Berkeley...
A new reality: philanthropy fuels Cal's future

When Robert Birgeneau donned the velvet-trimmed ceremonial robe as Chancellor of UC Berkeley six-and-a-half years ago, he could never have predicted the coming economic meltdown and its impact on the University. At that time, when tuition and philanthropy were modestly rising, the State of California was Cal’s primary funding source. It could be counted on to provide a steady — although declining — portion of the University’s budget. When the economy tanked in 2008, State support for higher education plummeted, setting off a funding crisis.

But a fortuitous factor was already at work. Even before the financial downturn, Birgeneau had set a high bar for philanthropy — $3 billion to be raised over seven years. So far, The Campaign for Berkeley is hitting its mark. This spring, donors helped Cal surpass the $2-billion milestone, illuminating a new financial reality: Philanthropy will play a central role in guaranteeing Cal’s future

Drastic state cuts shift the funding balance

During Birgeneau’s tenure, State funding has plunged from $450 million annually to just $300 million — a 33 percent drop in just six years. Today, California provides just 16 percent of Berkeley’s annual operating budget of $1.9 billion. Further, with Governor Jerry Brown’s proposed UC systemwide budget cut of at least $500 million — about $75 million for Berkeley — this percentage will drop to below 12 percent. Not surprisingly, Berkeley’s leadership is hunting for new ways to increase revenue and reduce costs.

2004 vs. 2010 primary sources of funding

Most noticeable has been a series of tuition hikes, set by The Regents for all the UC campuses. Since 2009, in-state undergraduate tuition plus student fees have risen more than 30 percent to $11,766 for this upcoming fall, a daunting increase for students. For the first time this year, tuition income has eclipsed the State’s contribution to Berkeley’s operating budget. Cal is also increasing admissions of out-of-state and international students — who pay significantly more in tuition — raising their percentage of the student body from 11 percent to 20 percent within four years, albeit without decreasing the target enrollment for California residents. “Although it has been necessary to increase tuition, we are ever mindful of the possible effects on accessibility for students,” says Birgeneau.

The University has also benefited from a dramatic increase in federal research funding, although this amount varies year to year. While federal money typically is earmarked for specific research projects, it enhances the funding available to support faculty and graduate students and thereby aids in Cal’s teaching mission.

A campaign to elevate Cal

“When The Campaign for Berkeley publicly launched in fall 2008, some might have called its goal aspirational,” says Associate Vice Chancellor David Blinder Ph.D. ’81, who leads fundraising for the campus. “Crossing the $2-billion threshold is a wonderful achievement, but it is absolutely essential that we keep up the pace. That means raising $1 million per day.”

Chart: Berkeley's Campaigns Raise the Level of Giving

According to the Chronicle of Higher Education, at least 10 universities are currently running campaigns at the $3-billion level or above, with Stanford topping the list with a $4.3 billion goal. Berkeley is one of just two universities on this list that does not have a medical school, which can account for as much as 50 percent of gift revenues.

Cal is relatively new to private fundraising, having held two previous campaigns starting with the Keeping the Promise campaign in the late 1980s. “At Berkeley, each campaign has not only exceeded its goal, it has set the ground floor of giving for the next one,” says Blinder. “Campaigns are a singularly effective way to engage with donors and deepen our relationships with them.”

Endowment creates stability

Berkeley’s future hinges on its ability to remove the uncertainty created by economic swings and debate in Sacramento. “Short of continued tuition increases, which are painful for everyone, endowment income is the most powerful tool we have to create a more resilient financial foundation for Berkeley,” says Birgeneau.

Though endowments respond to market fluctuations, Berkeley’s investments are diversified and oriented toward growth over time. Endowment giving during the campaign amounts to $689 million to date, or 34 percent of gifts, still short of the 40-percent target. Yet, its impact has been substantial: During the campaign, endowment gifts have created 126 chairs and distinguished professorships, 357 fellowships, 263 scholarships, and 24 funds that support both graduates and undergraduates.

“Our competitors are elite private universities who have extraordinary spending power created by endowments that are well above $10 billion,” says Blinder, who notes that Berkeley’s endowment is $2.6 billion versus Harvard’s endowment of $27 billion and Stanford’s of nearly $16 billion. “Yet those are the very universities that we compete with as we hire and retain preeminent faculty and recruit top-notch undergraduate and graduate students. Growing our endowment will help us seize the advantage.”

Berkeley is taking important steps to build its endowment. Notably, it is reaping the rewards of a landmark $113-million gift made by the William and Flora Hewlett Foundation, which includes a challenge grant to endow 100 new faculty chairs. Through this enormous investment in teaching and research, 83 endowed chairs have been created over the past three-and-a-half years.

Fiat Lux!

Berkeley continues to shine in spite of its financial challenges. Times Higher Education recently rated its reputation the fourth- best in the world, just behind Harvard, MIT, and Cambridge. For the third decade in a row, Berkeley has been recognized as having among the largest number of highly ranked graduate programs in the country. Further, it is attracting a record number of students, while still holding true to its mission of access and excellence — enrolling more low-income students than all eight Ivy league schools plus Stanford combined.

“We must thank our extraordinary donors, who deeply believe in UC Berkeley’s public mission, for we are counting on them as never before”, says Birgeneau.“I have no doubt that Berkeley has the resiliency to stand up to all of the difficulties ahead because we have created a dynamic public- private partnership that will extend its legacy of access and excellence to future generations of students.”

To make a gift or learn more about The Campaign for Berkeley, visit campaign.berkeley.edu

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