AGBInteractive

The alchemy of American philanthropy... An Interview with Claire Gaudiani

October 23, 2007
Rick Legon, president of AGB
Claire Gaudiani, former president of Connecticut College

RICK LEGON: I’m Rick Legon, president of AGB. With us today is Claire Gaudiani, former president of Connecticut College and author of The Greater Good, a widely respected and important perspective on philanthropy in America. Claire currently is at the NYU Heyman Institute for Philanthropy.

Claire, welcome.

CLAIRE GAUDIANI: Thanks for the welcome Rick—it’s good to be with you.

RICK LEGON: In The Greater Good, Claire, you discuss and give examples of the unique American values of philanthropy and volunteerism. Could you tell us why those two values have been so essential to the American culture?

CLAIRE GAUDIANI: Rick, they were initiated in American culture before any other virtues or values. In 1630, as the first colonists disembarked in Salem, Massachusetts with John Winthrop at the helm, they were following his charge to “move superfluities” (that’s a quote) to address the necessities of fellow citizens. And they went about helping each other to establish homesteads and supporting each other. For example, once Harvard College had been founded in 1636, it didn’t take a full decade for the members of that board of trustees—they might have been AGB members had AGB been there—before they wanted to invite the able sons of farmers and blacksmiths to attend Harvard and thereby provide them scholarships. So, those trustees went out and asked a wealthy woman to provide scholarships, and she did. That first effort of volunteerism on the part of the trustees to a social profit organization like the first college was part of their lives and so was the philanthropy of Anne Radcliff who provided those first scholarships.

We have continued this culture—those 370 years since 1630—of mutuality. You get free Americans together who all recognize the same social problem, such as the library is falling down in our town, or we’ve got to attend to the needs of kids in our schools, or we need a place to honor art. And those free Americans will found a society or an organization—a social profit organization—and they’ll start giving their time and their money to making the situation better. That is part of our entrepreneurial spirit as Americans, and it’s that same spirit that has made us so successful in business and inventions.

RICK LEGON: Claire, in higher education we have certainly learned those lessons over the 375 years and we’ve had wonderful success in both public and private higher education and in attracting private resources. But today we are seeing skyrocketing fundraising campaign goals across both public and private institutions—capital and comprehensive campaigns. Are you concerned that the figures we’re seeing today are perhaps getting too big and that we are seeking funds for priorities that go beyond the traditional academic priorities. Are we in a fundraising arms war?

CLAIRE GAUDIANI: Well, if you look at the numbers that is exactly what someone could consider. One of the reasons this is happening is because our graduates, who of course are very often our trustees, as well as our academic leaders, know how much money is out there. There is more money in the hands of more Americans than ever before. We have now literally millions of millionaires, and it seems right to anyone who has ever been to a college to want some of that funding to come back to that institution and make it stronger. So that impulse is terrific.

I am beginning to have some concerns about the exuberant building of endowment funds insofar as they don’t line up with exuberant increases in student financial aid. The great worry is that we’re now putting the building of better fitness centers and other luxuries like that ahead of student fellowship and scholarship support. And that would be a great mistake. Education is the most important part of the ladder of upward mobility, and to the extent that we are raising more money than ever, we need to assure that everyone who is able receives all the aid they need to attend a college commensurate with their capacity for contributions to local, state, and national life.

My concern is that we’ve stabilized our scholarship funding and are letting it grow at a small rate but we are massively increasing our funding for other areas, some of which could be construed as luxuries if compared to student scholarships and faculty salaries.

RICK LEGON: Good points, Claire, and certainly those concerns that you raise not only impact the total goals of campaigns but also are being seen by public policy makers, especially at the congressional levels, so we all have our eyes on those very significant challenges. Let's talk specifically about how those concerns, attach themselves to boards and trustees, especially as they relate to philanthropy, and then a little bit as they relate to presidents. Are higher education governing boards too focused on fundraising and, in light of what you just shared with us, too focused on fundraising independently from some of the strategic challenges that their institutions face?

CLAIRE GAUDIANI: I guess the most straightforward answer, Rick, is that’s not the case where the academic leadership is strong and smart. There are such things as foundation boards that really only are concerned with fundraising and the people who get on those boards understand that that is what they will be doing. They may be interested in the physics department or the athletic department, but they understand what they are doing is raising money for the whole school. The board of trustees of the institutions, the board with the fiduciary responsibility, has the responsibility to see to it that funds are raised either by itself or by a foundation board. And then to see to the success and appropriate development of all areas of responsibility of the institution from overseeing the work of the president—and that includes expenditures of the president, as we’ve seen in a number of unfortunate situations in the last few years.

RICK LEGON: One can argue that giving starts at home and certainly in our institutions we want members of governing boards and the private side of higher education and foundations as well as governing boards and public higher education to give generously from their own personal investments. But are we seeing a different level of expectation on the part of donors, both board members and others, as they make commitments to their institutions—greater expectations? We’ve seen the whole transfer of wealth question raise issues as to whether donors expect a greater say as it relates to their significant gifts. We have been seeing court challenges—well known—as they relate to expectations on the part of a donor not met as a gift agreement would have suggested. Is there a change or are those anomalies?

CLAIRE GAUDIANI: Well, I think if you look at the 4,000 institutions of higher education, most of whom do fundraising, those cases that we read about really are the anomalies. There’s a relatively significant high level of dependability between donor and recipient and I think a very high level of completion of donors’ intentions with gifts.

The anomalies, of course, also are important and need to be looked at. But as we know there are important documents that surround every gift and those documents are agreed upon and they need to be carried out precisely. If they’re not, in this litigious society, there may be real problems. I think most presidents are informed of the significance of those promises and the importance of carrying them out when they take on their duties. These are areas where boards are appropriately encouraged to review if not annually at least every two years. What kinds of documents is the development office using to conclude contractual arrangements, particularly from major gifts? Is the board clear on these and has there been sufficient legal oversight of those documents? Once the gift has been made, we sometimes have donors who want to come back and select the professor or make other demands on the way academic gifts are carried out. They really lose that privilege once the document is signed so long as the college is carrying out the intention expressed in the documentation. It’s a complicated area, and the media, of course, wants to communicate often the dastardly side because that’s more exciting than the normal side and the “how well it’s working” side.

RICK LEGON: Claire, let’s switch over to the role of CEOs, presidents, and chancellors, especially new CEOs. Do you sense that individuals who are coming fresh into the leadership positions of their institutions are sufficiently prepared to meet the expanding expectations of raising private resources for fundraising?

CLAIRE GAUDIANI: Well, truth be told, I became a college president at the tender age of 42 and I know from personal experience how complex the job was in 1988. And I didn’t feel prepared then, although I had taught at the Wharton School and published a number of books and led a number of projects. I still was not prepared, but had the wonderful guidance of several personal mentors who enabled me to initiate my presidency with a fair amount of success early on.

I think though that the job has become geometrically more complicated 20 years later, and that presidents are well advised to take a “start from the beginning” approach to all areas of their responsibility. Best practices have evolved since Sarbanes-Oxley, so even someone who was a CFO years ago and perhaps has been doing something else since and then becomes a college president would do well to start from the beginning and go through best financial practices in higher education with a profoundly experienced mentor/leader. Understanding how to draft a mission for an institution that is new—and yet not so idiosyncratic and personal that the institution can’t recognize it as its own and embrace it—is a delicate matter that needs guidance. Start off at a level where the expectations can be met for today’s college presidents. I think it’s one of the best jobs and one of the toughest jobs in the world.

RICK LEGON: Are you concerned that it’s growing more difficult, or will become more difficult over time, to recruit the best and the brightest men and women to the voluntary jobs of board members in the future?

CLAIRE GAUDIANI: Well, on the one hand, I think the right answer is we mustn’t tell them just how complicated it’s going to be! Of course, I’m only kidding. What we really need to do is have opportunities for trustees and presidents to work together on understanding best practices and to adapt them for their local setting together so that there’s a feeling of respect between the CEO and the board and also confidence and trust and enthusiasm. So that when the glitches occur—which they clearly always do—there are easy steps to addressing the problems and putting them in a better situation.

But, despite the fact that most trustees have had corporate leadership experience, leadership in higher education is a different piece of work. It’s a mistake to think that all of that business experience is immediately transferable. So, there’s serious work to do and I always encourage that this work be done with presidents and boards present, together and in teams. And then working with experts who can help them understand the challenges before they become problems and set appropriate pathways to addressing them.

RICK LEGON: Claire, I have one last question before we wrap up. And that has to do with the challenging question of college sports—intercollegiate athletics programs. There was an article recently in the Chronicle of Higher Education that indicated that gifts made to sports programs actually result in reduced giving to academic programs—a point that is counter to what historically has been the argument about donors initially providing support in college sports. How much of an issue is that from your perspective?

CLAIRE GAUDIANI: Well, I’m an athlete—aging athlete—and I love sports and attended endless numbers of games and tourneys when I was a college president, but I think it’s very significant if we start giving to athletics out of proportion to giving to academics. We’re really cheating the students for our own gratification.

Alums like to have winning teams and they like to talk about that at the office, and yet if students in the physics department don’t have access to the nuclear magnetic resonating spectrometer, and the chemistry department where they would use that machine, because in fact the gifts made to the soccer team or the football team were so great that the individual giving couldn’t be talked into reducing the athletic gift to ensure there was sufficient teaching equipment around—that’s a catastrophe for the mission of the school.

And here’s where trustees can be a tremendous asset. The board, as a full unit, can decide together that a certain percentage of every gift that the institution is going to receive is going to have an impact on student and faculty needs, that is, the academic units on campus. Or they might decide to meet privately with any person deciding to make a major gift, and make the case for a more modest athletic gift on behalf of the share of athletic needs. They can determine a locally appropriate approach to assuring that the needs of scholarships and teaching—students and faculty—are primary as the responsibility of the trustees to the mission and vision of the institution.

These are principles that the president can encourage, but the president cannot be asked to carry out alone. This needs to be a trustee resolution thoroughly discussed, and discussed with some major donors, and then put into place so that the president and the development office do their fundraising with the understanding that we have a mission for new dollars that respects the institutional mission for new knowledge and new citizens.

RICK LEGON: Claire, can you offer 2 or 3 soundbites that would be helpful to board and institution leaders on the subject of philanthropy, volunteerism, and the general health of governance?

CLAIRE GAUDIANI: I think fundraising has never been more important and that is partially made possible by the extraordinary wealth that is accumulating in the top quintile of the income distribution in the United States.

Second, presidents have more responsibility in a wider range of sectors than any time in history. To do their jobs well they need to make serious work of preparing, and no one should feel inadequate because they go to “president school.”

Third, for the best kind of leadership to emerge in an institution, the board and the president need to experience review of best practices together, so that they are understanding their individual responsibilities and can support and advance each other and the institution collaboratively.

Finally, higher education is America’s most important industry. It is the red blood cells of every other industry and the red blood cells of the whole nonprofit sector—which I call “social profit”—and so the quality of the academic program must prevail. Athletics is a critical part of that education, but it must remain in a helpful relationship, not in a dominant relationship.

RICK LEGON: Claire Gaudiani of NYU and the author of The Greater Good has been the guest of AGB_Online. Claire, thank you for your time and we wish you well.

CLAIRE GAUDIANI: Pleasure to be with you Rick.