Commonfund Convenes: Institutionally-Related Foundations in Practice

I'll start. My name is Shameer Karim. I've been in the asset management industry for over twenty years. Been with Commonfund for about four years. I'm on the client engagement team and I work with our investors in the Mid Atlantic region. Today, thank you for joining us for this IRF Convenes webinar. We're going to have a panel discussion for forty five minutes, and then leave fifteen minutes for Q and A. So if you have any questions, please put them into the chat and we'll answer as many as we can. I'm joined today by three panelists, David Silver, Lucas Koehler, and Tom Heck, to talk about IRFs specifically, and as practitioners, what they've noticed within their organizations and how they can share that knowledge across the IRF community. So let's start with quick introductions. Maybe, David, you could start first. Sure. So Dave Silver. I've been in higher ed for probably since the mid nineties. That was my first job in higher ed. I applied for a job at the controller's office at Johns Hopkins University, and a whole new world opened up for me. And ever since then, I've been bouncing around between different higher ed institutions and in different roles, some finance, some development, some a combination of both. So I just finished, I finished my previous stint at the University of Maryland College Park Foundation, and then I arrived here at the Medical College of Virginia Foundation which is part of Virginia Commonwealth University in 2018 and it's been a wild ride ever since. Maybe we'll move on to Lucas. Thanks, Shameer. I'm Lucas Kahler. I'm the CFO at the Foundation for City College, the IRF supporting the City College of New York, which is part of the City University system here in New York. Background has been in public finance and in education and a school teacher and then went back to school and worked with the City Office of Management and Budget and then in the department of education through the pre k rollout, but have been here at here at the Foundation for City College for the last four and a half years or so. We have a warm place for school teachers here at Commonfund. Our president and CEO Tim Yates, was a school teacher at Fordham Prep. And Tom. Good afternoon. Tom Heck, chief investment officer Emeritus from Ball State University Foundation, where I was at for thirty two years. As CIO and CFO treasurer kind of roles, I continue to serve on a couple of not for profit investment committees. I do a lot of consulting on the side and have worked with our local CFA society. I do miss CFA. I know the three year commitment is pretty tough. Yeah. Three or more. Yeah. So let's dive into it. So IRFs are in a unique position, as typically they're separate entities from the institutions they support, with independent staff, leadership, and investment committees. So how does the board manage the balance between the institution's needs and the donor intent and or intergenerational equity? And I should say the board and staff. So Lucas, let's start with you. You've been at City College Foundation for four years. It'd be great to hear how you're managing this balance and how it was done before you joined and how it's done today. Yeah, sure. So the current organization, the Foundation for City College actually formed via merger between two predecessor foundations, the City College Fund and the twenty first Century Foundation. Lots of backstory and history there. One of them functioned as a much more independent entity, the other more in the vein that we are now sort of administratively integrated. And so that brought with it kind of its own set of well differing practice and I think part and then my position was actually created so the two were merged they were managed under the college business office and my position was created to still within the college infrastructure but manage the finances of the of the foundation distinctly from the college business office. And one of the things, mean to get to the question about the balance between donor intention and intergenerational equity and the needs of the institution, one of the components of practice that we'd inherited without going too far into the details, essentially allocated the returns on the returns from the endowments to unrestricted funds. And we looked at that and sort of said, I mean, I said, wait a minute, this is gonna result in these endowments ultimately losing their purchasing power in the face of inflation over the long term. Now, there was a real tension because returning those funds to unrestricted had a clear set of benefits and sort of imagine why that would have been an important point for college leadership and for foundation leadership. And so this was really a matter of, I mean, was largely education of just sort of talking to, going a layer deeper with our investment and finance committees about, okay, how is this actually working? How are we doing the accounting here and what implications does that have for the long term? And then relatedly, bringing those same issues to leadership and being upfront about what the implication would be of making a change, but also really making the case for why ultimately a shift was needed. And then bringing everybody together and having those series of conversations, that series of conversations with everybody to kind of talk through the various pieces. And we did ultimately make a shift, which in my view is the right and correct one and will mean set those endowments up to serve, to meet the goal of intergenerational equity and continue to serve the institution. And we've adapted and found other ways to generate those unrestricted resources that we had kind of been depending on coming from that area. That's great. Thanks for sharing that. Think everybody in the IRF community and just in higher ed generally unrestricted versus restricted is tough. David, I'd love to hear your thoughts as someone who's been at different IRS throughout your career. And then if it makes sense, you can highlight some lessons learned early in your career at a private university. Yeah, I started my career at a very large private university, so almost like whale sized institution. And I didn't really know anything about IRFs or how they worked until I applied for my next job and I went to a small public liberal arts four year institution. They had a small side foundation. So, that was kind of an awakening about the difference between, you know, if you have everything in house as a private university versus now you've separated a lot of these functions and the investment function and you modify and you need a whole infrastructure to manage separate from the regular institution. So, that I had a very high, fast learning curve to get used to that. I think there's advantages to both models, but I think there's actually, my experience is there's a little bit more risk in the institutional related foundation model because you've got an independent board and an independent investment committee. So, instead of at Johns Hopkins, you had a professional investment office, you know, fully staffed and a lot of the functions that an institutionally related foundation does are already embedded within the institution's administrative structure. And that gives you some safety but it also introduces some, I'll just call it some slowness, you know, just because you get caught up in the bureaucracy of a large institution. The nice thing about institutionally related foundations is they can make decisions a little bit quicker, little bit closer to the speed of business, especially when you're talking about investments or real estate. I mean, those are kind of the two biggies that I've found where having an IRF is really advantageous for a public college. Great. Tom, you must have some interesting perspectives as you've led an IRF, been on the board and consulted for them. So kind of three prongs there, different hats, maybe we can go through that. Well, thinking about the communication issue, and particularly the role of the Foundation over time, often the Foundation is the one responsible for enforcing the terms of the donor, enforcing the desire of the donor. We went through, you know, been through extensively crafting a good gift agreement or endowment agreement that would serve as a kind of a gift contract with the donor, but ultimately, one of the other two parts of that, if you're going to accept the gift, then you need to be willing to abide by the terms of the gift forever, potentially. We had a donor, you may have seen it, it may have been the situation as well, donor wanted to endow a full ride scholarship in perpetuity. Well, we couldn't guarantee that, because tuition increases, changes in the University, so there would be terms that we would either refuse to accept or negotiate away, or try to negotiate something in between. And the other part of that is educating and working with the advancement staff, so if they're talking to a donor, they have some sense of what can be done and what should not be done. Yeah. Yeah, so that you're kind of walking that tightrope, right, of making sure that when you get those dollars in and facilitate the university's needs. Right. But not breaking the donor agreement. And this really kind of where it starts is everybody needs to know to the extent they can of what the university's highest strategic needs are and try to communicate those and engage donors in those highest needs to the extent possible. Great. So let's talk about instances that aren't ideal. So I'm sure there's instances where lack of communication has hindered a progress toward a goal. Instead of focusing on the negative, maybe we focus on the solutions or the processes that you've implemented after to optimize the foundation's resources and better support the institution and its constituents. David, maybe if you could quickly highlight what processes work to resolve consistent communication issues. I know you and I had talked about that strategic vision vision and the foundation being part of that. Maybe you can highlight that. Echoes what Tom just said. Yeah. It actually dovetails quite a bit off of what Tom said. What actually comes to mind right now is the gift agreement process and working with the development officers. They're in front of the donor and they're trying to make the donor feel happy and comfortable about writing that check or setting up that new endowment. Sometimes, the the language that ends up in a draft, the gift agreement may cause headaches or issues with the finance office or administratively or with financial aid if it's a scholarship. So, when I first got here, the communications between our office and the development office weren't the greatest, but I think we've come a long, long way, and we have a very structured process now to to really make sure that everybody who needs to see that agreement, look at the language, make sure that there's no onerous condition that the donor's asking to be put into the agreement that would cause headaches down the road. And I think we've gotten way better. And it's really it is. It's communicate. It's just keeping those communication channels open, building good relationships with your colleagues. You know, we're a completely independent foundation. So we're not even employees of the university. Yet, we have to work hand in hand with our colleagues who are campus employees and making sure that that relationship is solid and we have open lines of communication is really, really important. Lucas, you and I had a chat how there will always be reactive issues, right? So nothing is always within the model. But a lot of times the root cause for most of the issues are kind of one in the same. So maybe you could double click on that. Yeah. And just, you know, what David just said really resonates. I'll go in. I could say more along the same lines of coordination between advancement and finance. I think there's a lot there. I'll shift a little bit and talk about our coordination with the campus stakeholders directly. So we're independent but administratively integrated into the college. And I think also going back to David's point about the capacity in a public institution, the capacity for the foundation to move a little bit more quickly and nimbly than the state procurement apparatus or some of the state processes allow for. But that means we kind of have a fair bit of discretion over our own business processes, our own thresholds and rules and ways of doing things. And it's just really important to have that communication with the departments and divisions who are going to be the ones needing to turn around and actually deliver on whatever is contemplated in those gift agreements and in the purpose that the money was given for. And so we've made a big effort to put together a user facing SOP to really guide. And to your there are always going to be new cases, things like we either hadn't considered or people looking to do something new or people finding, well, wait, you didn't quite specify what happens here. Them trying to get creative to work around. And so to that point, to that end, there is a need to be reactive and sort of say, Okay, well, here's how we're going to work on this situation and also develop guidance and policy going forward. I think for our situation also having been formed out of the merger, there was a real opportunity in some blank space to fill in some of that policy and procedure. Yeah. And then also to use those as opportunities to build trust and communication such that even where there's an area where there isn't policy or we haven't done it before that it's sort of in the DNA of partners on both sides and on the foundation side and on the academic side to reach out and say, hey, we're starting this new program. We're going to to need to hire a big consultant and hire a few people and buy this big piece of equipment. How should we set this up? Kind of setting everybody up for success. And just to that end, found to reiterate to folks that we're here to help make things work. Think maybe especially in the public context, the folks on the program or the academic side can have the perception of finance and operations folks as the ones whose duty it is to guard the procurement policy and ensure everything is compliant more so than look for ways to actually make the programs work. And I think it's important for us, for me anyway, to keep a focus there and to keep that as a point of communication. Yeah, it's interesting because when you and I spoke and David and I spoke, you kind of said very similar things that it works best when you're partners instead of just the blank check, I guess. When you're involved, you kind of find out solutions or figure out solutions to implement it in the most strategic and best way in how you can do it. Tom, it would be great to put your consultant hat on here. What are some things that you work with your clients to implement to help them achieve their goals? Very similar to what David and Lucas have talked about, where I have seen it work best, where the processes flowed together and been a role partnership, I've seen where the University found, excuse me, the University, probably led by the University President, has developed a strategic plan for the University. That's going to include some goals, fundraising objectives, financial other objectives of different kinds. The Foundation can then partner along with that, pick up points that the Foundation and the fundraising end, however that's organized, are going to be responsible for, that helps drive everything in one direction for that cycle. It creates main asks for the fundraisers, it helps focus the donors getting excited around achieving objectives, really pulls things together. Kind of like when I used to take three young kids to the grocery store, as long as I was moving down the aisle, we were okay. If I stopped, then everything went haywire. To that extent, I've seen a cycle where, you know, in the strategic plan cycle, the University President suddenly retired, interim stepped in, interims don't really do strategic plans, because you don't want to handicap or handcuff the next permanent president. So it went through a cycle where there was no strategic plan to pull everything together, and the process suffered as a result. So I've seen that work well, and I've seen it work not so well. So that strategic plan is that a combination of, I guess, today's dollars and future dollars? So what the immediate need is? So like annual type of need plus future and long term projects, and then is it kind of set and then the foundation just follows on, or is the foundation part of that, I guess? Well, hopefully it's part of the conversation, but I think there's a whole development of a business model around, particularly a capital campaign, because some of the objectives may be brick and mortar kind of projects. And for the Foundation, if the Foundation is helping cover the cost of fundraising and cover the cost of the campaign, that money is going to flow right through. So it's going to be funded by, well essentially those asks are going be funded by whatever gift fees you put on this gift. Endowment giving, well, that's kind of tough for the University, because you're spending money upfront to raise endowment gifts, but the benefits are going to stretch way into the perpetual future. So, it's important to build that endowment base, but it doesn't provide a lot of immediate benefit to the University or cover the immediate you know, fundraising costs. And if you're talking about 25¢ to raise the dollar, which is pretty good deal, but if that dollar is restricted, where do you get the 25¢ from? So there's a pretty interesting process of developing a business model around the capital campaign, if it comes out of a good strategic plan. Thanks. I think it's a lot to think about, so thinking about IRFs that someone famously said here to me when I first joined, once you know one IRF, guess what, you know, one IRF, right? So they're all very different in terms of what that strategic plan is, but that fundraising and that unrestricted verse restricted to your point that raising 25¢ on the dollar, the cost, where does that cost come from? Unless you have unrestricted. I mean, to that point, did an analysis one time for an institution of, if they added a development officer, how long would it take for that Officer to pay for themselves? Through fees on the gifts or you know whatever kind of business plan they had. And when I did when I ran the analysis and ran it by the Director of Development, it was eighteen years before that additional person paid for themselves operationally. It's not a trivial decision. Yep. It sounds like one of my kids, how long I'll be paying for them. Probably longer, to be honest. So, I guess the next question is around the model. So, at the institutions you've worked with or at, are advancement teams part of the university or the foundation? What are the pros and cons of each? I'm going to start with David here because he has a wonderful representation that he shared with us. So I'm going to share that on screen so everybody can see it. Yeah, so as you said, if you've seen one foundation, you've seen one foundation. And this is an attempt to really, you know, lame attempt to try to figure out three kind of main types or models for the foundations that... And this is a lot of personal experience. These are the types of organizations I've either worked with or that I know somebody worked at one of these models, and I was very familiar with how they worked. Two other things I also wanna mention that are part of this model conversation. Benchmarking, board members love benchmarks, and we always struggle because they go, well, just look to your peer organization. Well, if we look at our peer universities that have foundations about our size, they're organized in 15 different ways. So trying to do metrics on staff size, annual budget, you know, how you run your investment program, it's almost, you know, it's just a bridge too far sometimes. So we get lucky, we find two or three other places that are somewhat comparable, but even then, it's not a perfect model. But I I... Every three or four years, the... As you get new fresh board members in there, always asking for new benchmarking. So so I built these three kind of illustrations. So this is what I would call the embedded IRF model where the the found... The foundation is basically just a part of the development office. The the president of the foundation is the vice president of the university's development office. The governing, there is a an independent governing board for the foundation but they're interacting with employees of the development office. They're not, there's nobody who's really called foundation employee. They're all and when I was at Saint Mary's College of Maryland, which was a small four year liberal arts public college with an IRF, it was me and a gift processor with the whole staff of the foundation, and we reported to the vice president for development. And that was my first kind of plunge into IRFs. Then when I got to the University of Maryland, it was a bigger staff, bigger endowment, and we were still just part of... We were just a a segment of the development office, and we reported up through the vice president for development who was also the president of the institutionally related foundation. So it's an interesting model. There's some advantages to this in that financially, the state helps pick up a part of the cost of the staff. Not all of it, but the foundation is expected to kick some money back, at least in the models I worked under, the foundation kicks some money back to the state to reimburse the state for the cost of the staff and their fringe benefits and their, you know, all their... All the the medical plans and retirement and all that good stuff. The foundations also were provided with office space, copiers, that kind of... All the office equipment to help support the operations of the foundation. And we were just part of the development team. So our colleagues in the next office who were actually doing the fundraising were our colleagues. There was no there was no kind of artificial firewall or organizational wall between us and and the development folks. The danger I see in this model and and it's it's probably in a few states that there have been court cases where you, you get FOIA requests for information, and I know in some states, the people requesting the information from the foundation and the fundraising information have prevailed in court and and pierced the wall of the foundation's corporate independence. In other states, I know I I was actually just pulling up the, the case that happened back in 2017 here for George Mason University, where it went all the way up to the Supreme Court and the George Mason University Foundation prevailed and prevented the FOIA request from being honored by the, the foundation. They proved to the Supreme Court that even though there's a lot of commingling organizationally between the two entities that the foundation is its own thing and and that it didn't it didn't qualify or have to comply with Virginia Freedom of Information Act stuff. So, and then go to the next one. So, here you have kind of a hybrid where you actually do have a separate foundation staffed and organized somewhat separate from the development office. It has its own president. Usually it has it has a CEO and president and then a small staff that do the day to day administration. But a lot of the stuff actually, usually in these hybrid models, a lot of the the the work still falls on the development office. So the development office is still doing fundraising, alumni relations and events, and they're all coordinate. But there's there's coordination between these two groups of people, maybe not as heavy as in the previous model, but it's still not quite as what I would call a truly independent foundation model. And then you get to the the next one. And this is where I would say we're pretty close here at the Medical College of Virginia Foundation. This is pretty close to what we are. We're pretty independent. We we are not state employees. We have an independent president, CEO, an independent board. We answer to our board. We do not answer to the university's administration. There's a lot of we have and there's some overlap as far as personnel. We have we have a communications group that does communications and marketing. We have a a development team that does they coordinate with the development officers who are university employees. So there's a lot of cross collaboration, but we're still organizationally very, very independent. And I think that the independence gives us a lot of advantages as far as the ability. Again, we can invest the money in the endowment the way our board really feels comfortable doing it. We're not subject to a state oversight saying, no, you must put your endowment in this investment or you you might have your here. We've set up our own investment office. You must put your investment, your endowment here. So, I think that gives us a lot of power and flexibility and again, with real estate, if you have to buy real estate or lease real estate or buy a piece of land, you can do it much faster and much easier with an independent foundation than you can with something that's more embedded within the university structure. Those are my kind of big points on this. It's just, but, you know, like you said, if you've seen one foundation, you've seen one foundation, there's a whole spectrum. There's a little bit of everything if depending on which institution you're looking at. So in these different scenarios, how is the staff... So in this scenario where it's embedded, the staff is really paid for by the university completely. This I imagine is some sort of like transfer pricing percentage. A, you're 50% here, 50% there. Here, you're completely independent. Yeah. So operationally in the first model, you know, you hate to say it, but the the foundation in the the first model, you're basically at the behest of the institution's president and vice president for development. I mean, the foundation is going to move with and in sync with whatever their goals and wishes are. It's not to say we in our independence don't want. We we actually try to align and stay parallel with the strategic vision of the university. It's it's in our best interest to align with them as much as possible. But I would say here, this this can create some operational issues sometimes, and maybe competing or opposing, you know, initiatives or strategy. Your foundation board may want to go one direction but the vice president for development and the president of the institution may want to go another direction. So, that can sometimes I've see actually seen that happen where the board wanted to go left and the president of the university want to go right And they had to work that one out. Is there a correlation between as you go to the more autonomous model, higher admin fees? Or it does it does that not correlate? I would just think as you're more independent, you would need to to pay that staff and etcetera. So when I was under the the first model where we were just part of the development office, the foundation created a budget that was bay... It was mostly based on headcount because 70, 80% of your cost to run a foundation typically is personnel. Yep. I would say the cost between that first model and the model I'm running now, which is the independent model, are probably comparable just to operate the foundation. There were some nice benefits of being part of the university and that, like, you could use one of their buildings for your office. You didn't have to lease space or buy a building, that kind thing. But a lot of foundations do end up buying a building because, you know, long term costs are better if you own and a lot of them do the lease back to the university, so you can make some money on your headquarters building. Yeah. If I might add, think the fee question is more correlated to size of the foundation in a lot of ways, because the $500,000,000 IRF just has a greater base in, you know, a greater economics of scale for their endowment fees per staff than a $50,000,000 IRF. So I did a kind of informal survey of 50 IRFs a number of years ago, and just to kind of compare size and business model and organizational structure. And that seemed to be one of the things that came out of that. Yep. It's a good plug for the NACUBO commonfund study. We actually are asking about admin fee and you should be able to see that by size. Great. Yeah. I think that's absolutely true that the size of your endowment in many ways is going to drive the size of your budget and your staffing. Tom, during one of our prep calls, you mentioned that you went through a model transition. It'd be great to hear the why and the how it played out. I did. So, the institution I was working with started out with the hybrid model, where the foundation is a bank, the fundraisers work for the University, The Foundation was able to generate some unrestricted dollars to help pay the cost of fundraising, but most of the fundraising expense was on the University budget side. So the Foundation, independent investment policies, the board was very involved in doing things policy and vision wise, but very partnered with the university because their only client. So, you've only got one client, you better make the client happy. Went through the transition to the embedded model, where the fundraisers now worked for the Foundation, but the Foundation President became the Vice President for Advancement working for the President the University. And in a way, because the cost of fundraising went to the Foundation budget, then the Foundation began to take the risk of that of that side of the business model, and the whole philanthropic risk if we, you know, we're paying a lot of salary, that many more salaries, are we raising money, are we earning fees to pay those or not? There were still shared expenses with the University. But part of it was from the leadership standpoint, now position that had been solely the Foundation President serving the University as a client, position reported to the University President on a personnel basis. So in some ways the University, the Foundation Board became somewhat less relevant, because now the University President had the hiring fire over the Foundation President, not the Foundation Board. So there was a change in responsibility, and that kind of trickled through down even into the staff level, in how that felt. There wasn't the same kind of independence. It also, like David said, kind of brought that foundation process into the bureaucracy of the university and made it a little less entrepreneurial, I would say, or flexible. Yeah, somebody told me one time, foundation can move at the speed of business when your institution can't. That's right. And then Lucas, what current model do you use and could you imagine one being a little bit more effective? So we're definitely on an embedded foundation. I thought that, David, your slides and conceptualization were just so helpful describing the spectrum. And I guess, mean, I to the point of if you've seen one IRF, you've seen one IRF. The university governing board is the city university. And that covers all of the campuses of the city university. But our foundation is campus specific. So City College of New York is just one of the senior college campuses of the city university. And so that governing board is much more attuned to city college level matters than the larger institutional board. So in an interesting way, they're actually in some ways more engaged at the institutional level, not just the foundation level than defining the institution as the city college. So strengths wise, I'd also say that we are highly operationally integrated. And so work in some ways, parallel, but it really is a complement to the college's budget and operations offices in that we can provide support for the academic units to do things either at a speed or with a flexibility to accomplish them that wouldn't otherwise be possible. And we work pretty closely to them. In other words, we mostly don't just send the institution a check. We work directly with the vendors and even students that the divisions are. And so that flexibility and speed I would describe as a real advantage. We also currently have the point about leadership alignment being a potential risk in that embedded model is real. Our college president serves as an ex officio member of the board And both through his efforts and the SVP for advancement, my boss, the executive director of our foundation, through their efforts, they've achieved a really high level of alignment between the board. But I don't take that for granted. I mean, that's a result of their particular work and the board's participation. And so there's a risk there in a future, a potential future. None of us are in our jobs forever. At some point, there'll be a transition. And there may be some risks that come up there. So I think the space that I'd identify as well, there are some ambiguities. I mean, what does it mean to be a foundation employee? Because we do have people technically, payroll doesn't run through our foundation. It's through a separate five zero one(three) even still. But whose employees are they? And whose personnel policies do they abide by? So there's some gray area that in some places provides us a degree of flexibility. But in other cases, is a potential either a risk or a vulnerability if something happens. Okay, how we work in this case? It's actually not that clear. We've fortunately not had any of those kind of critical forcing mechanisms to call on that, to call the question on any of those risks. Knocking on wood as I say that. But they're there. And so I wouldn't say that there's another model that could be more effective. I'd just say that we're clear eyed about the trade offs inherent in the model that we have currently. Know, a point of light in, regardless of the model, I think it's really important to have a memorandum of understanding between the University and the foundation so that to the extent possible, the roles and the relationship are spelled out on paper so that as leadership changes, you've got something to rely on for the long term. I used to be a consultant many moons ago, but we'd always do that gap analysis kind of very similar. Like what are our risks if and you document it, right? And then you kind of try to put process behind it, which we all know you can't always put process, but, you at least know what those risks are and then you kind of identify them and see if you can, you know, tease those out. So that memorandum of understanding makes a lot of sense to me. So we do have some questions. So I could dive into those. So could you provide some examples of how staff board investment committees work with the advancement teams in terms of those goals and initiatives? Like, are you working part and parcel with like helping them assess the performance of the funds and the foundations versus your peers? David, you kind of touched on that, like, who are our peers and how do you define that? So what are other metrics? I actually worked with an IRF who actually wouldn't spend for the first five years on a new endowed gift. Right? So they wouldn't be underwater. And they explain that to the donor and they explain the compounding effect and then that they would always be able, but then after that first five years, instead of spending the first, you know, call it four or 5%, they would end up spending six. Right. So kind of making up for it by not spending in the beginning. Yeah. So I think part of part of what the question was about, how does the group work together and coordinate? One example that pops to mind quickly because it's current here, new initiatives or new strategic priorities or a new building can all of a sudden up and and say, hey, wait a minute. We have a new fundraising priority. And the first question is always, well, how much money at the foundation do we have for that priority right now? So that's sort of an internal kind of analysis we do with the development office and say, okay, all right, the new project is, we need a new hospital building for the health campus. What do we have currently that supports, what funds at the foundation are supporting capital projects and can we use for that? And then that helps the development staff decide, all right, well, we don't, we're not putting enough emphasis on that particular type of fundraising. So, let's, let's figure out how do we allocate development office staff and start targeting donors that would be interested in that type of, of donation. So I think that's, and that's actually happening right now. We're doing, we're in the middle of doing something like that. But that's how we really coordinate with. And then also with the business offices, because the business offices will come to us and say, hey, we don't have any state funding for, you know, name the the issue that they they need. And they go help us find. Do you have anything at the foundation that could help us fill that gap or that void? And that's where we can come in working with the campus business offices and our finance team can come in and help figure out, hey, we think we've got a fund here that hasn't been used in a while. It might, you know, there's no, the donor restriction or the donor purpose kind of matches with what you need. And it hasn't been touched in three years. So why don't we use that fund? Tom, Lucas, wanna jump in on those, how you helped the advancement teams in terms to get there to their goals and initiatives? When I started at Ball State, the foundation office was off campus, away from the fundraising staff. After a few years, built an alumni center that brought all those offices together. That made a big difference, because now we saw people around the coffee machine or hallways or whatever, and you know as a finance person I would talk to some fundraisers, what information do you need? What can I help you with? Can I help model anything out for you that would help you in a pitch? Or they might come to me and say, hey, how would this work? So just bringing people together for that discussion helped a lot, professionally and personally. I would really underscore that point, Tom. Mean, we work not quite the same, not a new building, but work next The finance team and the development team work in the same spaces. And one of the products of that merger of predecessor foundations was some inconsistent record keeping practices. So in the process of identifying old funds, figuring out what they're for, connecting with the department that would be the front line steward for spending them, there's sort of no substitute for being able to walk over to somebody's office and say, hey, we don't have an agreement for this one. But we have contemporaneous communication between here's how we're thinking. Oh, yeah, that looks great. Okay, so now the folks on the finance team reviewing the expense request know write off that, Okay, this is going to be for this type of student support for this type of program and builds a real collaboration. Nothing replaces water cooler osmosis. That's right. Amen to that. Yeah, no, I absolutely agree. Proximity to your colleagues is super important. Let's go on to the next question. And I think this is probably one of the hardest questions that you'll get is, do you have any strategies for raising unrestricted dollars? Yeah, that's a good one. Because that's a hot topic here right now. So, we went through, when I got here in 2018, there was some, there was a actually a bond issue for a building that had been built back in the early two thousands and we were getting toward the end of the the the life cycle of the bond and we had to start doing some cleanup and reconciliation. And low and behold, we discovered some unrestricted fund balance in that cleanup that had been sitting around to the tune of about $20,000,000 So, yeah. Well, yeah. So, out of nowhere, you know, not out of nowhere. It it was there all the time. It just got buried in some some between three different finance systems over the years and lots of finance office turnover. This money just kind of just, you know, fell under the radar. We we dredged it up because we had to get this bond financing buttoned up and reconciled before we made the final bond payments. And you know, we thought it was great news. There were some people on camera. They're going, wait, you guys are hiding money or something. But but really though, the way we're we're structured now is we take our 1% administrative fee off of the endowments market value every year. That funds about 75% of the foundation's operations, which is mostly, again, personnel, salary, and fringe, and then our office space and some travel and things like that and and then of the development folks have events and the communications people have publication expenses. We try to budget very conservatively and what that does along with the market and our investments that have done pretty well over the last fifteen years. Generally, we're finishing every year with a pretty nice surplus. And what we've done is we've taken that surplus, which I I think over the last fifteen years, in any given year, it could be a 250,000 to almost 1,000,000 depending on what we've... You know, what we... What activities we have. We park that in an unrestricted reserve fund, which can then... Which is basically at our board's disposal to distribute the CAMV. And now the big argument on CAMV is who gets it? That's the... I think the hardest part is if you do generate unrestricted funds and you've got this, hey, we've got this thing we now call the excess reserve fund. Now the argument comes who gets it and how do you decide? And that's what our board is actually wrestling with right now. Did that exist during COVID? I mean, how did did your institution get through COVID using because a lot of institutions were scrambling for money after we're sending students home and trying to cover very unexpected situations. That's where we were blessed because we're supporting the health the health schools and the health system side of campus. We had tons of people that wanted to give us money during COVID. So we had the opposite problem of a lot of of institutions. People, in fact, we're still trying to figure out how to spend some of these small COVID funds that are left over and we can't, you know, we're trying to get the health system to figure out a way to spend it down. Wow. Yeah, we not, you know, I hate to say it, but we were actually kind of blessed during COVID because we are the health sub side of the campus. Yeah. David, if you could think of a way of replicating that finds 20,000,000 in the couch cushion strategy, I'd love to hear. Agree agree to do some bond debt service support for the university if they issue a public bond and then do a campaign, take that money, park it, and then hope for fifteen years of a bull market. Perfect. I was just going to say on this, I mean, compelling leadership at the institution level with a strong strategic plan and then work closely with the development so that that message is brought broadly and people understand what the institution is doing and can be sold on not a particular initiative within it, but broadly speaking, the direction of the campus. There's no secret to that formula, but I think there's also sort of no substitute for it to my mind. I've come to this question a couple of times, is when in trying to decide how to fund a fundraising campaign, specifically, I've had a couple of ideas that I don't know if they would ever work, if they've ever been done anywhere. But one would be, if you could, it would take a board member, somebody very committed to the institution, to make it, say, set up a million dollar endowment, that for the first ten years would be unrestricted, and then after ten years would go to scholarship or whatever they were going to do, but for ten years perhaps whatever endowment payout that would spin off would help fund the cost of the campaign to do other things. Similarly, I've wondered if you could use a charitable lead trust to do the same kind of thing. Get a donor to do a lead trust, use the money to help fund the campaign, money goes back at the end. I don't know if that would... If there were anything like that would work or not. So in that step first scenario, the only restriction would be the spend amount. Right? So they can only spend four or five or etcetera. Right. Like any other endowment. Yeah. But that could fund a position for, you know, a development staff position. Yeah. Yeah, so that was one of the questions here is beyond the traditional gift fee. Donors seem resistant to that gift or admin fee. Yeah, and the model you use, like the attacks, the gift on the front end, or do you just take a fee on the back end that that's less visible to the donor, unless they have an endowment account and they see when they get their statement that there was an administrative fee charged. I think there's pros and cons to both. I actually like it taking it off the back end, if you can. Here at our university, we do both a gift fee and we charge an administrative fee, so we're kind of double dipping. But the funding model for the university's development office really doesn't give us much choice. They need as many, I mean, the state's not really supporting fundraising activity. You gotta figure out how to pay for the fundraising. It's like my dad used to say, you gotta spend money to make money, kids. Do you have any different kind of fee structure for realized planned gifts? Because the business cycle on those are so long. Yeah, no, I think we pretty much take the standard percentage off the top. Now, of course, if there's a big gift that's going to come in and the donor says, I'm not paying that fee. There's usually some some secret backroom negotiation to get the fee reduced. They usually take a fee. It's just less. You know, if somebody says, I'll give you $10,000,000 but I'm not paying your normal fee. They usually find a way to make it happen. So we've got four minutes. So I'm going to ask this question relatively quickly. It's to expand on the benchmarking topic. So how do you identify sources of meaningful peer data? So how do you know who your peers are? What's valuable for your boards? So the question is, their boards want to benchmark everything, right? But what's really valuable to benchmark? Right? Yeah. For me, it's the biggest questions are always, are we staffed appropriately? Do we have too many staff or not enough? And is our fee is our fee on the endowment to our administrative fee appropriate? So when we answered that, I it was hard to find a foundation like ours that did the things because we have a communications department. Not many, I don't think we've ever found another IRF like ours that has its own communications team. And their job is to fill the gap for fundraising communication that the university's communication office doesn't have the resources to do. And then finance staff, that's the other one. Now that's the one I can... It's probably the easiest to benchmark across institutionally related foundations, especially when you look at the size of endowment they're managing. Are they doing investment in house or are they farming it out in an OCIO model? You can kind of gauge, you can have some comparability there. But a lot of what they're interested in, a lot of the board, they're just asking, are we right sized and is our fee appropriate? Think are the two biggest ones. And the hardest part again is, you know, once you've seen one foundation, you've seen one, how do you find another foundation that kind of looks like yours? Now, I know when we went to the AGB conference, some there was some a presentation that they did some good survey and presented some good survey data. So, I'm just constantly reaching out to different places like that to see if anybody's done any recent institutionally related foundation polling or benchmarking. The other one, the other question I get and this one I think is a little easier is returns. And there I mean I guess shameless plug for the commonfund sponsorship but the Nakubo commonfund survey of endowments really is a fantastic resource and has been around for a long time and carries weight. And those comparisons by size and by type, I mean, the returns are cut in those different ways. And so our board and investment committee have found those return comparisons really helpful. I think those areas about glad to hear that administrative fees are going to be included because that's certainly a question that we get. And yeah, the same questions that David raised. Are we right sized? Similar challenges in benchmarking those, I often try to just justify those internally to say, here, let's quantify our work by number of requests, number of transactions, those kind of things, and show obviously where we've made gains in efficiency, but use those to show at least over time how our staff size is appropriate. Yeah. And then the other one I always get is, you know, how much does it cost to raise a dollar? That's really hard for us because we have our own development team, but the university is really doing the main heavy lifting on development, and they're the ones with the most staff that are actually frontline fundraisers. So if somebody asks me, you know, well, how much did it cost to raise a dollar for the foundation? I'm like, well, not. There's not a real easy way to answer that one. At least So. If you can follow the same methodology over time, you can, you know, compare it one year to another. Yeah, but over end of the longer data you have, the better the better that kind of comparison is. Yeah. I remember talking back to investment returns, talking to one of our senior development officers one time and say, I asked, so when you talk to a donor about a major endowment gift, how often do endowment returns come up? And she said every time. Okay. And I think about when I, one time I was at a Nacoubou endowment management forum, and a university CIO said, we cannot afford to take any less risk than our peers. And I thought about that. You you usually think of risk as, okay, what our institution tolerate? But he was saying, no, we have to... Long time ago at Ball State, they did a study of Ball State Grids. Two thirds of Ball State Grids had an affiliation to another university. Spouse went somewhere else, kids went somewhere else, you know, got their minor degree somewhere else. So it's very competitive and that question of the investment returns, I want to set up the scholarship fund, institution do I do it at? So very significant. So we're at time. I just wanted to thank the three of you for your time today and sharing alongside the community here. Thanks for the shameless plug, Lucas, for the NCSC. The institute team is smiling back there. I did want to share that you have till October 27 to input your data for that early release data, which comes out in early November. So you'll get some of that data prior to the study being shared. And then you have if you miss that deadline, you have till the end of November approximately to populate your data. And I'll put in another plug for the institute. You guys all have a ton of great data. So if you're looking for comparison benchmarking, our friends at the institute are great. Yep. So there'll be a brief four question survey after the webinar. It would really help us if you guys could answer it just so we can create better programming for the community. Thank you very much.