UC Foundation collects record money -- and handsomely rewards those who collect it

Fundraising talent is in high demand
UC Foundation collects record money -- and handsomely rewards those who collect it
Posted at 7:00 AM, Oct 13, 2016
and last updated 2016-10-13 07:36:27-04

CINCINNATI -- The adage "it takes money to make money" seems especially true when it comes to paying the people who raise money for the nation's colleges.

Take the case of the University of Cincinnati Foundation, the fundraising entity for UC and, in the past few years, for UC Health as well.

During the fiscal year that ended in June, the foundation raised a record $259 million, said Julie Engebrecht, the foundation's senior director of communications and marketing.

According to its annual report to the IRS, during the previous fiscal year the foundation raised $117 million and gave $111 million to the university.

That year, the foundation reported spending $13 million on salaries and benefits. It also reported having 145 employees in calendar year 2014, which amounts to a per-employee average of about $90,000.

According to the report to the IRS, the top seven executives made a total of $1.65 million that year from the foundation or related entities, an average of $236,000.

Over the years, the foundation has raised a lot of money for UC, money that helps keep the university running.

From July 2011 through June 2015, the foundation gave $517 million to UC, with the amount given annually growing by 18 percent. Over the same period, employee annual compensation grew by 33 percent.

There are reasons why foundation employees are well compensated. Their services are in demand nationwide, and they support a big university.

"It should not be surprising to anyone that we have a vigorous fundraising effort, given that UC in particular is the largest employer in the region and that it educates many of the region's employees," Engebrecht said.

Salaries are annually benchmarked against sources such as national nonprofit data, she said. Executives are evaluated annually against specific goals and key performance indicators, and reviewed by the foundation board of trustees' compensation committee, she added.

Is compensation at the foundation in line with other university foundations?

It's hard to make such comparisons, Engebrecht said, because each foundation is unique.

The employees of some foundations, for example, are on the payroll of the university they raise money for. That's the case of the Ohio State University Foundation, which has no employees at all, said Christopher Davey, assistant vice president for media and PR for the university.

The more than 220 Ohio State University employees that do the work a foundation would normally do receive about $23 million in compensation, he said. That's an average salary of about $105,000, a bit more than the UC foundation's average.

Some foundations are a hybrid of employees paid by the foundation and the university it supports.

But the UC foundation is entirely independent of the university, with its own human resources department and employee benefits different from those provided by the university, Engebrecht said.

She referred questions about foundation compensation in general to the Association of Governing Boards of Universities and Colleges in Washington, D.C.

The association's senior fellow, James Lanier, agreed that comparisons are difficult and frustrating. If you've seen one foundation, he said, you haven't seen them all -- you've just seen one foundation.

But he said that, generally speaking, a mature university like UC could expect to spend less than 20 cents for each dollar it raises. The UC foundation is well within that guideline, with a percentage of expenses to grants made of between 18 and 12 over the past few years.

He also agreed that salaries for people who know how to raise money keep going up, while the average tenure with any given university keeps going down.

Nowadays, it's not unusual for large university foundations to have their own talent-recruiting offices, he said, or for them to provide fringe benefits, such as paying for professional development.

"We probably should be doing that with researchers and English teachers, but right now, philanthropy is making a difference," he said.

Many states have cut back on the money they provide universities, he said, and that puts pressure on foundations to produce more dollars.

For example, the Center on Budget and Policy Priorities reports that per-student funding for Ohio's public colleges and universities is 15 percent below its 2008 amount. In Kentucky, it's down by 32 percent.

Persuading donors to part with money has become more complicated, Lanier said, with donors seeing their gifts as investments they want to see a return on. It's not unusual for a donor to want to know who's involved in spending the gift, what kind of impact it will have and, after making the gift, how well it worked.

A good foundation officer can help donors understand how gifts can change the lives of students, he said. "It takes a mixture between being a missionary and a salesman," he added.

For most institutions, there's a pretty significant return on investment for money spent on fundraising, said David Bass, the association's director of foundations and research.

That return varies widely from university to university, with more established universities spending less because they have had time to cultivate long-term relationships.

"Ninety to 95 percent of the money raised is contributed by 5 to 10 percent of donors," he said. "You don't just knock on someone's door and get (those major gifts)."

It typically takes 18 months to develop an "already engaged" donor prospect to the point at which they're ready to be asked for a major gift, he said. And the market for good fundraisers is such that the average tenure of a development officer is often less than 18 months, he said.

"Among the foundation CEOs with whom I work, recruitment and retention of development officers is consistently identified as one of their greatest concerns and challenges," he said.