Maryland's Public System of Higher Education

The USM in 2010: 

Responding to the Challenges that Lie Ahead

Philanthropy and Entrepreneurial Partnerships

To be successful, USM institutions will have to be aggressive in seeking private support and flexible in meeting the expectations of donors.

The importance of private support for public institutions of higher education has grown to the point where it blurs the distinction between these institutions and their private counterparts. In fact, from a financial perspective, State institutions could more accurately be called State assisted institutions. While private funds should not be used to replace State support (i.e., a State institution should receive the amount of State funds necessary to accomplish its mission), private support can mean the difference between an average university and a great one. The margin of excellence lies in private giving.

Most State support of public institutions is in the form of annual appropriations for operations or multi-year funds for specific capital projects. Private support, on the other hand, can take the form of an endowment, which provides a dependable, continuous stream of income, allowing institutions to plan and grow. Endowed chairs and other financial incentives help institutions compete for world-renowned faculty, while scholarships and fellowships attract the brightest undergraduate and graduate students. Private support can also accelerate the modernization of facilities and equipment.

However, the philanthropic world is changing just as rapidly as other components of higher education, and institutions must respond quickly. In particular, the USM must position itself to respond to the greatest transfer of wealth in the country's history, which will occur over the next decade as approximately $125 trillion is inherited by baby boomers. Historical levels of charitable giving suggest that charities could receive between $10 and $25 trillion of the transferred wealth. In addition, the rapid success of technology companies is significantly reducing the age of both private and corporate donors that our institutions need to cultivate.

The coming decade will also witness an increase in "venture philanthropy," in which the relationship between a corporate donor and an institution is more of a partnership, with the corporation expecting a tangible return on its "investment." In other cases, institutions themselves will be investors, becoming part owners of promising companies by underwriting their start-up costs. These entrepreneurial partnerships are already developing in a variety of forms, and will be even more prevalent due to increased competition for corporate and foundation dollars.

USM Response

USM institutions will:

• Support State programs for matching funds for gifts and tax incentives to donors.
• Develop more for-profit, joint ventures with the private sector.
• Devote a greater portion of their budgets to fundraising and other advancement efforts.
• Create incentives to stabilize the fundraising workforce and reduce turnover.
• Create an IT infrastructure to support online giving.
• Create incentives for presidents and other institutional leaders to raise private funds.