Why university foundations struggle to raise funds


The law on the freedoms and responsibilities of universities (LRU) of 10 August 2007 provided for the autonomy of universities at 1 st  January 2013. They would then have a freedom in research funding from private donors through foundations. Inspired by the successful North American model, these foundations encouraged alumni to donate to the universities they attended. By extension, the tax cuts, to which the funds were entitled, should also encourage generous patrons to contribute.

What about six years later? It is clear that the fundraising has not had the expected success if one refers to the financial balance of the universities. In its annual report of 2018, the Court of Auditors pointed out that fifteen of them were in serious financial difficulties. As they get worse, they force at least three not to recruit them again. This is the case of the University of Lille, which has a deficit of 600,000 euros.

Results to be compared with a study of the Conference of Grandes écoles on the fundraising , published in 2017, and revealing that in the 30 institutions, mainly large schools, which had managed to raise funds, the 50 million euros harvested accounted for less than 4% of their total budget (and just over 13% of the public subsidy received). In this group, HEC occupies the first place on the podium, collecting nearly 60 million euros alone, while the University Paris-Descartes failed to arouse the generosity of its elders.

Another observation: donations to university foundations are made more by private legal entities than by individuals; businesses abound more generously than the old ones. Since donations to foundations are akin to patronage, they are subject to tax reductions of 60% of the amounts paid. In a way, French taxation is more incentive for companies than for individuals.

Maintain links

That said, the difficulties that foundations face are not just about the tax system. We must see that we are also facing two immeasurable university models : the North American model and the French model.

In the United States , it is not uncommon to see elders , once they have made a fortune, pay generous bounties to the institution they graduated, as a token of thanks or loyalty. In this model, perfectly embodied by Harvard, the university is like a closed club that chooses the “happy few”who will have the privilege of studying there. The university itself is organized in separate “colleges”, also recruiting their members, where friendships and strong fraternity ties are forged. In order to allow future generations to have the same opportunities as they at their age, the elderswill not hesitate to be generous.

In a very different way, the French university is based on the principle of equal access, even if Parcoursup does a sprain. The Article D612-9 of the regulatory part of the Education Code provides that “applicants for a first enrollment in the first year of higher education graduates or permitted to enroll in another title, have free choice of their university, according to the training they wish to acquire “. In such a context, it is hardly possible to create the same attachment as across the Atlantic.

For alumni to finance the university, they must still have links with it. So comes the question of how institutions maintain this flame. This can result in a very active alumni network regularly organizing events with and for them, as do Sciences Po Alumni or Dauphine Alumni. At a minimum, the institution where the former student has studied can regularly send a physical or electronic newsletter presenting the activities of the moment.

However, it seems that building links with the ancients is not anchored in the culture of French universities. This can be understood, especially since these graduates are very numerous and difficult to locate. Failing to be able to fan the flame, French universities are condemned to structurally hard to solicit their elders whom they fail to offer much in exchange.

Again, US universities and colleges have a head start, as they present their network of alumni as an element of attractiveness to students who join a club.

Status of the elders

In the United States where the model comes from , the alumni associations are very influential, functioning as fraternities as an extension of the “college” attended. Meetings, clubs based on common interests or trips are regularly organized by and for alumni. They are also systematically invited to major events marking the life of the university. Even 30 years after graduating, alumni can still feel part of this club that admitted them into it someday.

The fate of graduates of major American universities and French universities is very different. In the United States, social consensus assumes that everyone can make a fortune. It is obvious that not all graduates of major American universities will become billionaires. On the other hand, it is not uncommon for many of them to have jobs that allow them to be in the top percentile of the population in terms of income.

In France, where the social consensus is not based on wealth and where it is less easy to build by work alone, the number of potential donors is mechanically lower. It follows from this that the probability that the elders of a French university are financially able to behave as generous patrons is much lower than in the United States.

Another profound difference lies in the extension of the Protestant ethic: it is spontaneous that wealthy Americans give back some of what they have received. This is thanks for what they have received and in support of those who did not have the same luck as them. This is particularly the meaning of philanthropic works and actions, which include important donations to the university of which one is a graduate. Very differently in France, it seems that the wealthy are a continuation of a Francis er , generous patron of the arts and culture than education.

Author Bio: Vassili Joannides from Lautour is Professor, Director of the Doctoral Program (DBA France), Collection Director (Palgrave Macmillan) at Grenoble School of Management (GEM)