Philanthropy: a critical niche, not a substitute for state support

by Jodi Auvin

From M, spring 2003

As the University faces historic reductions in state funding, U leaders are frequently asked why the University cannot turn to philanthropic support to make up for the loss of state support.

Private giving is a critical component of the University's overall funding mix, but it cannot replace state support. Gifts, largely designated by donors for specific uses, enable the University to go beyond the limits of state funding.

Gifts to the U have created hundreds of scholarships and fellowships, supported faculty and their research, and helped build or renovate facilities. But they don't cover basic salaries or medical insurance, or pay the heating bills.

Here are some things to keep in mind about the role that philanthropy plays at the U.

• Donors designate 98 percent of all gifts to the U for specific purposes.
• About 65 percent of the gifts made every year are cash gifts. The rest are bequests, other future commitments, or pledges to be paid over a period of time.
• Many gifts, including about half of those made during Campaign Minnesota, have been designated for endowment, in which the principal is held intact and invested. An annual payout supports designated programs far into the future.
• Gifts provide about 10 percent of U revenues each year. This includes contributions for immediate use and payouts from endowed funds. While our donors are extremely generous, they simply cannot replace core state funding, which comprises about 31 percent of University revenue.