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UNCF Wrestles with New Economy, Old Issues

When former Dillard University President Michael Lomax took the helm of the United Negro College Fund five years ago, the economy was strong and the outlook high for most historically Black colleges and universities.

Today, half way into his 10-year work agreement with the nation’s major fundraising machine for private HBCUs, Lomax is wrestling with the worst fundraising economy in his lifetime and his 39-member colleges are feeling the pain too. Sources of income from all directions continue to fall.

“It’s a tough economy out there,” Lomax says.

Despite the bleak economy, Lomax has high expectations in the leadership of President Barack Obama, hoping the nation’s new leader can help turn the economy around and make HBCUs one of his vehicles for achieving his goals of a more well-educated society in the next decade.

“We believe this administration will be a very strong supporter of minority-serving institutions, especially HBCUs,” says Lomax, who says he has been in regular consultation with the White House and Department of Education as the new government maps its education agenda.

Lomax’s assessments were offered in a wide-ranging interview, during which he talked frankly about the weak economy’s impact on the organization and its member schools, his hopes for renewed interest in HBCUs at the national level, the expansion of “capacity-building” programs to strengthen member schools and the ongoing restlessness within the organization about its control over national fundraising.

On the fundraising front, Lomax says it was the generosity of a single anonymous donor late this winter that helped the UNCF avoid a significant drop in revenue for member schools this year.

A few days before preparing to tell his college presidents contributions of unrestricted funds for the fiscal year ended March 31 were about $8 million short of goal, Lomax says he received a letter from the representative of a donor who wanted to give the UNCF $7 million in unrestricted money.

“The only condition was for the money to get out to the schools” quickly, Lomax says, adding that it took a minute to believe the gesture was legitimate. “Don’t sit on it for a rainy day,” Lomax recalls the donor’s representative saying. “The rainy day is here.”

Lomax says $3 million of the money has already been sent to member schools. The other $4 million is set to go out in June.

The surprise $7 million capped what had been a tough fundraising year, Lomax says. Although most of the organization’s investments are in low yielding, but more secure, government securities, the organizations’ overall investment income fell about 15 percent, based on preliminary numbers for the fiscal year that ended last month.

Overall fundraising is down by more than $5 million, because of a fall off in restricted giving most for scholarships from corporations and foundations. As a result, distributions to member schools have been slashed.

The one exception has been the UNCF’s “Emergency Aid” Campaign. The drive, launched in March, is aimed at raising $5 million quickly for students at risk of dropping out because of a lack of finances. As of early April, the campaign had raise more than $1.5 million, with two-thirds of that to be sent to members schools by the end of April. It will be used to help students stay in school, including many whose graduation this spring was at risk as they could not pay their balances due the schools.

Lomax says he did not have a “watch list” of schools he felt were at a higher level of risk given the weak economy. However he speculated the public’s perception of who’s having the most trouble could be a bit skewed.

“There’s a kind of counter-intuitive reality to this economy,” says Lomax. “A lot of our schools with smaller endowments had most of their money in government bills,” he says, meaning those with more conservative investment strategies are earning less money day to day but have avoided the traumatic free fall loss in values of investment portfolios that were heavily invested in stocks.

Despite the rough seas in the fundraising world, Lomax says he was excited about the potential of a series of “capacity-building” programs the UNCF has been launching in recent years. Backed with small grants from foundations, the programs are designed to improve specific skills at local colleges, such as enrollment management, institutional advancement, fundraising, recruiting and financial management.

“I’ve been impressed with his initiatives,” says Dr. Walter Kimbrough, president of Philander Smith College in Little Rock, Ark. Kimbrough’s school was a founding member of the UNCF.

Philander Smith participates in the UNCF institutional advancement project. It has allowed his school to add and train four staffers in fundraising. In the first year of the program, alumni giving in dollars and number of donors nearly doubled, he says, boosting the school’s alumni giving to about $350,000 last year. “This program allows us to grow in completely different ways,” Kimbrough says. “If we strengthen the institutions and are able to do for ourselves, it lessens the burden on UNCF.”

Despite his enthusiasm for the capacity projects, Kimbrough echoes other member presidents who say the UNCF needs to re-examine its overall funding philosophy for member schools, to “modernize the funding formulas.”

Under present rules, some funds are distributed equally and the balance is distributed based on enrollment and endowment. It’s a formula Kimbrough and others have increasingly complained about over the years as working against smaller struggling school. The UNCF also has strict rules that discourage individual schools from soliciting national brand companies and big foundations, a legacy rule some presidents want revisited.

“We have different realities,” says Kimbrough, noting UNCF member schools include a few with substantial resources and most with much less. “We need to ask what are the priorities of UNCF? Should it be geared toward schools that need the most assistance or those that have done the best historically? It’s a philosophical question … we need to look at.”

Lomax acknowledges the concerns of Kimbrough and others and says, “The issue isn’t whether our schools should fundraise but who is asking whom for what? We want them to focus on their key stakeholders (alumni and local donors) and we focus on national folks (large corporations and big foundations) and direct mail. I think there’s better coordination today.”

Regardless of their inner tensions, Lomax and his colleagues seem united on their hopes the Obama administration will recruit HBCUs as key partners in achieving Obama’s ambitious education agenda.

“We’re going to ask them (the Obama administration) to look at our institutions as worthy investments,” says Lomax, “and our increased graduation rates as their return.”

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