Introduction 1. In striving for excellence in higher education, voluntary giving can make a significant difference. We are convinced that all higher education institutions have the potential to build a base of supporters and raise funds, focusing on their individual strengths. Some institutions have made good progress in this area over the last few years. However, there is much more that the higher education sector can achieve.

Principles 2. There are two key principles that informed our views on voluntary giving. Firstly, the role of voluntary giving is to support the development of the institution towards achieving excellence, not on maintenance or core funding. It is not a substitute for other sources of higher education funding, particularly public funding. Secondly, institutions have a responsibility to build the commitment of stakeholders to their future success and to solicit donations from those that can afford it. Higher education institutions benefit from having a charitable purpose and should, in turn, take full advantage of this in asking for financial support.

Giving in the United Kingdom (UK) and the United States of America (USA) 3. The success in fundraising of UK higher education institutions is often compared unfavourably with their counterparts in the USA. The difference in the amounts raised in the two countries can in part be explained by the differing cultures of giving. However, the difference can also be explained by the strong presence of a culture Increasing voluntary giving to higher education 5 of asking by US universities and its virtual absence in many UK higher education institutions. The key to increasing giving is for institutions to ask, in a professional and systematic manner, for donations. The evidence of the effectiveness of this approach can be found on both sides of the Atlantic. Many public US universities came to professional fundraising in the 1970s and 1980s and have made significant gains in the amounts raised. Leading UK institutions have adopted a professional approach more recently and there is much we can learn from the successes in the USA. 4. We may never match the absolute amounts donated in the USA. Similarly it is unrealistic to expect UK institutions to build endowments that rival those of private Ivy League universities. However, we can aim for UK higher education to model itself after public US universities and to match the share of individual donations that higher education takes in the USA. If we achieved this, even without increasing total giving, UK higher education would receive £600 million per year in donations from individuals, which is over £400 for each UK undergraduate. This would make a significant difference to the future development of higher education in this country.

Creating an asking institution 5. Creating a successful asking institution requires three key elements, all of which are within an institution’s control: strong institutional leadership; a committed and involved lay leadership; and a professional, well run fundraising office. 6. An institution’s leaders, at all levels, must devote time and resources to supporting the institution’s development (ie. fundraising) strategy. Presidents of public US universities can spend up to half their time on this activity, with the post of Provost leading the academic body. In the UK, Vice-Chancellors and Principals already have significant calls on their time and Chairs of Governing Bodies and Chancellors act in a voluntary capacity, which presents a challenge for institutions seeking to take this activity seriously. The higher education sector must review their current leadership arrangements if we are to achieve the gains seen in the USA. 7. Well regarded and influential lay people can make a significant difference in the effectiveness of alumni relations and fundraising. Other than having lay governors, which is often a requirement of statutes, institutions generally make poor use of their alumni and other supporters as volunteers. Current and potential donors should be involved in advising the institution’s alumni relations and fundraising operations, 6 Increasing voluntary giving to higher education encouraging their peer group to give and to apply to become part of the institution’s governance if their expertise and skills are appropriate. 8. The success of an institution’s fundraising rests on a well run development office which is staffed by trained professionals following best practice. The investment in such an office should produce a significant return, over time, with a steady state benchmark of every £100,000 spent producing between £600,000 and £1 million.

Incentivising voluntary giving 9. As charities, higher education institutions can take full advantage of the tax incentives for charitable giving. The current tax incentives for gifts from income are generous, although the system in place is complex. We believe that making the system for claiming tax relief clearer could increase gifts, especially from the small number of wealthy individuals that provide a disproportionate amount of donations. 10. The current tax relief rules prevent donors from deriving an income from, or retaining an interest in, gifts of assets or property to charities. With significant amounts of wealth tied-up in property, these rules are stopping the development of innovative schemes to encourage such gifts. In the USA such schemes, known as ‘planned giving vehicles’, are used to donate significant amounts to the higher education sector. They provide donors with tax relief and regular income in their lifetime whilst guaranteeing the institution capital on the death of donors. With widespread ownership of assets amongst alumni coming up to retirement, and a historically low number of offspring amongst which to leave this wealth, the time is right to develop such schemes in the UK. 11. The upfront investment required to establish professional fundraising offices, with a return being realised over the medium term, can act as a barrier to institutions devoting resources to this area. We believe there is a role for the Government to pump-prime this investment through a time limited matched funding scheme that supports building institutions’ capacity to fundraise effectively. If this is successful, the Government should consider whether a matched funding scheme for donations should follow.