MU to restructure fundraising budget
The changes will be put into effect in July 2010.
Published April 9, 2010
The UM system is restructuring its budget for the fiscal year 2011 to allow more funds from its general revenue to focus on development of teaching and learning, rather than fundraising.
Development spokeswoman Beth Hammock said the change is a result of a decision by the UM system Board of Curators in December 2009 but it will be put into effect for all four university campuses differently.
Hammock said MU's fundraising budget is $17 million per year. Changes will go into effect July 1, when the university enters into its new fiscal year.
Provost Brian Foster said the money going into fundraising from general revenue is no longer needed under the university's current budget.
"When the university started this campaign around nine or 10 years ago, there wasn't infrastructure set for the large amounts of fundraising that the university is dealing with," Foster said.
Foster said the university has invested millions of dollars into fundraising and received a billion in return.
"The university invested general operating funds to establish an infrastructure of the scale that we now have," Foster said.
MU will incorporate the new budget policy in two ways. The first is by establishing an administrative fee on endowments, which are permanent funds created by a donation to support a specific purpose chosen by the donor.
"We now have this administrative fee on endowments," Hammock said. "A 1 percent fee will be assessed on future endowments that will go toward development offices."
The small percentage adds up in the big picture, she said.
"We anticipate receiving $5 million a year from the administrative fee on endowments," Hammock said. "That's based on what the endowment balance is right now, which fluctuates."
The second change is that new gifts will go into a short-term investment pool for up to nine months. The interest accrued from the investment pool will go toward development, and 100 percent of the gift will go to a fund selected by the donor.
Hammock said it's not clear how much money would be received from the investment pool.
"The other campuses are changing their funding of development in slightly different ways," Hammock said. "We have adopted our funding plan for MU in the way it will work best for the university."
There are no other changes to the budget that involve donors or development besides the administrative fee and short-term investment pool, Hammock said.
"At least $5 million of the $17 million will be funded through this new way," Hammock said. "That will free $5 million up for use for teaching and learning, which is what the main focus of the university's mission is."
Hammock said the university system suggested modifying the fundraising section of the budget because it is a revenue stream coming in and expanding.
"It is one of not many sources of revenue the university has that actually increase from year to year these days because our tuition is capped and the state is not increasing its amount that it allocates to the university," Hammock said.
Private gifts and grants are two main sources of revenue for fundraising.
Hammock said another reason to look into reducing the fundraising budget is because it is common practice among organizations that accept gifts from across the country.
Most Big 12 and Big 10 universities use part of the annual endowment distribution to partially fund development, according to a fact sheet released by the development communications department.
"This is something we've been thinking about doing for awhile and we are finally doing this year," Hammock said. "It's a pretty common practice among other universities and non-profit organizations."