Deans and fundraising administrators at law schools nationwide say donors of large gifts are holding off on committing to contributions, given the current economic climate, while annual giving from their alumni could level off or decline for the first time in years.
In the past month, a few donors to some of the nation’s law schools have backed out of pledged gifts, but several more who previously were considering giving large amounts are now taking a “wait and see” approach.
Meanwhile, law schools, many of which have experienced record amounts of fundraising in recent years, are coming up with ways to combat an anticipated slowdown in annual giving.
Some are encouraging donors to take advantage of recent rules allowing them to give up to $100,000 tax free from their individual retirement accounts (IRAs) to a charitable institution. Others are being more specific in the alumni they approach for gifts; some are using “bundlers” to amass larger contributions. Bundlers, in this case, are individuals who collect a significant gift from a group of people on behalf of the school.
A few have delayed capital campaigns, while others have come up with nonmonetary ways in which alumni can contribute.
Regardless of the economy’s impact on their fundraising, all law schools have had to address the current crisis, either in conversations with regular donors or in letters to alumni.
“Looking at the overall industry data, what I would expect would be a slowdown in the growth rate of fundraising,” said David Van Zandt, dean of Northwestern University School of Law. “We know people are going to be trimming their budgets.”
Law school deans and fundraising administrators said that, although few donors who had committed to large gifts have backed out of their agreements in the past month or so, many of those who had been considering a contribution are asking for more time to assess their financial resources.
Todd Baily, assistant dean for development and alumni relations at the University of Michigan Law School in Ann Arbor, said the school has received signed gift agreements from significant donors in the past few weeks, although he acknowledged the economy has affected some potential commitments.
“I can only isolate one case where one person has said, ‘I can’t do what I had committed to,’ ” he said. But, he said, “ we had more than one, a few, and we probably expect more to come, of people who said, ‘I like your project, I want to do something, I just have to wait until I know what my situation can be before I can make a specific commitment.’ “
Baily said the school is working with donors to extend their payment schedules or has given them time to be more comfortable about making significant commitments.
The school is in the midst of a campaign in which administrators hope to break ground next year on a new academic building on campus. In order to move forward on the project, the school must raise $70 million; so far, $35 million has been collected.
The school’s total receipts from donations, including both annual contributions and large gifts, have increased from nearly $10 million in fiscal year 2005 to more than $18 million in the fiscal year that ended on June 30, he said. This year, the school has raised more than $4.5 million, but it is planning for flat or minimal growth in annual giving, he said.
Van Zandt of Northwestern said the school’s administrators are less likely to ask for large increases in donations this year even though only one donor has asked for an extension of six months before committing to a large gift.
In the fiscal year that ended on Aug. 31, Northwestern raised nearly $11 million, up by 40% in overall giving from the previous year. This fiscal year, he anticipates a “slight slowdown in the growth of what we do. I don’t expect another 40% up, but I don’t expect a decline,” he said.
If the economy worsens into a severe recession, however, a decline could be possible, he said.
The University of California, Irvine School of Law, which plans to open in fall 2009, is in the process of raising $100 million in the next few years, said Charles Cannon, assistant dean of development and external affairs at the law school. So far, the school has raised a quarter of that amount.
The effect of the economy on the school’s fundraising remains unclear, he said. The school is facing a tight deadline, aiming to raise about $6 million in full tuition scholarships for its first class of 60 students.
One potential solution, he said, has been to mimic a strategy used in political fundraising and use “bundlers.”
$5 million short
Other law schools are instituting measures to deal with the economic downturn. The University of Mississippi School of Law, which originally aimed to complete a fundraising campaign in December, is extending that deadline, said Jamie White, development officer at the law school.
He said “there have been a handful of donors who have asked us to wait.”
Most of those donors, he said, were planning to give for the first time or had not made a prior commitment. But, in its final months, the school remains more than $5 million shy of its fundraising goal of $35 million for construction of a new law building, he said.
To boost donations, the University of Mississippi School of Law is focusing on specific alumni who might be less affected by the downturn, such as executives or chief counsel at oil and gas businesses, he said.
He also said the school is keeping track of which plaintiffs’ attorneys, who are alumni, recently obtained large verdicts.
“If we have one alumnus who wins a verdict and will receive a large contingency fee,” he said, “we ask them to keep us in mind.”
Another strategy is to encourage prospective donors to take advantage of a recent change to the U.S. Pension Protection Act of 2006, which allows people 70.5 years and older to donate up to $100,000 to a charitable institution, tax free, from their IRAs through 2009.
The provisions, which expired in 2007, were extended by another two years under the $700 billion bailout bill signed earlier this month by President George W. Bush.
That same idea has been floating around at Vanderbilt University Law School, which is in the midst of a fundraising campaign that ends in 2010.
“In lieu of cash gifts, planned giving can be a great area for us to focus on,” said Alyssa Wilcox, assistant dean of development at Vanderbilt.
No check required
Wilcox said that the school’s alumni advisory board met on Oct. 24 to address how to remain proactive in reaching out to donors given the economic crisis.
One idea, she said, has been the launch of a new program that encourages alumni to interview prospective students going through the admissions process as a way to contribute without writing a check.
She said Vanderbilt hired an administrator in the admissions office to run the program, which launched a few months ago and has attracted the interest of several hundred alumni so far. She said Vanderbilt is one of the few schools to institute such a program.
Most importantly, schools have been quick to address the economic concerns of their alumni.
In a special letter sent earlier this month to previous contributors to the school, Vanderbilt Law Dean Edward Rubin emphasized how appreciative the law school is in receiving their previous gift while acknowledging the credit crisis, mortgage meltdown and increased cost of groceries, she said.
“At this time, we really value their contributions and so we’re hoping by letting them know this, we can hang onto these people this year,” Wilcox said.
Michael Schill, dean of the University of California at Los Angeles (UCLA) School of Law, said economic concerns are going to be a big part of the school’s standard fundraising letter to alumni, which is being sent out later this month or in November.
Schill said alumni who are annual givers, many of whom are practicing attorneys who give donations of hundreds, or thousands, of dollars, could see their incomes drop this year, which affects gifts to the law school.
On the other hand, he said, one donor gave $1.5 million to the UCLA School of Law on a recent day on which the stock market plummeted.
In general, he said, “you have to be careful, and you have to be sensitive, to a person’s situation.”
One bright spot: Some public universities, such as UCLA, which receives a portion of its budget from state resources, have an advantage in asking for dollars from private donors, he said.
“We’ll sustain substantial budget cuts at UCLA,” he said, due to California’s fiscal problems. “The argument for donors and alumni to contribute to this school is even stronger.”