This is the third and final article in a series about the University’s finances written by Gary Hauk, vice president and secretary of the University. Data and other information for the series have been provided by Executive Vice President John Temple, Senior Vice President Bill Fox, Vice President Alice Miller, Vice President Susan Frost, Associate Vice President Edie Murphree and Senior Vice Provost Charlotte Johnson.

Since the beginning of conversations about the need to rein in the rising costs of fringe benefits, many people have proposed that Emory close any budgetary gaps by launching a fund-raising campaign. To get a perspective on what such a campaign might be, some perspective on recent history could be useful.

The last capital campaign at Emory closed its books on Dec. 31, 1995, having raised more than $420 million in gifts and pledges during the five-year campaign and another $160 million in planned gifts (money that will come to the University in the form of bequests upon the deaths of the givers). Most people would be astonished to learn that, in the six years since the end of that campaign, the University has raised an additional $1.12 billion in outright gifts (see chart).

What has happened to that $1.12 billion? Much of it has gone into the endowment (see graph), and most of that is restricted—that is, it must be spent for specific purposes designated by the donor.

A large share of the total has been given to help Emory build the classrooms, laboratories and office space we have so badly needed—the Schwartz Center for the Performing Arts, the Whitehead Research Building, the Mathematics and Science Center, Emerson Hall, the Winship Cancer Institute and the Nursing School Building. In other words, some $200 million of that total has gone directly into bricks and mortar, at the request of the donors.

Had Emory not raised this additional $1.12 billion since 1995, the endowment would be much smaller than it is, and, without new teaching and research spaces, new library facilities and new resources for faculty enhancement and student scholarships, our academic progress would have slowed tremendously.

It is worth noting that, during this same period, a number of other universities carried out formal campaigns to raise $1 billion or more. Some of those universities—Harvard, Stanford, Duke and Johns Hopkins—have both larger alumni bodies and wealthier alumni than Emory. (Stanford, sitting in Silicon Valley, probably has produced more millionaire alumni through its engineering school than Emory has produced in all its schools combined.)

But even without a full-scale campaign—without the additional development staff, University publications, consultants and planning documents, involving faculty members as well as administrators and trustees, that such a campaign would require—Emory has done extraordinarily well in raising money.

Of the nearly $300 million raised just last year, one-third came from sources beyond the Woodruff Foundation and its related interests. So far this year, the University is on course for another $100 million in funds raised from sources other than the Woodruff interests. Nearly all of those funds, however, have come in the form of restricted gifts to the endowment for designated purposes.

Despite Emory’s remarkable record in fund raising, the University’s growth in programming, staffing and faculty has required every dollar of income available from this munificence for capital projects, personnel and academic programs.

Emory has raised this money very efficiently. The Institutional Advancement Division spends less per dollar raised than the average among our peer institutions—in fact, about half what our peers spend to ask for and receive each gift of a dollar. Last year Emory ranked seventh in the nation in fund raising among private universities; Harvard ranked first. Harvard’s budget for development (see graph) is more than eight times that of Emory.

One area where Emory could do better in fund raising is in the Annual Fund. This program brings in unrestricted gifts that can be applied directly to the Educational and General Budget. At some universities, particularly those with strong and established alumni programs, annual funds typically bring in millions more dollars per year than our annual fund, which averages less than $5 million annually.

We have a relatively young alumni cohort, however. Indeed, fully half of our alumni have graduated since 1984, and half of those in the last eight years. Our alumni, therefore, have not reached their peak earning years and have not matured as a body of philanthropists. In time they will become much stronger in supporting the University; however, that will not solve in the next few years the problems that are now before us.

To take the Annual Fund to a higher level of success will require greater expenditures for this program. Those additional costs will be more than met by increases in Annual Fund revenues. But even if annual unrestricted giving to the University doubled next year and remained at that level for another five years, the additional infusion of funds to the budget would not make up the deficit that would accrue under the old benefits plan.

The Board of Trustees, meeting nearly a year ago in June 2001, recognized and discussed at considerable length the need for a comprehensive capital campaign to provide another boost to the University’s finances. In February the board authorized fund-raising initiatives that will target priority needs of up to $150 million in each school or unit. These initiatives, and the planning they will generate, are critical to laying the foundation of a major capital campaign.

As Emory moves into the 21st century, it has become clear that fund raising must play a central role in helping to meet the University’s multiple needs in its quest for excellence at all levels. To become one of the top 10 universities will require resources that are not currently available through our endowment, our research dollars or the potential for growth in tuition. We simply must ask our friends (and friends yet to be) for more support.

The current plan to undertake fund-raising initiatives will allow the schools and units with immediate and critical needs to begin to address those needs at once.

At the same time, these initiatives constitute a transition phase for the University, giving us time to prepare to launch a major campaign in four to five years. That campaign will no doubt set a goal of raising at least $1 billion.

To the extent that future fund raising will augment the resources available to the Educational and General Budget, the University will have to determine the priorities to which these resources can and should be most prudently directed.