together: the Lord is the maker of them all.”

As I alluded to before, the easy answer might have been to say that only placing the Lord’s name on all of your ideas for endowment might lose the witness of actually showing that the Lord has called you to a special place of giving. Pray and read Proverbs 24:3-12 before you decide what to do.

Sent August 28, 2006

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