The script is simple. Dial the telephone number of a Georgetown alumnus. Introduce yourself. State that you are seeking to verify his contact information. Then, tell him about one or two things that are going on at Georgetown. Make him feel like he’s still in touch with the school. Now that he’s interested, encourage him to donate. Don’t be dissuaded; remember that alumni giving is directly related to Georgetown’s national rank.
Ironically, calling alumni to ask for donations is the highest paying student job on campus. Over 70 students work two shifts a week at the Office of University and Alumni Relations. Students earn nine dollars an hour, plus occasional bonuses based on performance and achievement of goals. According to Assistant Director of Marketing Campaigns Heather Greig, students raise between $1.6 and $2 million annually. This seems impressive, but when compared with Georgetown’s average annual losses, it is insignificant.
There are many similarities between Georgetown and other top-rated universities, competitive admissions, a star-studded faculty, an impressive campus and international prominence, to name a few. There is, however, one glaring difference: endowment size. In terms of finances, Georgetown is completely out of its league. Harvard boasts a $22.6 billion endowment. Emory has $4.5 billion. Penn’s endowment recently grew to $4 billion. Georgetown, the 25th best school in the nation according to the most recent rankings, has the 77th largest endowment at $680 million.
Students are quick to acknowledge the University’s paltry endowment and even quicker to pin the blame on alumni; most believe that the endowment is pathetic because alumni don’t give money back to Georgetown. This is untrue. Alumni do give money to Georgetown in increasingly larger sums at increasingly higher rates. The real problem lies in the fact that this increase in giving is a new trend. While other top-tier universities have been fundraising for centuries, Georgetown has only been at it for a few decades. Understandably, this puts Georgetown at a disadvantage. However, Georgetown’s vision for the future and its fundraising capacities are out of sync. Maintaining top-25 status costs money, perhaps more than Georgetown can raise. The question is not whether Georgetown has an endowment problem, but whether Georgetown’s endowment will continue to grow at a rate that will sustain its ambitions.
“Georgetown is punching above its weight,” Dean Emeritus of the School of Foreign Service Peter Krogh said. “It’s one of the top 25 universities in the country, but the endowment doesn’t place it there.”
Until the late 1970s, Georgetown was known as a small, East Coast Catholic school. Most students paid full tutition. Faculty members were required to teach more classes than they are today but were paid less. The Medical Center was prosperous, and the University was able to balance its budget. In 1969, however, newly inaugurated University President Father R.J. Henle sought to transform Georgetown. Henle saw that Georgetown had the opportunity to expand, both ideologically and physically. He envisioned a future in which a diverse student body received a first-rate education. In order to realize this goal, Henle focused on two objectives: fortifying the School of Foreign Service and expanding the basketball program. In enhancing the SFS, Henle sought to increase the amount of financial aid offered to students. He also introduced plans to reduce faculty workloads and increase pay. The costs of these measures highlighted the need for a new source of University income.
By the early 1980s, Georgetown had begun to boost its income and gain prominence academically. Then, in 1984, one men’s basketball game changed Georgetown forever. The nine-point victory over Houston in the NCAA tournament that made Patrick Ewing a hero and John Thompson a legend also catapulted the University to national prominence. Suddenly, everyone in Washington D.C. was sporting a Hoyas cap, and students applying to Harvard and Yale began filling out Georgetown applications.
Henle’s two initiatives proved to be wildly successful, thrusting Georgetown into the national spotlight. For better or for worse, Georgetown was no longer a small Jesuit school but an emerging academic and athletic powerhouse. With this newfound fame came new obstacles. In order to maintain its new high profile, Georgetown would have to begin to raise more money.
According to Krogh, fundraising was neither urgent nor a high priority for many years at Georgetown. However, encouraged by Henle and energized by the prospect of transforming the University, the faculty and staff quickly became adept at raising money.
“We were all on the road, shaking the tambourine, shaking the trees,” Krogh said. “There was a time when I didn’t go out to lunch or dinner if I didn’t think I could raise money.”
Henle’s enthusiasm for fundraising carried over to his successors, culminating in the recently completed $1 billion campaign led by current University president John J. DeGioia. With these advancements, however, came one problem: As Georgetown worked to raise $1 billion, other universities set and achieved far higher goals. According to the Chronicle of Higher Education, the newest trend in university fundraising is the $5 billion campaign. Having spent years working on the largest fundraising campaign in Georgetown’s history, University officials must now plan an even larger effort.
From the outside, Georgetown’s offices on Wisconsin Avenue appear deceptively quiet. The lobby is all marble and brass, and a silent elevator transports equally hushed passengers. The scene on the fifth floor of the building couldn’t be more different, though. This floor, home to the Office of University and Alumni Relations, is a maze of cubicles, decipherable only to those who work there. Telephones shriek, keyboards clack and the casual visitor gets the feeling that something is being accomplished here. It is within this office that the business of the University is conducted. Specifically, every person in every cubicle is devoted in some way to raising money for Georgetown.
The majority of Georgetown’s income comes from two sources: the endowment and the annual fund. The endowment is composed of fixed amounts of money designated to fund certain programs or departments. The annual fund is Georgetown’s cash reserve, to be used for immediate needs, like funding faculty research or purchasing computers. According to Director of Operations for the Office of Alumni and University Relations Kyle McGowan, the annual fund is extremely important because University cash flow is under constraints. At Georgetown, where the Medical Center continues to drain University resources, the annual fund provides an important source of income. This means that alumni are crucial to the solvency of the University; without alumni giving, the annual fund would not exist.
“In order for a university to remain competitive, it must have philanthropy,” McGowan said. “We try to inculcate a pattern of giving, keeping people on board and stressing the importance of giving.”
McGowan said that in the past few years the University has seen a steady growth in alumni giving. So far this fiscal year, Georgetown is 10 percent ahead of its dollar goal and three percent ahead of its participation goal. Simply put, more people are giving more money.
The main cause of this increase is a conscious effort by the University to create a community that includes alumni. According to Director of Communications for Alumni Relations Jeff Donahoe, the University is seeking to keep people engaged in the life of the University beyond graduation. This comes in large part in the form of the alumni house, a townhouse just outside the front gates that will serve as a resource center for alumni. Georgetown has also invested in improvements in alumni websites and e-mail in hopes of improving communication between alumni and the University. Additionally, the University is investing in regional alumni associations and high-profile alumni events.
“We focus on how to keep people engaged in the life of the University and to make them see that as alumni they have a role,” Donahoe said.
On May 15, 2004, Georgetown celebrated the success of the Third Century Campaign, which raised $1 billion for the University. Among those invited were University officials, faculty sitting in endowed chairs and alumni who donated more than $50,000. A special, more exclusive event was held for those who contributed over $1 million. In planning this event, the Main Campus Executive Faculty made several suggestions for courting the wealthy invitees. According to the minutes of the April 16, 2004 meeting, “faculty could engage potential donors, and remind them of their academic experience at Georgetown, which might encourage them to follow through with donating.” Just 20 years ago, Georgetown’s administration was totally unfamiliar with the world of fundraising. Today, it is a campus-wide initiative.
Despite the success of the $1 billion dol campaign and the augmentation of fundraising efforts, the University still faces a troubling financial situation. The sale of the Georgetown University to MedStar in 2000 alleviated some of the University’s debt, but Georgetown still controls the Medical Center. The Medical Center continues to drain the budget, with projected losses of $28 million for the 2004 fiscal year. The negative status of the University’s overall financial operations caused a drop in its credit rating late last year. The lowered rating means that it will be more difficult for the University to borrow money in the future, which could jeopardize future construction projects.
Although grants and pledges to the University increased by over $1 million from 2002 to 2003, cash holdings decreased by $87,710,468. Georgetown is spending far more than it receives, losing over $34 million in 2003. In the short-term, benefits such as new buildings and increased financial aid make the deficit seem worthwhile. In the long-term, however, the University is only worsening its already severe financial problem.
In a town hall meeting held January 21, 2005, University President John J. DeGioia outlined the difficulties facing the University.
“We face the same economic challenges as all universities and businesses in this country in coping with rising costs of health care and other benefits programs,” DeGioia said. “As a result of these last two factors-Medical Center losses and growing benefits costs-our institution-wide financial performance in fiscal year ‘04 was weaker than in fiscal year ‘03.”
DeGioia explained that a newly drafted financial plan, which went into effect at the beginning of FY ‘05, will hopefully lead to a $12 million budget surplus by FY ‘08. DeGioia noted that meeting these fiscal goals may necessitate that “we reduce department budgets, we delay some hires, we consolidate some administrative functions and we take other difficult steps.”
In addition to scaling back spending, the University is also in the beginning stages of another massive fundraising drive. The first phase of the drive is devoted to planning. University officials set goals and list potential donors. The campaign will begin quietly and will be largely unpublicized, as Georgetown seeks to raise a certain percentage of its goal before the drive formally begins. Finally, the fundraising campaign will be made public, and the massive push for donations will begin.
This upcoming fundraising effort is crucial to the future of the University. Georgetown must raise enough money to support and improve the programs that have made it a nationally recognized school. The amount of money raised in this campaign will either prove that Georgetown has the finances to sustain its precarious place within the top-ranked 25 universities, or serve as a brutal example of a university reaching beyond its means.
In the 1970s, then-University President Father Henle envisioned Georgetown as a nationally recognized university. Faculty members sought to transform the small, relatively unknown Catholic school into a top-25 institution, ranked among the Ivy League schools and populated by a diverse, elite student body. Over 30 years later, these ambitions have been realized. Georgetown is recognized as one of the top schools in the country, and students nationwide compete for admission. But in order to sustain this reputation, the University must be able to finance it.
“It’s clear, it seems, that sometime in the future, the University’s mission and its means will have to find some sustainable equilibrium,” Krogh said. What is unclear is whether the University will be able to resolve its fiscal troubles and preserve its status, or whether Georgetown’s vision must be tailored to its finances.
