Tapping alumni for cash can help solve funding crisis

How Ireland's universities are funded is a source of tension, conflict and debate. Both the State and the universities are seeking the return of tuition fees, and a number of new initiatives, such as Education in Ireland, have been introduced to encourage non-European students to study at Irish universities, as they incur higher fees than European students.

The return of tuition fees or increased non-European matriculation, although likely to result in some increased funding, will not replace the funding shortfall from the reduction in State support, nor will it meet the investment required for future growth. Unless the third-level sector secures additional forms of funding, such as philanthropy, its financial crisis is likely to continue.

A recent research report, Fundraising Performance in Ireland , by 2into3, the not-for-profit adviser of which I am a director, and supported by the specialist insurer Ecclesiastical, showed that philanthropic income here rose 4 per cent in 2011. In the education and research sector, however, philanthropy increased by 26 per cent. How big a part can philanthropy play in funding Irish universities? Alumni giving may be the key.

Despite the jump, a comparison of Irish higher education’s relationship with philanthropy with that of the UK and the US reveals deficiencies. Irish third-level philanthropic income stands at about €50 million, or 5 per cent of the Irish philanthropic market; in the US it is €23.1 billion, or 9 per cent of its market; and in the UK it is €856 million, or 6 per cent of that market.

To improve their performance, Irish universities need to invest in securing more philanthropic income and increasing market share. The total philanthropic market in Ireland is likely to continue to increase as a result of projects such as the National Giving Campaign, a Government initiative with a target of €800 million. Other sectors, such as the arts, are setting their own targets to increase their share of the philanthropic market.

Alumni giving is a major source of philanthropy in world-renowned universities. In the US, at Princeton University, 60 per cent of alumni contribute; at Carleton College, in Minnesota, it’s 59 per cent; and at Wesleyan University, in Connecticut, it is 49 per cent.

The Alumni Factor, a US-based organisation that ranks universities on alumni output, attributes their success in attaining such high figures to the small size of the universities and their location on a single campus.

The US average of alumni giving among all universities is 10 per cent – a more realistic target for most Irish universities. The UK currently has a 1.2 per cent participation rate from alumni of public donations involved in charitable giving, and has set a target to reach 5 per cent by 2016. Ireland’s current rate of alumni giving is just 1 per cent.

Research carried out by the Alumni Factor suggests that alumni giving is influenced by friendship, intellectual development, college experience and the encouragement of alumni giving before graduation day. According to the organisation, alumni give back to show their appreciation and to enable others to have an experience similar to their own.

Alumni giving is a representation of a university: a successful university produces successful graduates. Irish universities have produced highly ambitious and successful graduates, yet this has yet to be reflected in alumni giving. It is imperative to start graduates quickly into a pattern of giving during their undergraduate years and to then work on sustaining this pattern in the long term.

Irish universities have underinvested in their fundraising teams, with just 50 fundraisers in this sector. Maintaining the prestige and excellence of Irish universities, as well as their widespread access, demands significantly higher levels of investment and expenditure, especially if their undisputed success is to be secured and sustained in the long run.

Education is cited as the key to economic growth, so in a time of economic crisis many question the decrease in funding available to educational institutions. As Derek Bok, the former president of Harvard University , once said, “If you think education is expensive, try ignorance.”