Historically Black Schools Turning to Capital Campaigns

When Dr. Frank G. Pogue Jr. arrived at Louisiana’s Grambling State University as interim president a year ago, he quickly made an unexpected and unpleasant discovery. The school’s primary funding source—the state—was steadily reeling in the cash line and cutting taxpayer support for higher education, not just at Grambling but all over the state.

Today, faced with state allocation reductions of more than 20 percent, with more cuts on the horizon, the veteran educator is hoping to stem his school’s downward revenue spiral by beefing up his fundraising operations and launching Grambling’s first organized capital campaign. He is not alone. From Louisiana to West Virginia to North Carolina—and many states in between—a growing number of historically Black colleges and universities are coming off the sidelines and finally getting into the major fundraising game. In the face of a cash crunch, the colleges are rushing to launch serious capital and planned giving campaigns.

“There is a difference between the art of appreciation and giving back,” says Pogue, echoing the sentiments of other HBCU presidents. He says HBCU alumni and supporters “have no tradition of giving back.” It is a reality HBCU officials “will have to deal with,” he says.

Elsewhere, West Virginia State University is set to launch a five-year, $12.5 million capital campaign, the school’s first since its founding in 1891. Fort Valley State University in Georgia is exploring a planned giving campaign. North Carolina Central University, one of several public HBCUs in the Tar Heel State, recently hired a new development chief with orders to kick the school’s fundraising efforts into gear.

Meanwhile, the National Association for Equal Opportunity in Higher Education (NAFEO) has partnered with The Dream Company, an Alabama-based life insurance provider, to promote the “Insuring The Dream” life insurance plan. Launched in February, the program uses the Internet to sell easy-to-purchase group life term insurance policies in the $10,000 to $100,000 range, with death benefits going to HBCUs designated by the policyholder. Sixteen schools have signed up, including Stillman College in Alabama, Central State University in Ohio and Virginia State University. NAFEO, the organization representing the presidents and chancellors of the nation’s 100-plus HBCUs, has posted sign-up information for “Insuring The Dream” on its website.

The emergence of these schools on the major capital campaign landscape has been hastened by several years of declining state and private support. A still-languishing economy, mounting national debt and Republican control of the U.S. House of Representatives have most analysts predicting cuts to federal higher education aid in the near future.

The new attention comes after decades of HBCUs largely ignoring capital campaigns. The fundraising strategy, however, has proved highly effective for large nonminority institutions, as well as for several prestigious, private HBCUs like Meharry Medical College, Spelman College and Hampton, Howard, Morehouse and Xavier universities. A heavy dependence on private support at these HBCUs forced them to develop and refine giving campaigns over the years. As a result, the schools have successfully raised hundreds of millions of dollars, helping their endowments and foundations thrive in good times while weathering rough patches.

“We’ve been left in the dust,” says John Berry, WVSU’s vice president of institutional development. Berry was brought to the school a year ago to help build the school’s philanthropic operations and launch a capital campaign that includes planned giving.

He says most public HBCUs have been “slower” to focus on fundraising, relying instead on state sponsorship of higher education for Blacks and the poor. Until the last decade, state support was essentially a sure bet, he says.

HBCUs could determine their annual budget needs based on enrollment projections and expect to receive close to that amount in state allocation of tax dollars, Berry says. He notes, however, that HBCUs, especially land grant colleges, consistently received smaller financial allocations than their historically White counterparts.

Now, as cash-strapped states steadily look for ways to cut spending, more lawmakers are advocating performance-based funding formulas, a move that is guaranteed to dramatically change the funding landscape.

“The private schools have been fundraising out of necessity,” says Lois Deloatch, vice chancellor for institutional development at North Carolina Central, which recently posted a planned giving proposal on its website. “[Public HBCUs] have to see fundraising as an essential means of supporting our schools.”

Minority serving institutions have their work cut out for them, say Berry, Pogue and others. While there are no official reports on HBCU fundraising efforts, they say no more than a handful of HBCUs have ever had major capital and planned giving campaigns, and few have the personnel to staff such efforts.

It can be done, however, says Pogue, who speaks from experience. In 1996, when he became president of Edinboro University, a small, predominantly White institution in northwestern Pennsylvania, the university had no foundation at all. When Pogue retired 10 years later, the school’s foundation had more than $100 million. Today, the foundation is valued at $194 million.

“A lot of that money came through planned giving,” Pogue says. He hopes to bring the same results to Grambling’s new capital campaign.

“It’s a touchy subject,” admits Peggy Williams, vice president for sales and marketing for The Dream Company. “People don’t want to talk about it.” Her comments echo others who say it is much easier to discuss death in a religious context than in a starkly business context.

Williams says prospective donors often don’t realize that planned giving allows them to help their school and their family while possibly earning tax breaks as well. Once she explains the process, Williams says donors are more inclined to see their actions as establishing a living legacy long after they are “biologically cool” as one college official describes it.

Also, planned giving proponents say it doesn’t take a lot of money to make a difference for most HBCUs. The “Insuring The Dream” program, for example, can cost as little as $2 per week, says Williams. The program sells $10,000 to $100,000 policies to prospects generally between 45 and 55 years of age. Using insurance industry actuarial studies, 1,000 donors each purchasing $50,000 policies would eventually generate $300,000 in annual “unrestricted” income for the beneficiary school.

“We’re not trying to take away from their donors,” says Williams. “We’re trying to increase their donor base.”

While planned giving campaigns do hold the promise of financial salvation for HBCUs, they have their share of challenges as well. For example, most planned giving arrangements historically have included restrictions on how the funds can be used, such as for scholarships, specific programs or departments. Schools want, and need, unrestricted funds, experts say.

Also, there is no way of knowing with certainty when a person will die, meaning schools can only do so much planning about future income based on planned gift values. The realization that a parent plans to bequeath a large sum of money to a school also can spark intense family feuds.

And some fundraisers speak of instances where colleges have made major commitments to planned giving projects only to see a higher than expected number of planned giving insurance policyholders let their policies expire for non-payment. When that happens, schools have to decide whether to pay the policy in hopes of receiving the benefits when the policyholder dies. Such a decision puts the schools in the unenviable position of investing current revenue for an unknown period of time.

“Planned giving is the hardest, because there are so many variables, including donors living longer,” says veteran higher education fundraising guru Robert Sevier, senior vice president of Stamats Inc., a higher education marketing company. “Most colleges aren’t as ready as they think they are.”