Donors Express Confidence in Faust’s Direction

When former University President Lawrence H. Summers formally announced his resignation in 2006, several of his most loyal alumni supporters voiced their displeasure at his ouster with the largely symbolic threat of withholding all future donations.

James B. Davis ’75 called it a “disgrace.”

“So be it,” Richard A. Holt ’64 penned in an unpublished letter to The Crimson in 2006. “Henceforth, when the alumni fund solicitors call, I shall not donate so much as a penny to this shallow institution.”

Following the installation of University President Drew G. Faust a year later, a more subdued alumni community withheld judgment as they waited for the soft-spoken Civil War historian to settle into her new role and introduce herself and her vision for Harvard.

In the two years since then, Faust has made her introductory rounds within alumni circles, expanding her small posse of donor friends from her time as the dean of the Radcliffe Institute for Advanced Study to include other prominent givers from the Summers era.

But when Harvard’s $36.9 billion endowment plunged an unprecedented 22 percent in the four months leading up to Oct. 31, the former head of Harvard’s smallest school—with an operating budget of under $20 million—found herself thrust into the spotlight as a public figure tasked with bringing together the University’s traditionally disparate schools.

Over the past few months, Faust has found herself in a communicative role, in which she has had to bring all constituents—faculty, students, staff, and alumni—to a common understanding of the state of the University.

In response, donors have expressed warm support for Faust’s leadership in the face of extreme financial pressure, praising what they view as her transparent and cautious approach in identifying University priorities.

“She’s very forthright, unadorned, and not one to gild the lily,” says Peter J. Solomon ’60, the founder of the New York-based Peter J. Solomon investment bank who has met with Faust on several occasions.

CHANGING TACK

As the value of the endowment plummeted, donors have described Faust’s approach as direct and up-front in requesting their financial support to bolster the University’s cash reserves. Instead of winning donors over with plans for a new building dedicated to cutting-edge research, University leaders changed tactics and approached them for current use gifts and unrestricted funds to sustain Harvard’s core activities in the short-term.

“We felt that it is very important to have resources to make immediate interventions that will have good outcomes in the long-term,” Faust says, citing the need for greater flexibility in diverting funds. Unrestricted funds can be used at the discretion of University leaders, and current use gifts can be spent immediately—unlike most endowment funds, which are designated for a specific purpose and have limits on yearly spending.

Even more than other donations, such gifts represent a vote of confidence in the administration, since donors are in effect relinquishing the control they normally exercise over their contributions to the University.

“[Donors] want their money to go to things that they really care about,” Mark Hissey ’84 explains, adding that donors do not necessarily question the responsibility of University leaders—instead, an inherent level of suspicion arises when giving to what some perceive as a “slush fund.”

Fundraising numbers for the current fiscal year are not yet available, and the numbers for May and June—which comprise the final push for class reunion fundraising—typically boost year-end results. Thus far, University administrators say that donors have been receptive to the change in fundraising strategy.

“Ask us 3 months ago and we would not have predicted it,” University Provost Steven E. Hyman says of the level of philanthropy as of early May. “We’re fortunate to have such generous alumni, but we’re very much in unprecedented territory.”

DONOR APPRECIATION

Faust often emphasizes that Harvard is no longer in a position to think as a university with a $36.9 billion endowment, and donors acknowledge that reducing the scope of University activities and ambitions to those that a $24 billion endowment can support is not easy.

Most give Faust credit for coping with the unprecedented fiscal challenges thus far. Most praise her transparency and relatively frequent updates on University budget planning—“People are grateful for the information,” Stephen R. Quazzo ’82 says. And most cite her mild-mannered charm and ability to put everyone around her at ease as the key strengths she brings to the presidency.

But when asked to describe Faust’s long-term vision for the University, few alumni mention any specifics, though most express a general sense of confidence that Faust’s leadership will continue Harvard’s tradition of excellence.

“It’s hard to say,” John F. Cogan, Jr. ’49 says, considering his recent dialogue with Faust about her plans for the future. “I don’t think you can make short-term decisions without a long-term vision.”

While the economic downturn has forced Harvard to reconsider all aspects of its present operations, donors say they have faith that the University’s core initiatives will survive current cost-cutting measures.

“I like to think, though I haven’t asked Drew the question directly, that the vision is really little different than what it had been before the financial crisis,” John A. Kaneb ’56 says. “But it may have to be achieved over a longer time frame than one might have thought, and perhaps a bit more modestly in some ways I can’t now foresee.”

Faust describes the messages she has been sending to alumni as two-fold—Harvard must not only “adjust to a changed financial context” but also take advantage of the crisis to sort through University priorities going forward.

“We must be in charge of change instead of being the object of change,” Faust says.

But the changes the University has implemented thus far—including salary freezes, construction slowdown, and reduced faculty searches—have been incremental and measured in scope, and though Faust has yet to flesh out major structural changes, donors approve of the restraint she has shown in approaching budget cuts.

“I think the fact that they’re being cautious and not doing anything out of the ordinary—I think there’s a lot of wisdom in that,” Hissey says. More drastic measures would have suggested less consideration for the “human impact” of inevitable changes at the University, Cogan says, adding that “there’s a high level of respect and confidence in what she’s doing.”

—Staff writer Athena Y. Jiang can be reached at ajiang@fas.harvard.edu.

—Staff writer June Q. Wu can be reached at junewu@fas.harvard.edu.