Fundraising initiatives have been a longstanding way for universities to accomplish their mission and goals. They serve as vital alternative sources of revenue, and institutional leadership and vision is imperative for college and universities to find the type of financial success they need to meet a variety of demands. This study examined the influence of fundraising on state funding decision making for public higher education, specifically at Public Research I universities. The study considers social, political, and economic factors that influence college leader decision making for substantial university-wide interests in conducting billion dollar capital campaigns.


Private support for higher education has become big business for many donors (Gearhart, 2006) and universities recognize the importance of private gifts as a means of alternative revenue to function effectively and efficiently (Cheslock & Gianneschi, 2008). This also includes supporting the goals and mission of the institution, and competing against other colleges and universities for national recognition as leading higher education institutions. Public colleges and universities are depending on private gifts to make up for shortfalls and avoid increasing tuition prices, most notably with the application of aggressive comprehensive fundraising activities known as capital campaigns. Capital campaigns are specialized approaches to fundraising (Gearhart, 1995). They are large and major initiatives set in place to grow and expand a college or university. In general, there is no one-method approach to fostering and developing a successful capital campaign (Kihlstedt, 2009).


 Though capital campaigns have significant financial and marketing components, they also have psychological and economic aspects that are critical for organization leadership to consider when attempting to manage a successful campaign. Funding for higher education is connected through multiple variables, and a larger canvas that recognizes and emphasizes cost sharing as the most appropriate approach for fiscal support is imperative. Relationship building between the university and the donor is a crucial part of the fundraising and capital campaign process. These efforts have become common practice among the nation’s leading colleges and universities.


Background of Study


States have a primary role in funding for public higher education. State higher education institutions are essentially governed similarly to state agencies, and state funding is a key source of revenue state universities. Across several states, funding higher education has become increasingly challenging (Newman, Courtier, & Scurry, 2010) and many state entities are forced to compete for funding, mostly due to budget shortfalls and funding priorities (Kane, Orszag, & Apostolov, 2005). Navigating the political, economic, and social landscape can prove difficult and complex for the decision making process of policy makers (McLendon, Hearn, & Mohker, 2009). State governments’ first priorities are often Medicaid and K-12 education (Kane, Orszag, & Gunter, 2003). In most cases, public higher education is supported through a state’s discretionary budget in the form of appropriations, and so colleges and universities inadvertently or directly compete for funding. The 2012 fiscal year showed a decrease for higher education by approximately 7.6% (Kelderman, 2012; Lederman, 2012) and 41 states made the decision to reduce appropriations for higher education in their state (Lederman, 2012).


Higher education typically is included on the government agenda, and at times, on a specialized agenda. This is frequently attributed to funding concerns but also modifications in the way policy is developed, implemented, and managed. The structure of government can be indicative of the role that it will play in funding public higher education. Coordinating governing boards have a distinctive role in doing so as well (Nicholson-Crotty & Meir, 2003), specifically, in or how appropriations are dispersed to institutions.


Most recently, there have been improvements in state allocations and as such is occurring, so are state appropriations for multiple state responsibilities. However, as states recover from a weak economy, they are not replenishing state dollars that were not received in previous years (Micthell, Palacios, & Leachman, 2014). As one of the largest discretionary budget on a state’s agenda, funding for public higher education tends to subject to the strength and weakness of the economy (Zusman, 2005).


Though state funding is a major source of revenue, public institutions typically use tuition and fees as their primary revenue stream (Cheslock & Gianneschi, 2008). Tuition often increases as state funds decrease (Baum, Bell, & Sturtevant, 2010). Concerns for tuition-setting and cost containment measures have also been a large topic of public discussion, and there are potential consequences for setting tuition discounts (Davis, 2003). Recognizably, tuition discounting can prove detrimental for institutions because they run risk of losing revenue, especially in the case that student retention rates suffer (Davis, 2003). Also, institutional competition and tuition discounting have led institutions to either merge or close (Martin, 2004).


As students have had to reconcile for the budget shortfalls colleges and universities experience during challenging economic conditions (Baum, Bell, & Sturtevant, 2010), tuition-setting and policies that reflect public concerns about the cost of college have been a focus for college leaders, especially in a market that has witnessed national student loan debt cross the trillion dollar threshold (Chopra, 2013). The federal government’s role for higher education has consistently improved over the past several years and has been mostly secondary by appropriating funds to states and fiscally supporting student financial aid (Longnecker, 2009). Previously, some of the blame for the college debt had been shifted to student financial aid systems because students who are primarily limited to loans in order to pay for their education are less likely to attend and complete college (Burdman, 2005).


As an implication for declining financial support as well as political and social perceptions behind tuition increases, alternative funding such as capital campaigns has been increasingly important for colleges and universities. Public higher education is a shared responsibility that both higher education institutions and state policymakers recognize, it rarely appears on state government agenda for control and autonomy issues (McLendon, 2003).The private benefits associated with an individual obtaining a college degree, political realization among legislators that universities are positioned to allocate private financial support, and state fiscal and political pressures to fund other government responsibilities have contributed to criticism surrounding government subsidies for higher education (Dar, 2012; Kane, Orszag, & Apostolov, 2005; McLendon, Hearn, & Mokher, 2009; Vedder, 2007).


Research Methods


A parallel mixed methods approach was used in order to address the study’s research questions listed in Table 3. Based on reports from the Chronicle of Higher Education (2010), the population consisted of nearly 40 public higher education institutions that were conducting a capital campaign with a goal of least $1 billion. Of the population, 10 institutions were selected based on criteria listed in Table 1.


Table 1. Criteria for Sample Participants


1. Must currently have been conducting or recently concluded a capital campaign

2. Must have begun a capital campaign in the last 7 years

3. Must have had a capital campaign goal of at least $1 Billion

4. Must have been classified as a member of the Association of Public and Land-Grant Universities (APLU).

5. Must have had only one (1) designation according to the APLU. APLU institutions have a certain number of designations that are representative of the type of institution that they are, (i.e. HBCU, HSI) including being the state designated land-grant institution. In this case, an institution with this type of designation receives a one (1) and no other numerical designation.


State funding data for each selected university (see Tables 5 & 6) was collected from the Grapevine, an annual survey of aggregated data of state tax support for higher education and general appropriations (Palmer, paragraph 1). Any data that was unavailable from the Grapevine was instead collected from sample institutions’ websites and artifacts. All fundraising data was also collected from participants’ websites and artifacts.


The selected five primary institutions that were conducting a capital campaign were matched with five institutions that were not conducting a capital campaign. The criteria for selecting the matched institutions included the following: 1) status of a state designated public institution according the Association of Public Land-Grant Universities or recognized as the state flagship university of its State, 2) not currently conducting a capital campaign, 3) had similar characteristics of the sample institution to which they are compared. The five matched institutions were the University of Arizona, Louisiana State University, the University of Massachusetts at Amherst, the University of Nevada at Reno, and the University of Wisconsin, Madison.


Table 2. Campaign and Match Institutions


Campaign Institution                                                  Matched Institution

Indiana University                                                      University of Massachusetts, Amherst

Ohio State University                                                 University of Wisconsin, Madison

University of Maryland, College Park                            Louisiana State University

University of Utah                                                      University of Nevada, Reno

University of California-Berkeley                                  University of Arizona


Also, ten senior level administrators were identified from the selected universities, five senior development officers and five senior government relations officers. The college leaders were contacted by email to request an interview. The purpose of interviewing administrators from all primary participant institutions was to gain insight about college leaders’ perceptions of state funding during institutional capital campaign involvement. Of the 10 administrators contacted through email, eight of them, or their designees, responded affirmatively for an interview.


Pilot interviews were conducted with multiple college administrators in the Fall of 2013. The interview questions were amended based on feedback from the pilot interviews and review of literature related to the study. Data were collected in the Spring of 2014 through interviews of eight administrators and a variety of institutional websites and artifacts. The administrators at the sample institutions were geographically dispersed, so separate interviews were conducted by telephone and were not limited in time in order to gain as much data as possible.


State level appropriations three years before and after the fiscal year announcement of a capital campaign were identified, and examined during each primary institution’s period of capital campaign involvement. An independent t-test was conducted to determine if there was a statistically significant difference in state appropriation means between primary and matched institutions three years before the announcement of a capital campaign. A second independent t- test was conducted to determine if there was a statistically significant difference in state appropriation means between primary and matched institutions three years after the announcement of a capital campaign. A dependent t-test was conducted to determine if there was a statistically significant difference between three years of state funding before the announcement of a capital campaign and three years of state funding after the announcement of capital campaign involvement for all ten institutions.


Table 3. Study Research Questions


1. What were the longitudinal trends (seven years) of state support for public higher education when capital fundraising campaigns are in progress?


2. How did development and government relations leaders in higher education perceive the impact of private fundraising on state funding?


3. How did higher education institutional leaders perceive funding decision criteria for their institutions by state level policymakers?


4. To what extent was there an association between capital campaign involvement and state funding appropriations for selected research universities?


5. What were the potential policy implications of study findings on state level higher education funding?




Using an independent t-test (see Table 7.), means of state appropriations prior to the announcement of a capital campaign suggested that there was no statistically significant difference in the change in allocation percentages among capital campaign institutions (M=2.5, S.D. =6.6) and non-capital campaign institutions (M=5.6, S.D. =2.3); t(8)-1.007, p=.150. Based on these results, it is suggested that conducting a capital campaign does not influence state funding for a public research I university. The second independent t-test (see Table 7.) was conducted in order to identify a shift in state funding during capital campaign involvement following public announcement of a mega-capital campaign and state funding allocations at those institutions not conducting a mega-capital campaign. The results of the independent t-test suggested that there was no significant difference in shift of allocations for campaign institutions and (M=-.12, S.D.=6.29)  and non-campaign institutions (M=-1.34, S.D.=7.83); t (8)=.271, p=.719. By conducting a paired sample t-test (see Table 8.), the study found that there was no significant difference between scores for pre-capital campaign involvement at all sample institutions (M=4.10, S.D.=4.98 and post-capital campaign involvement at all sample institutions (M=-.726, S.D. =6.73); t(9)=1.500, p=.168.

Of the eight study participants interviewed, all of them asserted that they believe that state legislators are typically supportive of public higher education and that they did not believe that their university’s involvement in a capital campaign influenced state funding. As seen in Table 4., there were multiple themes to which participants responded affirmatively.


Table 4. Data-Based Themes from Interviews



Perceptions of State Funding

and Capital Campaign Involvement


Number of participants who affirmed


Response Percentage of



Campaign impacts funding





Relationship is economically driven



Legislators understand state funding



Legislators are involved with campaign



Campaign a part of funding criteria



Expect funding increase




In all, participants perceived that state allocations and economic conditions were leading factors for policymakers when making decision for funding public higher education. Participants suggested that competition for state funding contributed to decisions about appropriations. Furthermore, participants perceptions of state policymakers understanding of funding for higher education to be limited, making the decision-making process challenging.


Discussion and Conclusion


Study trends showed that state funding during capital campaign involvement fluctuated after the announcement of the capital campaign. Though all three t-tests showed that there were no statistically significant differences in funding during the periods of involvement, statistical analyses suggested that decreases in funding were common for four of the five primary participant institutions. Given the nature of private giving, reductions in state funding would be increasingly noticeable even in cases that showed negative reactions in fundraising during the same period of time. Regardless, post-analysis of the data suggested that there was consistency in decreased funding from states.


Universities consider capital campaigns an important alternative revenue stream, as they are not immune from the need of aggressive fundraising. University leaders often anticipate legislative decision making about funding for their institution and because of recent trends, and past economic conditions, college leaders plan for their institution with a mega-capital campaign as a point of reference during strategic planning and decision-making processes.


Considering trends in support for public higher education, institutional dependency on aggressive fundraising could have substantial public policy implications. Without equitable fiscal support from state policymakers, commitment to institutional priorities, and less so governmental priorities, could evolve. State coordination that mirrors shared governance principles is imperative for balanced support in both stable and unstable conditions.


K-12 education and Medicaid funding has receive continuous support that rivals that of higher education, and understanding this process on the part of college leaders, they may be increasingly inclined to set measures for success based on their needs, giving less consideration about other entities such as their respective legislature or state residents. As this may be a legitimate concern for making good public policy, institutional leaders expressed in this study a desire to contribute to a balanced funding process that contributes to the success of their institution and enhances their ability to serve students within their missions and goals.


Higher education is viewed differently by stakeholders, and whether higher education is supported adequately and with accountability are important parts of an on-going conversation that administrators have with legislators. Policymakers and political actors should find common ground about the best practices for addressing higher education funding in their respective state. Also, higher education institutions and state legislators, at times, have opposing or different priorities. This is largely because both have similar and dissimilar constituents, And as their priorities can be antithetical, the overall message from institutional leaders in the study was that there is a need for balanced financial support for public higher education and accountability of such from state government. For some of the states, this was in the form of performance funding. For others, it was equitable treatment regardless of perceptions about their institutional status and ability to raise substantial private gifts. As evidence has suggested that in real dollars, state funding for higher education has declined despite being a public good.


The ability to attach policy proposals that address the problem has become an obvious obstacle for institutional leaders, state policymakers, and additional stakeholders. The inability to create specialized policy proposals that better address state finance issues for higher education continues to be a point of discussion and recognized problem for stakeholders. The lack of policy proposals that alleviate issues surrounding state funding reductions, means plausible unfortunate financial burdens for many students’ and their families, and contributes to mounting pressures on college leaders and policymakers. Little has been done to improve state budgets for higher education and because of so, public institutions continue to rely on aggressive fundraising efforts to fulfill their mission and meet their goals. Moving forward with their mission and goals, universities plan extensively for a capital campaign. Just as extensive should be their suggestions for ways to improve state fiscal support for public higher education. Suggestive policy and models that could alleviate state funding pressures should be developed by both college leaders and state policymakers. Fundraising efforts are not simply arm-chair activities for the university but instead a considerable alternative revenue stream used for functional support. However, policy implications behind this level of dependency suggest that as state support continues to level off, and private fundraising activities receive growing emphasis, public institutions could begin to serve their own interests more than the interests of students and their families.




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Table 5.


State Funding for Capital Campaign Institutions (in thousands of dollars)


Fiscal Year (FY)                               Campaign Institution                            Allocations % +/-

FY 04




Indiana University




FY 05






FY 07



FY 08



FY 09



FY 10




Ohio State University


FY 08



FY 09



FY 10



FY 11



FY 12



FY 13



FY 14






FY 03

University of Maryland






FY 04



FY 05






FY 07



FY 08



FY 09








FY 05




University of Utah












FY 07



FY 08



FY 09



FY 10



FY 11





University of California-Berkeley


FY 05






FY 07



FY 08



FY 09



FY 10



FY 11



Note: Fiscal years underlined are campaign public announcement years.


Table 6.


State Funding for Matched Institutions (in thousands of dollars)


Fiscal Year (FY)                                Matched Institution                            Appropriations % +/-





FY 04


University of Massachusetts







FY 05






FY 07



FY 08



FY 09



FY 10





University of Wisconsin-Madison


FY 08



FY 09



FY 10



Y 11



FY 12



FY 13



FY 14





Louisiana State University


FY 03



FY 04



FY 05






FY 07



FY 08



FY 09







FY 05

University of Nevada









FY 07



FY 08



FY 09



FY 10



FY 11



University of Arizona


FY 05






FY 07



FY 08



FY 09



FY 10



FY 11






Table 7.


Independent T-Tests Results



Institution-Pre/Post Announcement   Mean


Standard Deviation




p value

Campaign-Pre                                    2.5




Matched-Pre                                       5.6




Campaign-Post                                  -.12




Matched-Post                                  -1.34







Table 8.




Paired T-Test Results




Institution-All Years              Mean

Standard Deviation


p value

Campaign                               4.10




Matched                                 -.726





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