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From The Chronicle of Higher Education

Colleges Step Up Fund-Raising Efforts to Support Student Aid

By BECKIE SUPIANO

With the economy sputtering and Congress pressuring colleges to be more affordable, many institutions feel a heightened need to provide more financial aid - and they are turning to alumni and other private donors for help.

While specifics vary from college to college, all types of institutions are feeling the pressure. Many smaller, private colleges find themselves in the tough position of having to dedicate increasing sums from their operating budgets to pay for such aid. They know they must become more affordable if they want to attract talented students of lesser means. And if they can't offer the best students a good aid package, those students will go somewhere else.

To prevent that from happening, some institutions, including Franklin & Marshall College, St. Olaf College, and Loyola University Chicago, are planning big fund-raising campaigns that will make student aid a priority.

Colleges with bigger endowments may seem to have an advantage, but the bulk of that money is often designated by donors for other uses. As a result, several of those institutions, including the University of Michigan at Ann Arbor, Purdue University, and Grinnell College, have also pumped up their fund raising for student aid.

Donors, too, worry about college affordability and are placing more emphasis on giving for aid, says John Lippincott, president of the Council for Advancement and Support of Education.

In fact, fund raisers at some colleges say that of all of their needs, student aid is the easiest sell. "It's a whole lot easier, bringing giving down to a very personal level in a way bricks and mortar and other programs can't," says Jonathan R. Heintzelman, vice president for advancement at Loyola University Chicago.

At the same time, the souring economy can make prospective donors more cautious. The "challenge to fund raisers," Mr. Lippincott says, "is to raise more money even at a time when people will have a harder time making those gifts."

A Drain on Operating Budgets

Franklin & Marshall spends more than one-fifth of its $110-million operating budget on student aid. That's money that could go to a lot of other things, says John A. Fry, the college's president.

Franklin & Marshall wants to get up to half of its aid budget from its endowment, but first it has to increase the endowment. So the college plans to earmark up to half of the money it raises in its coming campaign to its endowment and use much of that to support student aid, Mr. Fry says.

Student aid is also taking a "bigger and bigger bite" out of the operating budget at Loyola Chicago, Mr. Heintzelman says. For that reason, he says, Loyola plans to dedicate $70-million of its planned $500-million campaign to student aid and free up more of its budget.

Like many colleges, Loyola is trying to build connections between alumni and current students. For example, the university is soliciting donations for endowed scholarships for students who study abroad at a Loyola program in Italy. The college also plans to bring students who are on financial aid to fund-raising events across the country and include them in videos it is using to advertise the campaign, Mr. Heintzelman says.

St. Olaf College is also planning to raise funds for student aid, but for slightly different reasons. It just announced tuition increases. That news, combined with the state of the economy and the programs several wealthy colleges have announced to limit loans, has put pressure on St. Olaf, says Michael H. Stitsworth, vice president for advancement and college relations.

The college is planning a campaign in which support for scholarships will be a top priority. In addition to tapping alumni, St. Olaf plans to seek donations from the parents of recent graduates after they have finished paying for the education of their sons and daughters. It is even hiring a fund raiser who will focus specifically on parents.

"Once their [child] graduates and tuition is no longer a drag on the family budget, we generally have a happy and grateful customer, who likely just realized one of the largest raises in their lifetime," Mr. Stitsworth said in an e-mail message. "Thus the timing is excellent to ask for a scholarship gift."

While more colleges may be homing in on aid as a fund-raising goal, raising money takes time. "I definitely see programs that are starting to discuss these issues, looking at strategic planning, taking this into account," says Robert F. Sharpe Jr., a fund-raising consultant who works with many colleges. "They plan campaigns, but it takes years." In the meantime, he says, colleges will have to reallocate the money they already have to support aid.

Restricted Endowments

Even some of the wealthiest institutions do not have large, unrestricted pots to draw from to help students pay for college.

The University of Michigan has a $7-billion endowment, the eighth-largest in the country. But most of that money is restricted, says Jerry A. May, vice president for development. And even the university's most generous donors aren't always interested in providing unrestricted gifts, Mr. May says: "People are used to giving for the things they care about most."

In recent weeks, some colleges have started to highlight student aid with the hope of making it a priority for donors. In April, Purdue University announced a plan to raise $300-million to support aid. The university is seeking five donors to provide $1-million each to match the first $5-million in gifts as a jump-start to the campaign, says Murray M. Blackwelder, senior vice president for advancement. The university will also start using reunion-class gifts to support aid rather than other projects, and it is looking for corporate sponsorship as well. Student aid is the top priority, Mr. Blackwelder says, and the whole fund-raising staff will be working on it.

Grinnell College is also trying to make connections between alumni and students. About three years ago, the college began pairing its 50-year-reunion classes with the current graduating class to spur private donations. Gifts from each reunion class are used to help pay back the loan debt of the graduating seniors who have the most need or are considered the most deserving.

Previously, reunion classes were asked to give to a designated project, says Mickey Munley, vice president for college and alumni relations. But, he says, not every prospective donor would find the year's project worth supporting. Every reunion-class member, however, could understand the predicament of a graduate with loans to pay.

The reunion class is "a group who's seen a Grinnell education work for them and wants to make a real difference," he says.

About six years ago, Michigan decided it wanted its students to leave with less debt, so it instituted a special program, contributing some university money as well as looking for new private support. The plan was part of a $2.5-billion campaign, $400-million of which was to go toward student aid.

More than 175 fund raisers began asking donors to support student aid through a special endowment. Some individual schools also asked their annual-fund donors to make smaller gifts to this endowment.

Mary Sue Coleman, the university's president, came up with the idea of a matching campaign. The university matched $35-million in donations for need-based aid dollar for dollar over 15 months. That program was so successful that Michigan is now offering a one-for-two match to raise a total of $60-million - $40-million from donors and $20-million from the university - for graduate-student fellowships. With eight months remaining in the campaign, Michigan has already raised $450-million for student aid. Partly as a result of those recent drives, 20 percent of Michigan's endowment is now directed toward student aid.

"It was very popular and resonated with a lot of donors because it provides access to a lot of students," says Mr. May.

Over all, Michigan's fund-raising efforts amount to "one of the biggest pushes we've ever had for aid at this institution," he says. "This is a huge priority and will continue to be beyond that campaign."