CAMPAIGN PLANNING AND FUNDING REQUEST ......Campaign Funding Strategy • Year 1 (Fiscal 2013): $2.5 Million from identified unrestricted bequest (total is $12-14 million) • Year

Submitted by: David W. Ripple, Vice President, Development and Alumni Affairs

Budget and Finance Committee Agenda October 3, 2012 Page 1 of 3

CAMPAIGN PLANNING AND FUNDING REQUEST Recommendation It is recommended that the Board of Governors approve the following funding plan to increase and sustain the University’s investment in its Division of Development and Alumni Affairs as it plans, organizes and implements a comprehensive fundraising campaign of no less than $750,000,000. Additionally, the immediate goal with additional funding is to increase the annual fundraising revenue stream from approximately $50 million to $75 million. The plan below would grow the University’s general fund allocation to Development from $8 million to $13 million over the next six years. • Year 1 (Fiscal 2013): $2.5 Million from identified unrestricted bequest (total is $12-

$14 million)

• Year 2 (Fiscal 2014): $1 Million from General Fund

$3 Million from identified unrestricted bequest

$4 Million total



$5 Million total



$5 Million total



$5 Million total




Background The University is currently in the silent phase of its next comprehensive fundraising campaign and it has raised $198 million since the end of the Wayne First Campaign (12/31/2008). In April 2011, the Division of Development and Alumni Affairs retained Marts & Lundy, a well-respected national fundraising consulting firm, to conduct a campaign planning study. This work resulted in a series of recommendations to assist the division and campus to better position itself to plan and execute its next large-scale campaign. The work completed since the study includes completing wealth screenings and donor/prospect capacity analysis, establishing new benchmarks and key performance indicators for fundraising productivity, purchasing and converting to an industry standard donor database (to be completed in 2013), major gift staff redeployment, upgrading the quality and depth of the development staff in key leadership areas, and launching professional searches for campaign director and foundation relations director positions. The work to improve the entire development and alumni affairs operation over the last 16 months has been in collaboration with the president, provost, deans and unit directors. A key finding from the Marts & Lundy study revealed that the University is significantly underfunding its development operation compared to its national peers. Additionally, the Council for Advancement and Support of Education (CASE) presented its annual Advancement Investment Metrics Study (AIMS) in March 2012 that supported Marts & Lundy’s findings. The AIMS study revealed that WSU-peer institutions invest 2 percent of their all-funds operating budget in institutional advancement. With Wayne State’s all-funds budget at nearly $900 million, a 2 percent investment in institutional advancement would equate to an $18 million annual budget. The University’s current investment is approximately $8 million. The AIMS study also revealed that for every dollar invested in institutional advancement work, these same peer institutions raised $4.27. The same dollar invested at Wayne State is returning $5.90, based on current productivity. In terms of the philanthropic potential identified in the Marts & Lundy study, it was found that by using predictive modeling and a capacity analysis of our database, the University has nearly 7,000 current prospective donors of $25,000 or more. Also, the local fundraising consulting firm, The Remington Group, conducted nearly 100 personal interviews with current and prospective donors last summer, affirming the larger philanthropic potential and a proposed campaign goal of $750 million. By using this conservative number and considering the 245,000 living alumni and the fact that nearly half of all the gifts received during the $500 million Wayne First campaign were from non-alumni, the potential growth of philanthropy at the University is significant.



The funding proposal as presented phases the investment from the University’s general fund over the next six years to build the base budget for development to $13 million by fiscal year 2018. To partially offset the current $8 million general fund allocation to development, the University imposes a 0.5 percent fee on its endowment distribution and a 2 percent fee on cash gifts received. This proposal recommends no changes to these percentages. Rather, recognizing that the general fund budget is “tight” for fiscal year 2013 and the following few years, it is recommended that the University look to other sources for some of the incremental funding, including using a significant portion of an unrestricted bequest. Earlier this summer, WSU was notified that a benefactor had passed away and named the University as a remainder beneficiary in the estate plans. Working with the trust officer of the estate, WSU has documented this planned gift and received the first $4 million in September of the projected $12 million to $14 million total. The documentation from the donor’s estate stipulates that the gift is unrestricted to WSU. University policy states that all unrestricted gifts, cash or planned, are to be directed to the Office of the President to be used at his or her discretion. This funding proposal would use up to $11.5 million from this planned gift for the first five years of the six year funding plan to help supplement the distributions from the general fund over time. The goals of increased annual gift revenue and the larger campaign goal rely on the new investment from the University.

Campaign Planning & Funding Request

Division of Development and Alumni Affairs

Board of Governors Meeting

Wednesday, October 3, 2012

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'IV

Goals and Objectives

• Plan for a $750 + million campaign

o $193 million raised since end of Wayne First Campaign

• Increase giving to the level of $75 million raised in cash per year within the next three years (a 50 percent increase)

• Build a sustained culture of growing philanthropy

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Positioning for Success - Progress

• Campaign Planning Study completed by Marts & Lundy, September 2011

• Wealth screening

• Donor/Prospect capacity analysis completed

• New benchmarks for productivity

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Positioning for Success - Progress

• Database conversion

• Major-gift staff redeployment

• Upgrade quality and depth of development staff – AVP of Principal Gifts – AVP of the School of Medicine – AVP of Advancement Services – Senior Director of Alumni Relations – Senior Director of Planned Giving

• Searches under way for leadership positions including

AVP/Campaign Director and Foundation Relations Director

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Shared Investment By Schools and Colleges

• All Deans are expressing active interest in development work

• Specific examples of Deans committed to investing in development include:

– Medicine

– Business Administration

– Engineering

– Nursing

– Law

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History of WSU Development Expenses and Outcomes

Fiscal Year(s) Average Expenses Average Annual

Funds Raised

2000 – 2002 $4.5 million $38 million

Wayne First (2003 – 2008) $8 million $66 million

Pre-Campaign (2009 – 2011 ) $9 million $50 million*

* According to the Council for Aid to Education (CAE), during the recession public universities experienced a 30 percent drop in giving.

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Campaign Funding Need

Fiscal Year(s) Average Expenses Average Annual

Funds Raised

Wayne First (2003 – 2008) $8 million $66 million

2009 – 2011 $9 million $50 million

2012 $8 million $60 million (estimate)

Active Campaign (2013-2018) $13 million $75 million +

$5 million additional expense budget

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$750 million campaign goal

Phased-In Approach

• Year one, FY 2013: $2.5 million additional to base budget (Budget becomes $10.5 million)

• Year two, FY 2014: $1.5 million additional to base budget (Budget becomes $12 million)

• Year three, FY 2015: $1 million additional to base budget (Budget becomes $13 million)

• Years four through six, FY 2016 – FY 2018:

$13 Million Base Budget Remains Intact

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Current Funding Examples in Michigan

• University of Michigan funds its development operation with a regular budget in the General Fund and, to a lesser extent, a special allocation from the Endowment.

• Michigan State University funds its development operation with a significant budget in the General Fund, an Endowment payout up to 1% and use of cash management income.

• Wayne State’s current Endowment distribution is 0.5%. – Association of Governing Board (AGB) 2012 survey indicates that 87% of institutionally

related Foundations assess an endowment fee for fundraising at an average of 1.3%.

• Wayne State’s current fee on cash gifts is 2%.

– Nationally, public universities often include a charge on most new gifts. This charge averages up to 12%. For example, most PAC-12 universities charge between 8% - 12%.

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I

Suggested Principles of Expense Funding

• No changes to payout percentage or to fee on cash gifts

• Development operation is an essential part of the overall University operation, which is budgeted in the General Fund

• The General Fund budget is “tight” for 2012-2013 and the following few years. Some of the incremental funding for Development should come from other sources, including using a significant portion of an unrestricted bequest.

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Campaign Funding Strategy

• Year 1 (Fiscal 2013): $2.5 Million from identified unrestricted bequest (total is $12-14 million) • Year 2 (Fiscal 2014): $1 Million from General Fund $3 Million from identified unrestricted bequest $4 Million total • Year 3 (Fiscal 2015): $2 Million from General Fund $3 Million from identified unrestricted bequest $5 Million total • Year 4 (Fiscal 2016): $3 Million from General Fund $2 Million from identified unrestricted bequest $5 Million total • Year 5 (Fiscal 2017): $4 Million from General Fund $1 Million from identified unrestricted bequest $5 Million total • Year 6 (Fiscal 2018): $5 Million from General Fund

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Documents

CAMPAIGN PLANNING AND FUNDING REQUEST ......Campaign Funding Strategy • Year 1 (Fiscal 2013): $2.5 Million from identified unrestricted bequest (total is $12-14 million) • Year