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'Philanthropic donations have become essential'
Author: Development & Alumni / Ontwikkeling & Alumni
Published: 20/08/2021

As higher education becomes increasingly unaffordable and university budgets are strained, philanthropic donations have become essential in creating broad access for prospective students and universities' success, writes KAREN BRUNS.

The sustainability of universities revolves around three income streams: a government subsidy, tuition fees and industry research funds. But, over the past decade, South African universities have experienced significant changes.

They struggle to balance their budgets because their needs and ambitions exceed what government can afford to fund. Furthermore, to manage the growing demand for the National Student Financial Aid Scheme fee subsidies to the poor, the government capped universities' fees over the past five years, meaning that there is no imminent relief through student fees, even from the more affluent students.

The so-called third-stream income, research income – in the form of research contracts and sponsored research chairs and centres – is necessary for universities to survive or, at the very least, it helps to diversify revenue streams beyond government grants.

The salient features of research income are that these offset staff costs and may contribute towards bursaries to postgraduate students. However, research income is largely financial input to enable research output.

Furthermore, the collateral costs at universities have significantly increased to, for instance, subsidise reliable public transport for staff and students, fund additional safety and security measures, and provide academic support services to prepare first-year students.

Universities are often castigated for not being 'more disruptive' in sourcing other income streams when we argue that grants, fees, and research contracts are not sufficient to catapult South African universities into the so-called big league of international universities. So, what, then, of innovation as an income source?

Nested within the universities are fairly new technology transfer organisations, which were established within the context of new legislation in 2010 – the Intellectual Property Rights from Publicly Financed Research and Development Act (No 51, 2008).

But moving research from a lab to the market is complex and expensive. And the dream of queues of investors begging to buy tax-efficient venture capital shares has not quite materialised.

Today, the financial viability of universities depends on the ability of vice-chancellors (VCs) to raise philanthropic and corporate social responsibility donations, locally and internationally, from alumni, friends, corporations, and foundations.

To increase fundraising effectiveness at universities, several things must be in place. Setting a vision for the university and implementing behaviours that motivate donors to join that vision is essential. Regarding skills, the practical application of a leadership style grounded in the importance of personal relationships is fundamental.

Fundraising is certainly one of the most demanding and visible roles of university leaders, and they should expect to spend an inordinate amount of time raising private funds.

A 2012 study in the USA showed that almost 50% of the university presidents stated that fundraising responsibilities ranked either number one or two among their job duties. In this study, university presidents spent on average 3.85 days each month travelling to and performing fundraising duties, but up to 20 days in a month when time allowed.

The good working relationship between the VC and his or her chief development officer is vital and, in the quoted study, 91.34% engaged with their chief development officer regularly, with 20% speaking daily.

At Stellenbosch University (SU), we have raised ZAR1.7 billion (US$115.3 million) in philanthropic funds in the first term (from January 2015 to end May 2021) of our current Rector and Vice-chancellor, Professor Wim de Villiers.

More than a third of this has gone to bursaries and student support, while other funds were directed towards teaching, infrastructure, research, and community service. We have built new research and teaching buildings on our campuses and increased the diversity of our academic staff through strategic funding.

The involvement of our VC contributed to doubling the number of national and international alumni hubs since 2015, which effectively means opening networks to our graduates. De Villiers has led in our peer-to-peer fundraising, running and cycling to raise funds for food insecurity on SU's campuses (our #Move4Food campaign).

Since 2015, SU's international donors have been increasing in number – from 13% of all donors, to 17% prior to the start of the COVID-19 pandemic.

Inadvertently, fundraising, itself, costs money, particularly the international activities. But, in the case of SU, a national Inyathelo benchmarking study, the Annual Survey of Philanthropy in Higher Education, or ASPIHE, has shown that our fundraising expenditure is, at most, 11c on every rand raised. And the Bureau for Economic Research recently found that Stellenbosch University's vice-chancellor has raised 50 times his fundraising direct costs.

The health of any organisation and the success of university fundraising efforts begin with leadership. Without leadership and without philanthropists, great and small, this cannot be achieved – and the dream of higher education as the great equaliser will remain elusive.

Universities are training the leaders and experts of tomorrow, and education is an investment essential to empowering individuals to reach their full potential and to make their own positive impact on the world. Philanthropic support allows them to do this.

Karen Bruns is the Senior Director of Development and Alumni Relations at Stellenbosch University.