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March 18, 2004

Capital Campaign on Target, Novak Reports

The University is two-thirds of the way toward meeting the $1 billion goal of its “Discover a World of Possibilities” capital campaign.

Pitt had raised $673 million in gifts and pledges as of March 5 and is on pace to hit the $700 million mark by the target date of June 30, the end of the University’s fiscal year, Pitt’s chief fundraiser says.

Vice Chancellor for Institutional Advancement Albert Novak Jr. says he’s confident that the campaign will meet its $1 billion goal by 2007, the year it is scheduled to end.

The campaign began in July 1997.

Of the $667 million raised as of the end of February, 39 percent ($261 million) had come from foundations, 33 percent ($224 million) from individuals, 15 percent ($97 million) from corporations and 13 percent ($85 million) from other organizations.

Novak told the Senate budget policies committee (SBPC) March 5 that he’s been relieved to see a resurgence in foundation giving to Pitt recently.

Fortunately, most foundations had started investing their endowments conservatively prior to the economic downtown that began three years ago, he said. “Those that didn’t go conservative took big, big hits,” Novak told SBPC. For example, the Ford Foundation’s endowment has fallen in value from $18 billion three years ago to $11 billion today, he said.

“We’ve started to see more positive responses coming back from foundation proposals, so I’m encouraged by that,” Novak said. “I didn’t think we would see that for another six months to a year, but we’re starting to see it both locally and nationally.”

Pitt has raised about $15 million per year from corporations during the capital campaign so far, three times the $4 million-to-$6 million the University had been getting from corporations annually during the 15 years leading up to the campaign, said Novak. “I’m optimistic that [corporate giving to Pitt] will continue to grow, and it will be because we’ve gotten our story out to the corporations about what a research powerhouse this University is.

“Typically, companies give where they’re getting something — whether it’s that they’re hiring our graduates, or they’re hiring our faculty as consultants, or they’re sending their folks into our labs, or we’re sending our people into their labs,” Novak said.

During the first two years of the campaign, gifts by individuals represented just 22-23 percent of total giving. That’s up to 33 percent now. Novak attributed the increase to Pitt’s burgeoning alumni association and aggressive efforts “to tell our story around the country, to talk about the excellence here.”

The University is on track this year to surpass its record number of alumni donors (30,391) set in fiscal year 2002-03, said Novak, pointing out that Pitt is playing catch-up with most peer universities when it comes to alumni fundraising.

Most members of the Association of American Universities (AAU), to which Pitt belongs, have had dues-charging alumni associations since the 1940s. “Ours started 10 years ago,” Novak said. “It takes a long time to make that up.”

Pitt also is at a fundraising disadvantage, compared with overwhelmingly undergraduate institutions such as Penn State, in that it enrolls so many graduate students – in recent years, about 9,000 out of a total student body of approximately 34,000.

“The rule of thumb is that undergraduates tend to give more to their undergraduate alma mater than they do to their graduate alma mater,” Novak said. “Alumni who graduated from the College of Arts and Sciences here and went on to our medical school or the law school or the business school still tend to give back to their undergraduate departments. That’s where they came as 17 or 18 year olds, that’s where they grew up with their friends and the whole bit. When you get to graduate school, it’s more like a job at that point. You’re not forming the same kind of bonds.”

Of the 90,020 individuals, corporations, foundations and other organizations that had contributed to Pitt’s campaign as of Feb. 16, 48 percent (43,484) were first-time donors, said Novak.

About 90 percent of the total 90,020 contributions are paid gifts; only 10 percent are pledges. Novak said Pitt hasn’t had problems getting donors to make good on their pledges, although bad economic times forced some major contributors to restructure their payment schedules.

Since the capital campaign began, Pitt has raised funds to create 238 endowed scholarships (a 57 percent increase over the pre-campaign number of 417), 74 endowed fellowships (a 27 percent increase), 46 endowed professorships (35 percent), 40 endowed chairs (100 percent) and 263 other endowed entities, ranging from seminar rooms to funds for purchasing dental instruments.

Endowing a scholarship requires a minimum donation of $50,000. A fellowship requires at least $250,000, a professorship $1 million and a chair $1.5 million. In the “others” category, endowments vary considerably, Novak said.

A $1 million endowment generates about $45,000 a year, not enough to fund the full salary and benefits of an endowed professorship, noted Vice Provost Robert F. Pack. Similarly, a $1.5 million endowment doesn’t generate enough income to fully compensate a chair holder. The University pays the remainder.

Endowed chairs and professorships “weren’t designed to pay the full cost,” Pack told SBPC. “That was done on purpose to make sure that the University wanted the position enough that it was willing to slide in a regular salaried appointment underneath the endowed portion. That way, you resist taking [endowed chairs and professorships] you don’t want simply because somebody is telling you they’ll give you money for it.”

Pitt isn’t seeking endowed chairs and professorships just to expand its faculty population, Pack said. “It’s being done to make the resources go forward by adding external support for things we wanted to do anyway.”

As part of Pitt’s “University on the Road” outreach program, Novak said, he traveled with Chancellor Mark A. Nordenberg and Pitt Alumni Association president Eva Tansky Blum to meet with alumni and other prospective donors in California and Florida last month.

“I can tell you, Mark sure works hard on those things,” Novak said. “When I think back to the California trip, we flew in to San Diego on the late flight out of Pittsburgh and got to our hotels around midnight. We had a breakfast meeting at 9 a.m., then a luncheon meeting, then a 3 p.m. meeting, then a dinner meeting with individual alumni. The dinner meeting ran until about 10.

“The next morning, we were on the road at a quarter to seven, heading to Irvine for a 9 a.m. meeting with an alumnus there. Then we had a noon luncheon. That ran until 1:45 p.m. We had a 2 o’clock appointment, a 3 o’clock appointment and a 6 o’clock appointment. At 7 o’clock, he made a big presentation to a large group, which was followed by a small group dinner. The next morning, we flew to San Francisco and did the same thing all over again.”

Novak pointed out, with a grin, that occasionally he gets to sit in the back of the room and recharge his batteries during these public events. “But Mark has to be ‘on’ the entire time,” Novak said.

Nationally, estimated private donations to U.S. colleges and universities totaled $23.9 billion in the fiscal year ending June 30, 2003 — the same total as the year before, and down from the all-time high of $24.2 billion in FY 2001 — according to an annual survey conducted by the Council for Aid to Education (CAE).

Harvard University raised more in private gifts than any other higher education institution last year: $555.6 million. The highest-ranking public university was the University of Arkansas at Fayetteville, which collected $365.3 million. But $300 million of that was a single cash gift from the Walton Family Charitable Support Foundation, supported by relatives of Sam Walton, founder of Wal-Mart Stores, Inc.

In its FY 2002 survey, CAE found that the total value of gifts to higher education dropped that year (by 1.2 percent) for the first time in 14 years, a decline attributed to the sour economy and a related 13.6 percent drop in alumni giving. —Bruce Steele


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