As state funding decreases, push for private funding increases

The "Campaign for Berkeley" aims to raise $3 billion in private donations. Part of the project includes "PhotoBooth" portraits by Christopher Irion.
Ashley Chen/Senior Staff
The "Campaign for Berkeley" aims to raise $3 billion in private donations. Part of the project includes "PhotoBooth" portraits by Christopher Irion.

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Dwindling state funding has lent a new significance to the push for private donations at UC Berkeley and throughout the UC system.

Though Berkeley has engaged in major private fundraising campaigns for the last 30 years, not long before the first major one began in 1985, state funding accounted for roughly half of the campus budget. Currently, state funding represents just 11 percent of the campus budget, corresponding with a transition in the role of private funding from functioning solely as a safety net for when state funding is insufficient for big projects to supporting more central campus needs.

“Fundraising provides an extra padding, or margin of excellence, on top of state funding,” said C. Judson King, director of the Center for Studies in Higher Education at UC Berkeley. “What has changed is that the pad has become larger and the base of state funds smaller. Private funds are indeed taking some of the roles that state funds used to cover completely.”

According to statistics from the Voluntary Support of Education survey, UC Berkeley raised $283.35 million in donations in 2011, the 18th-largest amount among schools in the United States.

To date, the campus has engaged in three primary private fundraising campaigns. Keeping the Promise, which ran from 1985 to 1990 and raised $469 million, and the Campaign for the New Century, which raised $1.44 billion between 1996 and 2000, collected the most money any public school had up to that date.

Now, the campus is nearing the end of its biggest campaign yet. The Campaign for Berkeley, which began in 2005 and is set to end in 2013, has raised $2.6 billion of a $3 billion goal as of Aug. 31, according to campaign spokesperson Jose Rodriguez.

Overall, in private funding, Berkeley remains behind UCLA and UC San Francisco, which were ranked eighth and ninth in the survey and garnered $415.03 million and $409.45 million, respectively, in 2011. And all three high-earning UC campuses remain far behind private universities like top earner Stanford University, which received $709.42 million in donations in 2011, compared to Berkeley’s $283.35 million.

The survey found that private contributions to colleges and universities across the country increased by 8.2 percent in 2011, with $30.3 billion in donations overall.

Though the UC system fares very well against other public schools, individual campuses’ inability to compete with fundraising numbers from elite private schools like Stanford has made schools like UC Berkeley vulnerable to losing faculty to higher-paying institutions.

“At all levels, UC faces increasing competition in recruiting and retaining high-quality faculty as disparities in compensation with UC’s competitors, especially elite private universities, increase,” reads the university’s 2012 Accountability Report.

According to Associate Vice Chancellor for University Relations David Blinder, who is the campus’s main administrator in charge of fundraising, private funding plays a key role in positioning UC Berkeley as a competitor with larger private institutions.

“The private gifts that we bring in, especially when they are permanent gifts in the form of endowment gifts, gives us an important position in that competitive landscape with our peer institutions,” Blinder said. “When you look at Berkeley peers, it really is the private schools like MIT, Stanford and Ivy League schools.”

Private funding has played a particularly important role in funding the creation of endowed faculty chairs, according to King.

The largest example of this in recent years has been a $110 million gift from the William and Flora Hewlett Foundation awarded in 2007 that aimed to create 100 endowed faculty chairs. Likewise, the Campaign for Berkeley intends to apply $390 million of its total to creating additional chairs.

Still, the transition to additional reliance on private funds has been one of the university’s more contentious moves.

Critics of increased reliance on private funding are concerned by the impact it could have on the character of the university as well as the long-term feasibility of relying on private money.

In 2004, the UC, CSU and then-governor Arnold Schwarznegger announced the Compact for Higher Education, calling on the UC and CSU “to seek additional private resources and maximize other fund sources available to the university to support basic programs.”

The Academic Council of the University of California Academic Senate passed a resolution in October 2005 asserting that the university’s work to seek private funds to augment state cuts could alter “its academic and public service missions with impacts that are not fully understood.”

King said this kind of funding also raises issues for researchers who receive private funding from companies.

“The question is, what is the person thinking of when they shower?” King said. “Is it the university or the company? Greater and greater dependence on private sources affects the university. The trick is using them in ways that don’t significantly affect the essential character of the university.”

According to Blinder, a donation from a business to fund research benefiting that business does not fall under what the university classifies as philanthropy. Donations from companies are strictly monitored, he added. He said the objective of private fundraising for the campus is to create a long-term support structure rather than replacing lost state funds in the present.

“This is not about making Berkeley a private institution,” he said. “But it is clear that private fundraising, whether you see it in terms of tuition or private philanthropy or research funding, is going to be more and more what constitutes our financial resources.”

Jamie Applegate covers higher education. Contact her at [email protected].

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  • Steed Dropout, Berkeley

    Excellent investigating Jamie, very well presented. and Ashley Chan’s pic was mind-blowing. Who would have thought you could get a good shot of those posters, which seem to make no sense?

    Jamie, would it be fair to conclude that Cal is now a private university, since only 11% is public funding. Does the 11% represent the the largest single share of the funding? Is that what keeps Cal public?

  • Dude

    Penguin – both factors are foolish. The state is not savvy enough to look at private donations and modulate its support accordingly. Second, your tuition argument makes no sense when the elite private schools (with much higher tuition and better financial aid (low income student subsidies) absolutely destroy Cal and the rest of the higher education world with fundraising.

    It’s a travesty that Stanford can raise 3X that of Berkeley with a fraction of the alumni base. Shameful, really. Berkeley’s alumni are bottom of the barrel when it comes to school pride.

    That Berkeley is one of the top schools in the world and only EIGHTEENTH in terms of fundraising is a huge failure on the part of the administration to prioritize private giving. For God’s sake, DROP the social engineering/URM agendas and start to focus on topics that will benefit the entire student body.

    • Calipenguin

      Dude, the state’s Democrat politicians don’t care how wonderful Cal is, they think they can get more votes by cutting UC funding while pandering to Latino, union, and environmentalist special interest groups. Democrats politicians equate excellence with elitism, so UC funding has never been a priority for them. I never said they modulated support. I said they CUT support and then watch public reactions to see how much more they can cut. They see that every year private donations somehow come in and provide some cushion. So next year they cut some more. Low income students who get aid don’t remember all that private donation helping them. They think they’re getting their fair share of the California public education pie so why should they donate to their alma mater later?

      Stanford does financial aid in a more sane way. Stanford doesn’t use return-to-aid so that wealthy students don’t have to pay for the tuition and living expenses of low income students. Every student with need gets financial aid from the endowment, so when they graduate and make a million dollars on Facebook IPO shares they remember the generosity of the university and donate willingly. Alumni from wealthy families also feel they were treated fairly and not forced to pay more than their fair share, so they donate willingly.

  • Calipenguin

    I believe there are two factors tempering the generosity of alumni. Alumni see the state taking advantage of private donors by cutting UC funds every year. The more they donate, the less UC gets from Sacramento. Private donations to a public university are meant to enhance education, not provide the foundation for it. Another factor is that mid to upper income families feel they have already paid too much tuition when a third of their tuition is earmarked for “return-to-aid” to low income students, so why should they donate even more money as alumni?

    http://www.dailycal.org/2012/06/06/uc-regents-discuss-possibility-of-redirecting-return-to-aid-funds/

  • I_h8_disqus

    Critics of private funding for Cal need to push the state to fully fund Cal, and I don’t mean with things like Prop. 30. Getting only 11% of our funding from the state is pathetic, when you consider how much revenue the state takes in through taxes and the lottery. The only reason that Cal will become private is because the legislature and governors prefer to fund other projects instead of the UC.

  • Russell Bates

    u.c. berkeley,inc.?

    • Steed Dropout, Berkeley

      Russ, is it even public?