Philanthropists for the New Austerity

A few months ago the University created a new position in the Development Office and selected Thomas Stephenson, a top-ranking public relations executive, to fill the post. University officials hoped Stephenson, a 40-year employee of the DuPont Corporation and a veteran of many corporate gift-giving decisions, would be able to bring unique insight to his new coordinating task. As director of corporations, he was given responsibility for coordinating the Harvard Campaign's corporate solicitation strategy.

In creating the new position, the Development Office took heed of the growing importance of corporate dollars in the University's fiscal scheme, a trend that has become increasingly pronounced during the past few years. Since 1971, private sector donations to Harvard have risen from $6 to $16 million, and last year they accounted for 18 per cent of the University's total received contributions. Medical School research projects, Business School chairs, and the Kennedy School's new buildings all depend on corporate funds.

During the past decade inflation cut deeply into the once-stable endowments of universities and private foundations. With their traditional funding sources drying up, schools across the nation began to court the private sector.

Apparently, they found a compatible partner. The recent discovery and development of an entire DNA technology outside of industrial labs, brought home to the leaders of more corporations the importance of the basic research done by universities. The Survey of Voluntary Support to Education reported that the fiscal year 1979 saw gifts from corporations to educational institutions rise 25 per cent from the previous year's level. According to a second survey, conducted the same year by the Conference Board and the Council for Financial Aid to Education, corporations had overtaken and surpassed private foundations as donors.

It seemed, in fact, that the universities had timed their efforts to coincide with the Reagan revolution. Paring federal subsidies and waving his magic wand over the private sector, the new president called upon corporations to fill the gaps his budget cuts would leave. But stop-gap efforts to shore up eroding endowments are not the cure-all the prophets of creative altruism might suppose.

Ever since the late 19th century--when the railroads supported the YMCA hostels where their employees bunked down--corporate philanthropy has been closely linked to the self-interest of the company making the donation. "A corporation has to justify giving the money; it has to consider what purpose is served," Stephenson explains. Generally, that means corporate giving falls into three categories: manpower, research and community relations--a triangle of corporate gift-giving.

It is no coincidence that in the past the vast majority of corporate donations have gone to Harvard's professional schools and the School of Public Health. These schools have "natural constituencies," Stephenson points out. The Law School, Business School, and Kennedy School either directly supply corporations with personnel, or place their graduates in positions where public policy decisions directly affect corporate policy. The Medical School and School of Public Health benefit from the research point of the corporate giving triangle.

The second law of corporate contributions: companies are always more willing to give when their giving is seen. "Many companies are reluctant to give for endowment, for bricks and mortar," Stephenson observes. They are more likely to endow professorships or support buildings and forums, than they are to donate money for unrestricted use.

As a result, the areas hurt most by federal funding cuts--financial aid and the Faculty of Arts and Sciences--end up unlikely candidates for traditional private sector donations. Realizing this, President Bok, Dean Rosovsky, and other FAS and development officials have recently made special efforts to strengthen the tie between the Faculty and the corporate community.

The cutting edge of this effort is the Harvard Campaign. In the past, companies who have once made capital donations have proved the most reliable contributors of smaller annual sums. University officals must first convince business executives of the importance of undergraduate institutions to the aims of private corporations. Rallying a wide array of arguments, they have stressed the need to train future teachers, and what Andrew Heiskell, the retired CEO of Time, Inc. and chairman of Harvard's corporate gifts committee, calls "the liberal education that is the essence of any managerial job."

"One area where we hope businesses will be responsive is junior faculty," Thomas M. Reardon, director of University Development, says. A University graduate can start out in business and make $35,000. If he were teaching he might be making $21,000. Fifteen years later, if he's tenured, the professor would make a maximum of $35,000, while the businessman could easily be making $150,000

"Since these points of disparity only widen, who's going to train the next group of scientists?" Reardon adds. "Industries are beginning to see this as a very serious problem--they're beginning to see it not as an investment parochially in Harvard, but as something much longer term."

The success of the Faculty's new corporate push remains to be seen, but at the moment the signs are promising. Corporations have already donated $6 million to the Campaign and are well on their way to meeting Harvard's $15 million goal. One reason for the positive corporate response, Dean Rosovsky speculates, is that private businesses--being "rather more sympathetic to the policies of the current federal administration,"--feel a "special obligation to do more."

Officials in both the University and the corporate community say it is impossible to expect the private sector to replace all of the cutbacks in federal funds. As Robert Payton, president of Exxon's Educational Foundation, points out, "The total sum of corporate contributions for all purposes is less than the cut in the federal budget for student aid alone." Nevertheless, the corporate community has become an increasingly vital source of educational funds, and one that the University will continue to court.