September 25, 2023

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KUEA Funding Change

One of the greatest and most unique assets of the University of Kansas is the Kansas University Endowment Association.

The uniqueness of this “asset” is that the Association is a totally separate, stand-alone entity. It is not a part of the university, not controlled by the university and the chancellor is not a member of the executive committee, nor a trustee.

However, the sole purpose of the Association is to do what it can to help improve the university; to provide funds the state should have the responsibility of funding.

Over the years the Association has compiled an outstanding record in raising private funds, one of the best among all state-aided universities. This record has been achieved primarily due to donors’ support and their appreciation for the school, its role in their personal and professional development and the astute management of the money by Association officials. To some degree, the role and effectiveness of a particular chancellor is a significant factor in whether an individual makes a donation.

Generally speaking there are two kinds of monetary gifts or pledges: One that directs the money be spent for a specific project, program or individual; or, a gift may be given as “unrestricted” which means it can be used however Association officers and trustees think is in the best interests of the institution.

The vast number and total dollars are earmarked for specific purposes.

Over the years the general thinking of those serving on the Association’s executive committee, as well as the trustees, has been they should be far more careful in spending the money of others than they would be in spending their own money.

Likewise, over the years new chancellors are made aware the Endowment Association should not be looked to as a convenient financial cookie jar he or she can dip into to provide funds for programs they favor.

Again, over the years there have been many efforts to get the Association to fund a wide range of requests which Association officers have politely rejected.

With news reports of the Association raising record amounts of private money following each highly successful capital campaign, growing numbers of state lawmakers ask why the “rich” KU Endowment Association cannot come up with funds to pay for programs that state taxpayers are being asked to fund. This same question is often asked by students and faculty.

This week’s announcement by KU officials that the KU Endowment Association has made a $10 million grant to the university to pay for covid-related expenses is a major departure for the Association.

It’s believed this grant will turn out to be significantly larger in future announcements.

This is called a “grant” but it is a gift, not a loan, not to be repaid and there are no fees attached to the grant.

The chancellor asked for this money and said it is essential and vital for the university to come out of the pandemic ready to climb to greater levels of excellence and achievement.

The Association’s executive committee bought into the proposition and came up with the unprecedented gift.

According to several Association officials, they know of no other state-aided university endowment-type organization to have made such a gift.

Again, the role and mission of the Association is to do what it can to help the university by providing funds for programs the state cannot or will not provide. This is how Association officials have justified the grant.

This action, however, opens two giant doors that may cause serious problems or conflicts in coming years.

No longer can Endowment officials turn their backs on requests by state lawmakers when they ask why a very rich KU Endowment cannot, or will not, provide funding for programs that state taxpayers now are funding or for new programs the chancellor would like.

Second, this action could cause potential donors, and maybe even those who have already given or pledged money, to reconsider how they want to designate or direct any gift or pledge they have or will make.

Individuals thinking about making a gift to the university, but through the Endowment Association, may give more thought to directing their money be used for a specific reason….a building, a professorship, an art acquisition, a student scholarship fund, a travel abroad program, a piece of equipment for the medical school or any number of other specific programs rather than leaving their money in an “unrestricted” category for a chancellor’s wish list.

As noted above, the KU Endowment Association has a truly distinguished record. It has played a significant role in the development of the University. Its careful use of contributions has been a major factor in the willingness and/or enthusiasm of alumni and friends to give generously for the benefit of the school.

It will be interesting to see if and when there may be increased scrutiny by potential donors to make sure their money is spent for specific uses on Mt. Oread and/or at the KU medical school and hospital in Kansas City, Kansas.

Likewise, will Kansas state legislators increase their requests that KU Endowment funds be used to pay for numerous university programs rather than to have state taxpayers carrying the full load?

KUEA has opened a giant hole in their up-till-now shield for not spending their monies to fund projects or programs they believe state taxpayers should fund.

The competition for fiscal support for higher education….both state-aided and private schools….is going to become more intense in the years to come.

Schools able to attract more private dollars will be those where individuals serving on bodies such as the KU Endowment Association will merit the respect of donors for the manner in which they handle their funds and maintain pressure on university administrators to aim for excellence at all levels. Likewise, there must be knowledgeable Regents with vision and courage to demand excellence.

Donors will be earmarking funds for those schools with balanced academic excellence and leadership – a winning basketball or football team is nice but the most important facet in the minds of the majority of those able to be generous with their money will be the level of soundness and excellence in the academic programs and leadership of the chancellor.

The role, integrity, respect, reputation and firsthand knowledge of the university community by those serving on boards such as an endowment association, or the Board of Regents, and what they expect from the school’s leadership will play a critical role in the level of success of a school.

This will make the difference between the “winners” and the “also rans.”