Stealth Fund Drives: Where The Real Money Is

Last May, the University of Michigan pulled out all the stops when it announced its drive, dubbed The Michigan Difference, to raise $2.5 billion. More than 1,000 wealthy alums and friends packed the glittering kickoff, while former President Gerald Ford -- a Michigan grad -- and his wife Betty were introduced as honorary chairs of the campaign. But for all the hoopla, the real drive had been under way for almost four years and had already netted $1.3 billion.

While this may seem surprising, Michigan's approach is standard practice in the secretive world of big-time college fund-raising. These days, an elite university's development office is one of the most sophisticated operations on campus. The University of Chicago now has 250 staffers devoted to the task, while Harvard University has a staggering 620. These people employ cutting-edge data mining to develop detailed profiles of the wealth of alumni and other prospective donors. "Your college probably knows more about you than you do yourself," says John Butler III, CEO of Barnes & Roche, a leading fund-raising consultant.

A typical campaign unfolds according to well-scripted events, many behind closed doors. Harvard, for instance, is currently in the early phases of hush-hush planning for its next campaign, says Donella Rapier, vice-president for alumni affairs and development. Although Harvard already has a $22.6 billion endowment -- nearly twice that of No. 2 Yale University's $12.7 billion -- it also has immense ambitions. Among them, says Rapier: strengthening undergraduate education by providing more international experiences and improving the student-faculty ratio. Other objectives include investing in Harvard's science departments and its public-service schools.

Once a financial goal has been set, the critical quiet period begins, when school leaders solicit the largest potential donors. At Massachusetts Institute of Technology, former President Charles M. Vest, who retired Dec. 6, held meetings with each of its 100 top prospects. Big donors will make or break a campaign. At MIT, the top 200 gifts ultimately totaled $1 billion. Michigan estimates that 85% of its $2.5 billion goal will come from gifts of $100,000 or more.

The drawback is that large donors usually want to specify how their money will be used. Some 90% of it comes with restrictions, says John Lippincott, president of the Council for Advancement & Support of Education, which represents college fund-raisers. Thus, when DreamWorks co-founder David Geffen gave $200 million to the University of California at Los Angeles in 2002, it was earmarked for its medical school, which was then named for him. Garnering such huge gifts can be time-consuming. Michigan spent several years working with Bill and Dee Brehm before they agreed to give $44 million in November to create a new Brehm Center for Type I Diabetes Research.

The focus broadens when a campaign goes public, drawing contributions from as many alumni and others as possible. Universities stage elaborate events, which may seem to be overkill. Michigan, for one, expects hundreds of thousands of gifts for well under $100,000, but they're likely to make up only 15% of the total. Still, they usually don't come with strings attached. And some small fry will become giant donors.

Overall, campaigns can last for seven years. But increasingly, there's little respite. Although Smith College is closing in on its record-setting $425 million goal, "we are working on the next five-year horizon," says its vice-president of advancement, Karin George. Similarly, after Johns Hopkins University finished raising $1.5 billion in 2000, officials launched a $2 billion campaign. Add to death and taxes a call from the college fund-raising office as one of life's inevitabilities.

By William C. Symonds in Boston

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