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The Perceived Advantages of Centralized and Decentralized Approaches to University Fundraising Programs

Article by Michael T. Miller and G. David Gearhart

The Perceived Advantages of Centralized and Decentralized Approaches to University Fundraising ProgramsAbstract

Fundraising in higher education has continued to grow in importance, providing critical resources to the operation of colleges and universities. With such importance, college leaders must work to identify the most effective and efficient ways to organize their fundraising efforts. Sustained dialogue among these college leaders has been whether it is more effective and efficient to centralize fundraising efforts on a campus with a singular reporting line, or whether a decentralized approach provides better connection with potential benefactors. The purpose for conducting the current study was to identify the agreement of senior development officers regarding the benefits of centralized and decentralized approaches to fundraising programs in higher education. Using a three-round Delphi survey, 15 senior development officers were asked to identify, and then rate their consensus about the advantages of centralized and decentralized fundraising efforts. This identification resulted in 24 non-duplicated advantages to centralization and 20 non-duplicated advantages of decentralization.

Introduction

Since its inception, higher education institutions have engaged in various forms of fundraising and development activities. In the earliest colleges, this process was part of the college leader or president’s role, and ranged from soliciting in-kind gifts of food for students to cash for endowments. The president had to be master of conveying the institution’s needs, and although the president could assign responsibility for meeting with a potential donor, the ultimate authority rested entirely on the president (Miller, 1993).

Higher education has grown and evolved, and a significant part of this evolution has been the compartmentalization of administrative responsibilities. In most contemporary institutions, for example, there is a division of labor sorted among various types of responsibilities, such as academic affairs, student affairs, government affairs, etc. Some institutions even place their athletic programs within this realm of structure, and provide leadership to such divisions with a vice president or vice chancellor title.

Development and fundraising programs are no exception to the segregation of administrative responsibilities, with the solicitation of philanthropic funds being tied to a senior development officer. There are variations to this structure, as some institutions rely on a broader ‘university advancement’ categorization of administrative structures that includes offices and efforts targeted at media relations, promotions, news management, etc., and work related to fundraising is considered simply an office within this larger organization.

As varied as the senior level leadership for development offices exist, there are multiple structures used by institutions to organize and implement their fundraising programs. There are at least three dominant structures for university fundraising. In the first, the senior development officer, typically a vice president or vice chancellor, holds centrally the budget, personnel, and responsibility for all fundraising activities. In such settings, development officers are dispatched from this centralized office and represent the university and its interests, the central office creates priorities, and determines when and from whom gifts are solicited.

In a second organizational structure, staff, budget, and responsibilities are co-administered between a centralized office and independent units, such as academic colleges or a division of student affairs. These offices rely on strong communications between units to determine priorities, set goals, and qualify and solicit potential donors.

In the third structure, resources and responsibilities are decentralized, meaning that independent units can set their own goals, establish their own priorities and determine resources to expend, and determine who is solicited by whom. In such environments, fundraising occurs at the most local level, where alumni and benefactors are the most closely aligned.

There is little evidence exploring the virtues and problems associated with development office structures, and therefore, the purpose for conducting the current study was to identify the agreement of senior development officers regarding the benefits of centralized and decentralized approaches to fundraising programs in higher education. The central research question, then, was what were the advantages of both systems of fundraising, and ultimately, which structure provides the institution with the best chances for an effective fundraising program. With the growing need for revenue generation for institutional operation and success, understanding fundraising efficiencies and what works for an institution are increasingly important (Jung & Lee, 2019).

Background of the Study

Nearly 40 years ago, Bowen (1980) developed what he referred to as the ‘laws of higher education finance, which included among other elements, that colleges and universities raise all the money that they can, spend all that they raise, and such efforts are all for good reasons in the pursuit of prestige and excellence. Such thinking is, in part, a rationale for higher education to rely so heavily on philanthropic fundraising programs. With limited public support that has not kept pace with inflation, and increased concerns about tuition pricing, philanthropic giving to higher education is one of the few areas that college leaders can control to garner resources to help the institution distinguish itself.

The history of fundraising in higher education dates to the very earliest institutions, as colleges were dependent upon their host communities for support, often in the form of goods and services. This pattern of behavior continued for hundreds of years and did not fundamentally change until the 20th century. Two distinct trends impacted how college leaders approached fundraising, with one being the advent of the influential donor who expected institutional control or at least influence as the result of a philanthropic gift (Vacik, 1997). The second major trend was the government support of college-going students through the GI Bill®, and the institutional need to manage this new concept of student financial aid. In many cases, institutions organized GI Bill® funding through alumni offices, suddenly providing an important and prominent role for these offices. In addition to playing this role of financial receiving agent for the institution, the concept of alumni associations managing scholarship support prompted the evolution of their future role soliciting and administering scholarship support (Miller, 1993).

Generating philanthropic support for higher education is not easy, as the competition for benefactor support is greater now than at any other time in history. And although many institutions are able to coordinate their work and raise significant amounts of funds, there are equally as many who struggle to raise support. The result is that there is bifurcation of institutions, divided among the ‘have’s’ and ‘have not’s.’ For the institutions that are capable raising multiple billions of dollars in a capital campaign, concerns for fundraising tend not to be technical; they have devised plans and programs for raising funds effectively and efficiently. For these institutions, the work is centered on engaging potential benefactors and assisting them in finding the right ways to support the institution. For other, however, there are critical conversations that must be held regarding who has access to the tools of university development, and who controls these tools. For these institutions, the development process is as much about the process of raising funds as it is about who funds are being raised from.

A key component in institutional approaches to fundraising is the leadership demonstrated by the college president or chancellor. When leadership deems fundraising and alumni relations work to be critical to the institution, others at different levels of administration similarly find themselves prioritizing this type of work (Gearhart & Miller, 2018). Additionally, once an institution makes a firm commitment to engage fully in the fundraising arena, they must learn to innovate and change with societal trends, including use of new and innovative approaches to fundraising that are technologically based, such as crowdfunding (Gearhart, Smith, & Miller, 2018).

Success in higher education fundraising has been related to a wide number of variables, ranging from donor recognition, donor’s social expectations of a return on a gift, giving to multiple programs at the same time (Shen & Tsai, 2010; Stinson & Howard, 2010) program solicitation sophistication, infrastructure (Gyllin, Miller, Morris, & Grover, 2015), the student’s experience on campus prior to graduation (Parsons & Miller, 1996) and even senior development officer characteristics. There are, additionally, a wide range of study findings that suggest the importance of different elements in fundraising effectiveness, including organizational structure (Schanz, 2012). Grunig (1995), for example, found that organizational structure did not impact fundraising success, but success did favor decentralized controls of these operations. Other scholars have argued for hybrid models of centralization and decentralization (Estey & Wilkerson, 1994).

The conceptualization of centralization as compared to decentralization relates to the control of development related processes. At a basic level, this includes control over who has access to potential donor information and who has the ability and “right” to make changes to that information. This can be as simple as who has the responsibility of updating an alumnus’ mailing or email address, and can be as sophisticated as making decisions about who has the right to determine who speaks with an alumnus. The process is complicated and is differentiated based on the type of potential donor. For alumni, for example, some graduates have a spouse with a different academic major, some hold multiple degrees, and some work in a profession that is different than their academic preparation. Some were very involved in extra-curricular activities and some even in sports, so the question to be answered by the institution is who has the right to groom, steward, and solicit this alumnus.

For centralized institutions, potential donors are assigned to constituent groups, including academic colleges, athletic organizations, etc. Exceptions are made for potential donors, and in centralized environments, there is some pre-determined criteria for the assignment or re-assignment of a potential donor. In such a situation, an individual might be assigned to athletics and not to an academic college based on input, feedback, and discussions with the individual. Similarly, a former student might have been a star athlete, but might have a strong interest in theater, and in such a case, centralized development officers would be in a position to steer a solicitation toward the individual making the best possible use of the potential donor’s greatest interest. This approach presumably allows the institutional leaders to make the most meaningful connections possible with potential donors and to encourage gift solicitations that are in the greatest interest of the individual.

In decentralized development structures, constituent groups are placed in a position to compete for the attention of an individual potential donor. Contact information, individual preferences, and even giving histories might be held by one constituent group, such as an academic college, and not shared with others on campus. These types of environments tend to be very competitive, but also allow for donors to have the greatest, most intimate contact with those with whom they may have had a relationship. For example, a graduate from an academic college has potentially strong ties with former faculty members, and in a decentralized structure, these faculty members are involved more directly in meeting with and stewarding alumni. There is a mutual or shared understanding of what the former student has gone through, and the communication can be highly personal and relevant to the individual’s experiences.

Institutional constituent groups generally want what is best for the entire university, but can differ in their interpretation of how to accomplish this idea. With access to fundraising, the possibility of controlling access to funds, groups can assume competing postures. For example, controlling contact information for alumni (as potential donors) controls access to them; if a group does not know where alumni is or how to reach them, they cannot access those individuals and their resources. The result is that strong senior leadership must assume and exert responsibility for defining responsibilities for different actions, and must also distribute resources in such a manner that no constituent group is excluded from the opportunity to access funding. Typical constituent groups involved in these types of discussions include athletics, alumni associations, foundations, development offices, academic colleges, administrative units, and those groups that engage with former students such as Greek-letter organizations.

A significant part of the conversation about organizational structure for fundraising programs is situated in the organizational philosophy of the institution. Sternberg et al. (2015) presented a traditional view of organizational structure, focusing on the separation of functions and roles into traditional areas of control. This span of control thinking is common in the academy, although such traditional approaches have been criticized for failing to build teams and consensus driven thinking to facilitate change (Reason, 2010). Similarly, Sporn (1999) noted and argued strongly that institutions need to be receptive and open to change on a continuous basis, and that environmental adaptation for an institution is a pre-requisite to sustained success. Such thinking is critical to fundraising programs and efforts, as societal trends and changes to thinking are fundamental to an institution’s ability to respond to potential contributors.

One of the major concerns from an institutional perspective is how to best assess an individual’s interest in supporting the institution, and if the person does have an interest, how to best arrange funding proposals that align with those interests. Academic colleges typically believe that a graduate’s strongest interest would be toward the academic program from which the individual graduated, and in many cases this type of relationship produces endowed scholarships or speaker series or even much needed operating funds for an academic department. Pottick, Giordano, and Chirico (2015) demonstrated this student-centered relationship in their case study in a social work department. Frequently, though, alumni have their fondest memories of time spent with other students, participating in Greek-life or in a recreation center, and those groups want to have an opportunity to participate in the interest assessment and recruitment of a funding opportunity (Wunnava & Lauze, 2001).

The engagement of students in creating feelings of affinity to support an institution prompted Cook and Lasher (1996) to explore what they ultimately referred to as an emerging theory of fundraising in higher education. At the center of their work was the contention that the college president plays a central role in both fundraising and setting the tone of importance for fundraising, but that ultimately fundraising must be a “team effort” (p. 33). They noted that in this team effort, donor motives must be effectively matched to institutional needs and priorities, and effective solicitations occur when thorough background research of giving capacity has been conducted. Their grounded-theory argues that effective fundraising, although highly independent based on institutional characteristics, must involve multiple stakeholders on campus.

Over 20 years, Herrmann and Herrmann (1996) studied the structure of fundraising in higher education and compared these structures to other non-profit organizations. They found that the strategies and structures in use varied little across non-profit sectors, including higher education institutions, and that success was typically predicated on the ability to build and utilize strong team-based approaches to fundraising. Although they did not offer a particular singular structure for fundraising success, they did point out the need for strong leadership to coordinate activities, stressing the need for highly coordinated efforts. To some extent, the Herrmann and Herrmann study was an argument that neither centralization nor decentralization is the best solution for effective fundraising, but rather, hybrid approaches that emphasize highly coordinated situational responses to fundraising opportunities best suit an organization.

As many institutions are struggling to consistently raise the funds they need to operate a high level, it is critical to identify the best organizational practices that lead to sustained fundraising success. The current study was developed and initiated in the context of trying to identify which development and fundraising structures are the most effective. As a limitation, however, the study does not attempt to address the reasons individuals make a gift, but rather, acknowledges that institutional behavior can be an important element in helping an individual make a decision about giving, where to direct a gift, and the amount of such a gift.

Research Methods

As the purpose of the study was to identify and describe the benefits of centralized and decentralized fundraising structures, the initial activity was to identify what these benefits were perceived to be, and then to identify the consensus of development officers about their agreement of the centralization or decentralization benefit. Due to this exploratory and descriptive nature, the Delphi survey technique was selected for use. The Delphi survey allows for the collection of geographically separated experts to provide input to a question or questions and to arrive at group consensus over their input. The current study made use of a three-round procedure, where these experts first were asked to identify up to five advantages to development centralization and five advantages to development decentralization. In the second round of the survey, the experts provided an edited listing of both sets of advantages and asked to rate the extent of their agreement that each was advantage. In the third round of the survey, experts were asked to consider group data about each and to then re-rate their agreement level with each statement.

The 15 experts selected for inclusion in the study were leading senior development officers who had either presented or written about issues related to centralization of development activities. The majority of these presentations were through leading higher education based fundraising associations. Meeting these criteria of publishing and presenting on fundraising, suggesting that they are in some and many ways leaders in how higher education fundraising is supposed to work, provided the operational definition of ‘development expert.’ The initial listing of names was reviewed by senior development officers to identify if the individual was considered an “expert” on the topic, and this process resulted in the removal of two names and the addition of two other names. All 15 were emailed and asked to participate in the study. All 15 agreed to participate in the study, however, one did not participate in round 2 and three did not participate in round three.

The 15 participants represented a range of academic institutions, with 7 of the 15 holding positions at Association of Public and Land Grant University institutions and 6 held positions at American Association of State Colleges and University institutions. Two sample participants held professional fundraising positions at private research universities. As an initial descriptive study, there was no attempt to have a fully geographic represented sample, and as a result, 7 of the 15 were from the mid-Atlantic or Northeastern United States. The remaining 8 were geographically distributed throughout the United States.

In the first round of the survey, experts identified 68 unedited advantages of centralized approaches to development. Once edited this resulted in 24 unduplicated advantages to be included in round two and three. These experts also identified 46 unedited advantages of decentralized approaches to development, which, when edited, had 20 unduplicated advantages for inclusion in round 2 and 3.

In the second round of the survey, each of these items were provided to the development experts participating in the study, and they were asked to rate the extent of their agreement that each item was an advantage of either the centralized or decentralized approach to fundraising. These perceptions of agreement were recorded on a 1-to-5 Likert-type scale, where 1=Strongly Disagree progressing to 5=Strongly Agree.

Between rounds 2 and 3, experts made 47 changes to their agreement ratings on the centralized advantages (on average 3.1 changes per expert with 39 agreement level increases and 7 decreases) and 29 changes to their agreement on decentralized advantages (on average 1.9 changes per expert with 19 agreement level increases and 10 decreases).

All data were collected in the spring semester of 2019.

Findings

The experts participating in the study rated their agreement level for the combined group of centralized advantages had x̅=4.26 (SD .4088) and a x̅=4.17 agreement level for the decentralized advantages (not statistically different; t=.4191 (df=42, standard error .107). Within the centralized advantages, 18 had a mean of 4.0 or greater (meaning agree progressing to strongly agree) and only one item under a x̅=3.5 level of agreement. For the decentralized advantages, 14 advantages had a =4.0 or higher, and the remaining 6 all had=3.5-3.99 (see Tables 1 and 2 for listing of advantages and their mean ratings).

The most agreed upon advantages of centralized fundraising programs were better control of gift recording (x̅=4.82; SD .7801), better control of specialized gift services (x̅=4.80; SD .4399), and less likelihood of multiple solicitations on individual donors prospects (x̅=4.76; SD .7612). The most agreed to advantages of decentralization include too regulated donor contact does not allow for benefactor choice (x̅=4.69; SD .2381), units create priorities for their needs and understand their needs best (x̅=4.67; SD .1999), and personalization of gratitude (x̅=4.63; SD .4333).

The perceived advantages of centralization with the least agreement included institutional priorities are kept at the forefront of philanthropy (x̅=3.72; SD .4000), better records management of activities from enrollment (x̅=3.67; SD .8444), and better control of the university brand with prospects (x̅=3.26; SD .8391). For decentralization, the least agreed to advantages were central institutional leaders do not always see the importance of unit activities (x̅=3.89; SD .2143), temptation is ‘things’ that gifts can support rather than faculty efforts (x̅=3.87; SD .5898), and timely responsiveness suffers in centralization (x̅=3.83; SD. 6557).

Discussion and Conclusions

Findings demonstrate that respondents had very similar overall levels of agreement regarding the identified advantages of each centralization strategy. The dominant theme for the centralization advantages focused on controlling interactions and communication with current and potential benefactors. Controlling the process was represented in advantages such as controlling gift recording, mail and email maintenance procedures, record keeping, etc. Conversely, the advantages of decentralization tended to focus on freedom of choice and individualism, allowing for greater constituent or donor control of the process. Decentralization was seen as something closer to a deregulation of the process of fundraising for an institution, meaning that the environment that might be likely to arise would be one of inter-agency competition, complete with wins and failures to connect with benefactors and raise institutional funds. These decentralization advantages also focused on closely aligning benefactor interests at the level where they might have the greatest personal connection (implied, with faculty and fellow alumni).

What the advantages of both centralization and decentralization identified in this study reflected in a very limited way, though, was an indication of the potential cost and cost savings from duplicated services and marginal cost spending. Cooperation between departments or a centralized approaches to such things as event management or recognition ceremonies can save substantial money for individual departments, and in the end, the institution. There may also be social benefits to having benefactors, for example, acknowledged in front of peers from across disciplines and campus, and not just within an academic unit.

An element not identified at all by study participants was the organizational approach to institutional activities across their respective campuses. On some campuses, services such as the library, communications, technology services, human resources, etc., are consolidated into a ‘shared services’ model. On these campuses, there might be a dedicated office for faculty hiring, for example, and all activities associated with that function are coordinated through that office. These types of shared services can heighten service quality through greater specialization of employee skills, and can also reduce duplication and save resources on campus. There is a tremendous need to research such centralization activities and to identify their true potential to optimize resources. Additionally, from a management perspective, a combination of centralized and decentralized services can cause confusion and result in perhaps greater inefficiencies. If development activities are decentralized while other services are centralized, managerial benefits of one approach might be mitigated by confusion and lack of understanding about operational procedures.

Another consideration that might have been implied but not directly addressed in the survey responses was the overarching concern for consistent priorities across campus. For those respondents who agreed strongly with the decentralized concern for best addressing the needs of an individual department or academic program, the concern might be that centralized approaches to development might pursue donors and funded activities that address a different priority. Such conflicting approaches to understanding philanthropy in higher education might be a serious concern at some institutions, and for some development offices; the concern might specifically be trying to reach dollars raised goals rather than raising less money that has a more meaningful impact.

Overall, these findings suggest that there is a tremendous need to continue considering the management and leadership at use and in need in higher education. Ultimately, campus leaders are the individuals responsible for making higher education affordable and accessible to their constituents, and fundraising can be a powerful tool in further opening the academy. Understanding how fundraising activities best provide the resources and open opportunities for potential students’ needs to be a continuous conversation, and this exploration of centralization and decentralization is but a beginning. Further research that explores actual cost savings through centralization, for example, would be helpful in making decisions about development related activities throughout higher education, as well as what development strategy best improves the lives of students in higher education.

References

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Bowen, H. R. (1980). The costs of higher education. San Francisco, CA: Jossey-Bass Publishers.

Cook, W. B., & Lasher, W. F. (1996). Toward a theory of fund raising in higher education. Review of Higher Education, 20(1), 33-51.

Estey, G., & Wilerson, S. (1994). Harmonious arrangements. Currents, 20(6), 22-26.

Gearhart, G. D., & Miller, M. T. (2018). Perspectives on time commitment to fundraising by community college presidents. Journal of Research on the College President, 2, 40-47.

Gearhart, G. D., Smith, E. A., & Miller, M. T. (2018). Community college crowdfunding: New strategy or latest fad? Community College Journal of Research and Practice, doi: 10.1080/10668926.2018.1520660

Grunig, S. D. (1995). The impact of development office structure on fund-raising efficiency for research and doctoral institutions. Journal of Higher Education, 66(6), 686-699.

Gyllin, J., Miller, M. T., Morris, A. A., & Grover, K. S. (2015). A profile of giving patterns and donor behavior at a suburban community college. Community College Journal of Research and Practice, 39, 1-10.

Herrmann, J. C. L., & Herrmann, S. E. (1996). Public university fund raising. Miami, FL: Jan Hermann and Associates (ERIC ED 399 874).

Jung, Y., & Lee, M. Y. (2019). Exploring departmental-level fundraising: Relationship-based factors affecting giving intention in arts higher education. International Journal of Higher Education, 8(3), 235-246.

Miller, M. T. (1993). Historical perspectives on the development of academic fund raising. Journal of Instructional Psychology, 20(3), 237-242.

Parsons, F. R., & Miller, M. T.  (1996). Resident assistant service as a correlate to higher education fund raising. Resources in Education, 35, 12 pp.  ERIC Clearinghouse on Higher Education ED 430 463.

Pottick, K. J., Giordano, S., & Chirico, D. E. (2015). Creating a culture of student philanthropy to address financial challenges in universities. Journal of Social Work Education, 51(2), 207-221.

Reason, C. (2010). Leading a learning organization. Bloomington, IN: Solution Tree Press.

Schanz, J. M. (2012). Differences in fundraising: The role of university practices and organization. Unpublished doctoral dissertation, University at Albany, State University of New York.

Shen, A., & Tsai, C. (2010). Are single-gift committed donors different from their multiple-gift counterparts? International Journal of Nonprofit and Voluntary Sector Marketing, 15, 253-264.

Sporn, B. (1999). Adaptive university structures. Higher Education Policy Series 54. Philadelphia, PA: Jessica Kingsley.

Sternberg, R. J., Davis, E., Mason, A. C., Smith, R. V., Vitter, J. S., & Wheatly, M. (2015). Academic leadership in higher education. Lanham, MA: Rowman & Littlefield.

Stinson, J. L., & Howard, D. R. (2010). Intercollegiate athletics as an institutional fundraising tool: An exploratory donor-based view. Journal of Non-Profit and Public Sector Marketing, 22(4), 312-335.

Vacik, S. M. (1997). Critical incidents impacting the role and development of the academic department chair, 1870-1925. Unpublished doctoral dissertation, University of Alabama, Tuscaloosa, AL.

Wunnava, P. V., & Lauze, M. A. (2001). Alumni giving at a small liberal arts college: Evidence from consistent and occasional donors. Economics of Education Review, 20(6), 533-543.

Biographical Statement

Dr. Michael T. Miller is a Professor of Higher Education in the College of Education and Health Professions at the University of Arkansas. He previously served as a department chair, associate dean, and dean of the College.

Dr. G. David Gearhart is a Professor of Higher Education in the College of Education and Health Professions at the University of Arkansas. He previously served as the Chancellor and as the Vice Chancellor for Development at Arkansas, and as the Vice President for Development at Penn State University.

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