'Show us the money,' U. urges donors

Officials are aggressively seeking ways to boost the University's endowment within a few years. NEW YORK -- Last December, Joanne Hanna journeyed to the Big Apple for a day trip and brought back $150,000 worth of promises. Her mission: "To tell the story" of a University struggling to recruit top-notch freshmen under the strain of a $2.89 billion endowment that while being the 12th-biggest in the nation is just the 65th-largest in per-capita terms. As director of development for Penn financial aid, Hanna has made her pitch to prospective alumni, foundation and corporate donors countless times before. But changing times necessitated a more aggressive approach. One by one, several of the University's Ivy League rivals have announced revamped financial aid packages designed to benefit lower- and middle-income students -- further pressuring Penn, which had already embarked on a seven-year campaign to increase the endowment for undergraduate financial aid by $200 million. To date, officials have raised $40 million, or 20 percent of the goal. Of the $50 million Penn allocates annually for aid, only $2.3 million, or 4.6 percent, is covered by its endowment, landing Penn at the bottom of the Ivy League in terms of endowment-financial aid ratio. "This may be the only area where there's a clear and significant disparity between Penn and its Ivy League peers," University President Judith Rodin noted. And according to University Board of Trustees Chairperson Roy Vagelos, the meager portion of the endowment earmarked for financial aid serves as an "enormous handicap" to a school competing for the best and the brightest students. "The University is woefully underendowed for undergraduate financial aid," he said. The overall endowment operates like a mutual fund, with money invested primarily in stocks and bonds that yield a total return on the investment fund. Hanna recounted a series of visits she had on that day in December. In one, she conversed with a married couple -- both Penn alumni and first generation college graduates. The husband, a former financial aid recipient in his early 30s, was interested in giving, and Hanna was determined to close the deal. "They know what I'm coming to ask for," she said. Hanna waited for the appropriate time to pose "The Question" -- "Would you consider making a $50,000 gift?" The potential donor agreed to make the transition to donor status. Encouraged by the success of signing-on a first-time donor, Hanna next visited a former Wharton graduate who owns a small investment firm. "You came at the right time," she quoted the man as replying. He pledged $100,000 for the financial aid cause. Hanna's next stop: A Penn parent in his late 50s. He had already donated $50,000 to the University in term money -- money that is spent every year and not part of the endowment -- but the fundraising official hoped he'd consider funding an endowed scholarship. The latter would fund one or more student scholarships in perpetuity. She was met with a cool reception. "He said he appreciated that I came, but said no," Hanna recalled. Hanna crams in about three or four meetings with donors during each biweekly excursion. While the process of soliciting donations may appear simple on the surface, all strategic planning -- right down to the phrasing of the all-important "question" -- is governed by a four-step fundraising master plan. In the beginning stages, officials identify how much potential donors would be willing to pay by utilizing a large base of public information, including the Dow Jones on-line federal tax filings, newspaper clippings and information obtained by the Office of Alumni Relations. After composing a profile of an individual's income, career and family, officials begin to "cultivate," or woo, a potential donor. The cultivation process could take anywhere from six months to a lifetime -- the latter in the case of a bequest -- and includes generic mailings, invitations to campus events and a series of informal conversations with Development officers, according to Hanna. "You have to be on the road meeting alumni," she said, adding that New York, California, Florida and Baltimore are popular fundraising sites. Hanna had already established a rapport with all of her New York prospects before meeting with them, and was careful to request amounts in line with their budgets. All three had been financial-aid recipients as undergraduates. And efforts continue even after an official procures a signature on the dotted line. "If someone says yes, you want to move on it," said Executive Director of Development for the Agenda for Excellence Bonnie Devlin. The last step -- labeled "stewardship" -- functions to keep donors engaged so they will continue to funnel their dollars into financial aid. Hanna explained that officials capitalize on a donor's competitive spirit by publishing names and gift amounts in a "honor roll." Additionally, some donors receive written biographies of the student or students on the receiving end of their gifts. Others meet the recipients in person at bi-annual scholarship dinners. "You have to make the gift come alive," Devlin said. At one such dinner held in New York earlier this month, Wharton and College alumnus and donor Ronald Moelis said that while donating to buildings may prove to be "ego-wise," giving to scholarships is a more "charitable" use of funds. Moelis recently donated $120,000 to fund one College of Arts and Sciences scholarship in perpetuity. At an average growth rate of 10 percent a year, a scholarship fund doubles every seven to 15 years, Devlin noted, adding that a portion of the interest generated from the fund is used for the actual scholarship. The principal remains untouched. "It's nice to do something with the student body so that I can feel young again," he added. Although Hanna said it would be impossible to construct a profile of the "typical donor," she stressed that alumni and Penn parents who have remained active in the University community are good candidates. In fact, individual gifts comprise 80 percent of total financial aid fundraising. And with the "turnover of wealth to the next generation," and a renewed entrepreneurial spirit, donors are now younger than ever, according to Hanna. While the majority of donors to the University's Capital Campaign -- a four-year long, University-wide fundraising push that kicked off in 1988 -- were over 40 years of age, officials are now seeing more donors in their early 30s, she noted. Gifts are ranked by monetary value, with "major" gifts totaling $25,000 and above, "principal" gifts $250,000 and above and "leadership" gifts $1 million-plus. An individual must pledge at least $100,000 to create a named endowment fund for undergraduate scholarships. December is a huge fundraising month, Vice President for Development Virginia Clark noted, explaining that both alumni and corporations revel in the thought of filing year-end, tax-deductible donations. Officials often "call in" Rodin and Vagelos to help secure gifts hovering near "leadership" status. Vagelos -- a former financial aid recipient -- is personally spearheading the effort to raise the endowment for financial aid. He is well-acquainted with the enemy. In January, Princeton University trustees voted to eliminate all student loans for families with incomes below $40,000, replacing them with grants. The program sparked a competitive drive in Vagelos. As a member of Penn's lightweight crew team in the mid-'50s, Vagelos recalls more Tiger victories than he'd care to admit. "There's no way Princeton's going to get ahead of us this time," he said. The Trustee Scholars Program, announced last month, represents the University's response to a string of similar announcements made by other top universities. Under the program, as many as 50 outstanding freshmen will receive financial aid packages entirely funded by grants and work-study earnings.

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