🔒Yale’s $7B capital campaign reflects shifts in nonprofit fundraising focus

If you’ve got $42.3 billion in the bank, it can be a little tricky to ask your friends for more.

But Yale University is finessing that issue in its new capital campaign, seeking an additional $7 billion in donations under the banner “For Humanity.”

“Simply put, I am guided by Yale’s mission of ‘improving the world today and for future generations,’ ” President Peter Salovey said at the campaign’s kickoff event in October. “That mission demands that we not only create knowledge but harness it to improve lives.”

That high-minded rhetoric not only reflects the university’s goals — it also reflects a shift in nonprofit fundraising in the wake of the worst of the COVID-19 pandemic, experts say.

“Colleges are trying to reinvent themselves,” said Mary Antonetti, partner and leader of nonprofit and social sector services in the New Haven office of Marcum LLP, a national accounting and advisory firm. Instead of focusing on campus buildings and programs, colleges are asking for help in addressing major social and scientific issues.

“Donors want to feel that they’re making a difference,” Antonetti said.

That shift is reflected in Yale’s own take on its new capital campaign.

“We are facing urgent, existential challenges, from climate change to global health crises. In this moment, Yale has the ability — and the responsibility — to address these and other challenges,” said Josh Bekenstein, one of five alumni co-chairs of the campaign.

Bigger picture appeal

Traditionally, Yale presidents preside over one major capital campaign during their tenure. Salovey’s predecessor, Rick Levin, banked $3.9 billion by 2011 for his “Yale Tomorrow” campaign, in addition to wrapping up his predecessors' campaign with $1.7 billion in 1997.

This year’s campaign theme is notable for its lack of the university’s name in its title, reflecting the larger trend of focusing on global issues.

“It’s more of a mission-based thing,” Antonetti said. At the same time, institutions like Yale have to take care to avoid being too “political” and turning off major donors.

“A lot of people are trying to walk that line in a very polarized climate,” she added.

A focus on mission and a “solidarity approach” can be seen in many major higher education fundraising efforts nationwide this year, according to WealthEngine, an online provider of information about high-net-worth individuals.

“In the wake of the pandemic, higher education fundraising has shifted toward a less isolated, more progressive agenda,” according to a WealthEngine blog post. “Rather than focusing on the individual benefits of donations, COVID-19 has created a movement centered around giving for the collective good.”

Mary Alice Haddad, a professor at Wesleyan University and expert on nonprofits, traces the shift in emphasis to recent admissions controversies at top-tier schools and the Black Lives Matter movement.

Yale was among the colleges implicated in the Operation Varsity Blues scandal, in which wealthy parents paid bribes to coaches to gain entrance for children. The Trump Department of Justice also accused Yale in 2020 of discriminating against Asian-Americans and white applicants in its admissions process.

The Biden administration earlier this year dropped that discrimination lawsuit against Yale, which denied the allegations.

Instead of focusing on benefits for their students, top schools instead are trying to inspire donors with their visions for social change, Haddad said.

“There has to be a little bit more of a purpose to why anyone should give their hard-earned cash to a rich, elite university,” she said.

The capital campaign comes as Yale’s investment portfolio saw a 40.3% net return for the fiscal year ending June 30, boosting the endowment by $12.1 billion in that period alone.

Fundraiser challenges

For Yale, its capital campaign launch in October was greeted by the expected controversy, in this case a protest by unions and city activists across the street from the launch site raising concerns about the school’s wealth.

Some alumni also grumbled online about the decision in the campaign’s “silent phase” to rename Yale’s drama school for Hollywood mogul David Geffen, who gave $150 million in June. The rechristening of an entire professional school for a donor was a first for the university in living memory and may entice more big-dollar gifts.

Fundraising events to spur donations have also been impacted due to the COVID-19 pandemic, although according to the university’s most recent tax form, Yale’s two major fundraising events in 2019, the Blue Leadership Ball and Football Assoc. Golf Outing, lost a total of $180,065 due to high expenses. Even so, engagement with alumni remains an issue for all schools.

“The way that most colleges make connections to their alumni is through those events — all that went away,” Antonetti said.

Nonprofits of all kinds are struggling, she added, trying to figure out, “How do you engage with your donors? How do you figure out who your donors are?”

Tax implications

One thing that won’t likely dampen enthusiasm for giving to Yale’s capital campaign and nonprofits in general in the near term is the tax code, although risks may arise in future proposals by President Joe Biden, Antonetti said.

Many nonprofits had feared a decline in giving after the 2017 boost to the standard deduction as part of President Donald Trump’s tax plan, but most charities have reported little change.

“I think they found that a lot of people gave money because they wanted to give money,” Antonetti said of nonprofits. “The large donors will find ways.”

Another Trump tax change will likely hit Yale in the future — a measure setting a 1.4% tax rate on investment income for universities with endowments of $500,000 per student. Yale said in its most recent annual financial report that the measure’s impact won't be known, “until further regulatory guidance is published,” but Harvard has said it could face a $37.7 million tax bill, and Stanford, $42.9 million.

Yale can look for encouragement to its neighboring institutions of higher education that have seen strong donations to capital campaigns in recent years. The University of New Haven wrapped up its four-year “Charger Challenge” campaign at the end of last year with $167 million, exceeding its original goal of $100 million.

Fairfield University beat the goal of its most recent capital campaign by nearly $60 million for a total of $218 million by the 2018 close. The fundraising effort’s success helped prompt the school’s board of trustees in October to extend President Mark R. Nemec’s contract through 2027.

Local universities also continue to highlight major gifts: Albertus Magnus College renamed its Academic Success Center this summer after a $1 million gift in memory of Lillian Adley Germain, class of 1957.

For Yale, key to motivating its givers moving forward may be translating its lofty rhetoric into concrete goals and benchmarks, Haddad said. Donors want to see that their gifts get results, she added.

“Transparency is going to be a key feature of this,” Haddad said. “If they’re just funding the same things they always funded, it’s really just a branding question.”