One of the “new normals” in higher education fundraising finds public universities easily eclipsing their multi-billion-dollar campaign goals years ahead of schedule. The list is long and growing.
The University of California San Diego (UCSD) provides an intriguing twist on this recurring theme. Not only did its Campaign for UC San Diego blow past its $2 billion goal three years early, UCSD became the youngest university in the U.S. to cross the $2 billion threshold. How did they do it?
The short answer, the school said, lies in the university’s first-ever strategic plan, which came into focus back in 2012, when Pradeep K. Khosla became chancellor. The plan “encapsulated the mission, vision and goals for UC San Diego, providing a framework around which fundraising could coalesce.”
The longer answer involves a perfect storm of familiar economic and demographic factors that allowed the school’s development team to tap a growing, diverse and affluent pool of alumni drawn to the school’s emphasis on medical research and innovation.
“UC San Diego has achieved our $2 billion milestone three years early—but we are not yet finished,” said Khosla. “Our 135,000 donors have created a powerful community that is driving fundraising momentum, and propelling us to continue our efforts to the planned conclusion of the campaign in 2022.”
“Profound Resource Constraints”
Established in the 1960s as an experimental campus, UC San Diego “benefited early on from a supportive local community and founders who aimed to serve the nation’s need for exceptional basic science by recruiting the best scholars,” Khosla said.
Fast-forward to 2012. The support Khosla alluded to was in short supply. General fund spending per student in the UC system had plummeted from $25,000 in 2000-2001 to just over $10,000 in 2012-2013. At the same time, the U.S. economy was slowly emerging from the Great Recession and in the third year of what would become the largest bull run in history. And the first crop of baby boomers began retiring en masse.
Stakeholders began to embark on the school’s first-ever strategic planning process against this financial, political and demographic backdrop. “While our founding vision has served us exceptionally well, UC San Diego is at a critical point in our history,” Khosla said. “Like all higher education institutions, we are facing profound resource constraints. We must think boldly to identify and implement the unprecedented solutions that are necessary to ensure our continued level of excellence.”
UCSD’s strategic plan and fundraising priorities would “define the future of the public research university.” UCSD stakeholders weren’t alone. Around the same time, UCLA was also laying the groundwork for its $4.2 billion Centennial Campaign for UCLA, which went public in 2014. It has since raised over $5 billion.
You can read UCSD’s strategic plan report here, and the executive summary here. The plan listed five goals—student experience, diversity and access, interdisciplinary research, community enrichment, and support infrastructure. The latter goal called for the university to define a “multi-year campus fundraising goal and strategy, linked to the strategic plan, to significantly enhance the endowment for scholarships, fellowships, and patient care.”
A Perfect Storm
The Campaign for UC San Diego launched in 2012. Its priorities included “student support and access,” “campus and community,” and “research and innovation.” This was a prescient move, as each priority aligned with growing areas of interest within the larger higher ed donor community.
Since the launch of the campaign in 2012, tuition has risen all across the country, the student debt crisis has exploded, competition for “high-achieving and high-income” students and “rock star” faculty has accelerated, and healthcare experts have voiced increasingly dire warnings about exploding costs, labor shortages, and strains on public services as boomers ease into retirement.
Donors have stepped up to address these challenges at an astonishing scale. According to the Voluntary Support of Education survey conducted annually by the Council for Aid to Education, colleges and universities raised $46.7 billion in 2018, up from 2017’s record of $43.6 billion on an inflation-adjusted basis.
The reasons behind the gold rush are well-documented and applicable to public and private schools. The ongoing bull market has generated over $30 trillion in wealth. Fundraising itself has become an “always-on” activity at most schools. Donors concerned with student debt have dug deep for scholarships and financial aid. Others remain enthralled by the enduring allure of the capital project, while loyal alumni want to see their beloved alma maters rise in the all-important U.S. News and World Report academic rankings.
Throw in the fact that UC San Diego is situated in the cash-flush region of Southern California, and it’s obvious that the school was well-positioned to hit its fundraising goal.
Hitting the Sweet Spot
These trends still only tell part of the story as it pertains to UCSD’s fundraising success. Writing in the San Diego Union-Tribune, Gary Robbins succinctly explained why the school raised so much money in such a short amount of time: “Although UC San Diego faces deep financial pressures, it has a big advantage when it comes to attracting gifts. Donors love to give money for health and medicine. And the university operates a medical school [UC San Diego School of Medicine] and two hospitals [UC San Diego Medical Center and the Jacobs Medical Center], and is among the largest academic medical researchers in the U.S.”
In 2010, Dr. David Brenner, UC San Diego’s vice chancellor for health science, appeared before the UCSD Foundation to encourage stakeholders to double down on patient care, research and innovation. “I felt that people shouldn’t have to go to Houston or L.A. for healthcare,” Brenner said. “They should be able to get everything they need at a state-of-the-art center in San Diego.”
Brenner’s vision resonated with Qualcomm-co-founder Irwin Jacobs and his wife Joan. In 2012, the couple provided the campaign with a lead gift of $75 million for the Jacobs Medical Center and a subsequent $25 million gift to erase a construction budget shortfall. The 10-story, 509,500-square-foot expansion of UC San Diego Health’s La Jolla campus opened in 2016.
“When we came here in 1966, the medical school was just starting, and there was no hospital,” Jacobs said at the time. “More and more, we’re learning how to bring results from basic research in biology and engineering to medicine, and to the patient. This medical center is going to show how effective that kind of integrated care can be. Innovations will spread out from San Diego, and go all around the world.”
The Jacobses serve as honorary chairs for the Campaign for UC San Diego, along with finance executive Ernest S. Rady, who gave $100 million to the UCSD Rady School of Management in 2015, and South Dakota businessman T. Denny Sanford, who followed up 2013’s $100 million gift for stem cell research with this year’s $100 million gift earmarked for the study of compassion and empathy.
Big Gifts for Data Sciences and Public Health
As the campaign unfolded, fundraisers secured huge gifts to create new schools in two of the hottest giving areas in higher ed philanthropy—data sciences and public health.
Donors all across the country have dug deep to support both initiatives for similar reasons. Most obviously, each research area tackles some of the world’s most pressing problems. These efforts most frequently require capital projects, thereby catalyzing regional economic activity. And investments in data sciences and public health provide in-demand jobs for the future.
In 2017, former Facebook employee Taner Halicioglu gave UCSD $75 million to create a new data science institute. Saying he wanted to “do something transformative,” Halicioglu pointed to the field’s potential to advance personalized medicine. “Data science touches so many areas—biology, physics, chemistry, medicine, computer science, math. Gathering and storing all this information, analyzing it, finding correlations and causes to determine how things are related and what that reveals, this is what data science can do.”
Chancellor Khosla was slightly more pragmatic in his commentary. “Data science,” he said, “is going to be the discipline of the future.”
A year later, optometric physician, inventor and philanthropist Herbert Wertheim made a $25 million gift to create a new school for public health. “The most important thing we can achieve is making our communities healthier across the lifespan, and thus more productive,” Wertheim said. “Prevention is, and always will be, the best medicine.” The school said it hoped to raise an additional $50 million toward the construction of a building.
That same year, Qualcomm co-founder Andrew J. Viterbi made a $50 million gift to UCSD’s Department of Ophthalmology to advance research, education and eye care. The goal here is nothing less than a cure for blindness.
And therein lies another benefit of gifts earmarked for research and innovation. These groundbreaking institutes can elevate a university’s stature to help fundraisers engage donors and secure additional gifts. This takeaway wasn’t lost on the Campaign for UC San Diego’s braintrust. The campaign’s website listed “top philanthropic impacts” during each fiscal year to assure would-be donors that previous gifts were being put to good use.
At the time of this writing, $1.36 billion—a whopping 68 percent—raised thus far was designated by donors for research and innovation, with $1 billion specifically supporting UC San Diego Health and medical education. $454 million is earmarked to enrich the campus and community, $210 million funds student support and success, and $19.3 million supports other areas.
Embracing the Residential Model
Additional factors contributing to the campaign’s success will likely resonate with readers of Inside Philanthropy’s higher ed vertical. Consider that donors’ penchant for the residential college experience allowed UCSD to raise close to a half-billion dollars for “campus and community.”
Founded as a commuter school, UCSD has been slowly transitioning to a more residential model for its 40,000 students. The school plans to house 2,000 students in a new North Torrey Pines Living and Learning neighborhood that will feature dining and retail space, along with parking, open space and a pedestrian and bike-friendly layout.
“I don’t want this to be just a great research university. I want it to be a great university—period,” said Khosla. His comment is telling, as it equates greatness with the residential model. Khosla isn’t alone in his thinking. Donors want future students to enjoy the same kind of enriching and immersive experience they had, despite the fact that this capital-intensive strategy can drive up tuition.
Speaking to the San Diego Union-Tribune’s Robbins, UCSD alumnus Ken Kroner laid out a more tangible driver behind the alumni community’s support for the school’s expanding residential footprint. “I know a lot of students who visited UCSD and chose not to go there. They said the reason was student experience…We need to make it easier to live on campus.”
Super-Mega Gifts on the Rise
The Campaign for UC San Diego also benefited from another familiar trend—the startling rise of super-mega giving. Last year, Marts and Lundy published a report examining the proliferation of mega-gifts in 2017. It found that the total value of gifts exceeding $10 million to universities was up 25 percent over the previous year. The increase, the report stated, “is due entirely to more gifts at the $50 million to $99 million and $100 million+ levels, which increased in number by 70 percent, and in total value by 47 percent from 2016.” During the same period, “gifts in the $10 million to $24 million range declined, both in number and total value.”
The Campaign for UC San Diego secured four $100 million gifts. These gifts represent roughly 40 percent of the campaign’s $2 billion total thus far.
While it’s hard to argue with this windfall or the fact that, as the Voluntary Support of Education survey discovered, alumni giving in 2018 increased 4.3 percent over 2017, super-mega gifts skew the numbers upward and raise familiar concerns around undue mega-donor influence at the expense of “middle-of-the-pyramid” donors.
That said, you can’t fault fundraisers for focusing their attention on the big fish. As Marts & Lundy President Phil Hills noted, “Should institutions be investing for the long term in the entire spectrum of giving? Yes, but that’s difficult to do when you’re under pressure to raise a lot of money at the lowest possible cost.”
Yet demographic changes suggest this model may not be sustainable in the long term. As baby boomer donors gradually cede the stage, fundraisers will have to engage younger, more social-justice-oriented, and frequently debt-ridden alumni whose priorities do not naturally align with those of their gilded and entrepreneurial predecessors.
UCSD fundraisers acknowledge this looming reality, writes the San Diego Union-Tribune’s Robbins: “UC San Diego executives are grateful for the support of big-buck philanthropists like the Jacobses, Denny Sanford and Ernest Rady. But they say they’re going to have to greatly expand the number of gifts from alumni if they’re going to change the school’s culture and place the interests of students ahead of researchers. Barely 4 percent of alumni make donations, a figure that’s slipped in recent years.”
All told, 135,367 unique donors gave to the Campaign for UC San Diego. Most encouragingly, 95,000 were new to UC San Diego, and more than 250 gave $1 million or more in support of the campaign.
With $2 billion and counting in the bank, UC San Diego is doing exactly what you’d expect it to do: raising more money. Officials announced the Campaign for UC San Diego will seek an additional $1 billion by late 2022 to fund the construction of a replacement hospital in Hillcrest and further the school’s transformation from a commuter school to a “residential oasis.”