The University of Connecticut's new president says it needs to push its endowment fund past $1 billion, more than triple its current amount and a threshold that's proven challenging for many public universities to cross.
Susan Herbst, who started at UConn in June, said this week that soliciting donations from alumni, businesses and other supporters will be among her top goals to give the university a better cushion against tough financial times.
The fundraising emphasis comes as UConn is two years into a five-year campaign to raise $600 million, part of which would boost its current $288 million endowment to $500 million by 2014. About $277 million has been collected so far.
Herbst underscored her emphasis on philanthropy with an announcement Wednesday that she and her husband were donating $100,000 of their own money as an example of how important donations are to the university's future.
She took over as president last month at UConn, where she earns an annual salary of $500,000, and her husband is a marketing consultant who owns his own business. Herbst previously was executive vice chancellor of the University System of Georgia.
Endowments serve as last-ditch emergency accounts for universities and other entities, which generally use some or all of the investment interest for regular expenses while trying to leave the principal untouched.
"The reality is that we at the university have to try harder so we can protect the academic mission from the ups and downs of the economy," Herbst said. "Right now, we don't have that insulation because our endowment is not where it should be. The university is forever and that's what an endowment is all about: protecting what you have no matter what's going on in the larger context of the economy."
UConn faces millions in state budget cuts and is increasing tuition 2.5 percent this fall, deferring some non-critical maintenance projects and struggling to decide where to make spending cuts without letting class sizes spiral out of control.
While the university's trustees expect to address those short-term questions this summer, Herbst said in the long run, pushing UConn's $288 million endowment past $1 billion would benefit the school and state for generations.
She's also started meeting with current and prospective donors, leaders of the UConn Foundation tax-exempt fundraising entity and others about ways to plump up the endowment.
Some experts in university financing and investment say that while Herbst's goal is laudable, it will not be quick or easy unless a few major donors step forward with large gifts. More likely, they say, it'll involve selling the university's virtues at every turn to every potential donor large and small, and watching the investment returns of every penny.
Of the approximately 850 colleges and universities in the U.S. and Canada with endowments as of January 2011, only 60 had passed the $1 billion mark.
UConn's $288 million endowment was the fourth-highest in Connecticut behind Yale, at $16.6 billion; Wesleyan at $504 million; and Trinity College at $357 million.
And while it's not unusual for private universities to have higher endowments than public institutions, UConn's lags behind some comparable public schools in New England, including the University of Massachusetts at $459 million and the University of Vermont at $291 million.
The schools' January 2011 endowment figures come from an annual report of the Wilton-based Commonfund Institute and the National Association of College and University Business Officials.
William Jarvis, the Commonfund Institute's managing director and research head, said private colleges usually have higher endowments because they have had hundreds of years of receiving donations and benefiting from compound interest.
Many public universities like UConn were set up with the expectation that public money would be a major part of the financing, but many are now trying to bolster their endowments as that money has become uncertain.
Jarvis said cultivating the loyal donors and investing their money well creates a "virtuous circle of increasing confidence," showing them and others that UConn is worthy of their gifts and gratitude _ thus, prompting more gifts from them and others.
"Achieving a billion-dollar endowment for the University of Connecticut would be a tremendous goal and a worthy goal. Is it highly ambitious? Yes. It is impossible? Obviously not," Jarvis said.
Brian Otis, the UConn Foundation's vice president for development and capital management, said that after a slowdown in in the tough 2008-09 economic slump, they are seeing a rebound in donations and bequests to the fundraising campaign.
"We're really optimistic that this is the sign of things to come," he said. "We're anticipating being up close to 10 percent over last year, which is pretty significant in our world and, I think, a sign of the momentum building for getting back to the pre-2008 levels of fundraising."
They are emphasizing to alumni and other donors that helping bolster the UConn endowment fund and other needs like scholarships and faculty support "are key to moving institutions like UConn to higher excellence," Otis said.
Nationwide, Harvard University has the largest endowment at nearly $27.6 billion, followed by Yale's $16.6 billion fund.
Other universities in southern New England with endowments over $1 billion at the start of 2011 include the Massachusetts Institute of Technology ($8.3 billion), Brown University in Rhode Island ($2.2 billion), and the Massachusetts schools of Williams College, Boston College, Amherst College, Wellesley College, Smith College and Tufts University.
Boston University was also close to reaching $1 billion as of January 2011, according to the Commonfund report.