Recently, I was with a client discussing their scholarship program – both, awarding scholarships to students as well as raising money for scholarships.

The University CFO told me that the University provides institutional financial support for students based on both merit (a blend of high school g.p.a. and standardized test scores) and financial need. Also known as “tuition discounts,” these are automatic scholarships given to students if they complete the FAFSA. This institution markets these automatic scholarships under the name of the “Wildcat Scholars Program,” and the total annual amount they spend on these scholarships is $48 million.

This means, of course, that if the total full price for tuition and fees for all of their students totaled $200 million, this institution would receive $152 million as payment. They would have “discounted” the $48 million difference.

This also means is that they can’t create an annual operating budget based on the total amount of tuition and fees they should have received (the $200 million), because they only have received $152 million. So, their expenses must be in alignment with the $152 million, not the $200 million.

Meanwhile, in talking with the Vice President for Advancement, they raise about $6 million each year in scholarship support from donors.

Guess with me how much of that $6 million raised each year for scholarships goes toward “paying back the University” for at least part of the $48 million Wildcat Scholars Program expense?

That’s right, you guessed correct: The answer is zero dollars raised for scholarships goes to support this significant annual scholarship expense for the University.

Instead, all $6 million is given to students above what the University has already given these students as part of the Wildcat Scholars Program. And, the student has to enter into a maze of applications and interviews to receive any type of additional scholarship help.

Here is the brief and selected list of institutional problems with this set-up. The full list is much longer:

The $6 million scholarship support raised each year may not be helping the University at all (or only indirectly). The advancement program is acting like a pass-through from donor to students in this arrangement. The $6 million scholarship support raised each year is not helping the University’s bottom line in any direct way. If even $1 million of the scholarship support raised each year could be utilized to support – or underwrite – the $48 million Wildcat Scholars Program, the University would now have $153 million to spend, instead of $152 million for any variety of purposes.
The inefficient use of funds is off the charts with this arrangement. Many of the students receiving the additional scholarship support beyond what they already receive from the Wildcat Scholars Program have the financial capacity and would pay the amount they owe without additional help. And, many students who actually need the additional scholarship support to attend may not be selected for the additional scholarship support.
The amount of additional work because of this arrangement for people in admissions, financial aid, the business office, and the advancement program is striking. In fact, there are full-time jobs focused solely on implementing the scholarship applications, awarding the scholarships, and applying scholarships dollars to student accounts. The more scholarship dollars that could be centralized through the Wildcat Scholars Program, the more streamlined (and successful) the recruitment of students and the awarding of needed financial support would be.

The primary issue with matching donor scholarship dollars raised each year with the University’s centralized Wildcat Scholars Program is the concern that donors want their support to go to students with specific attributes or interests. For example, if a donor sets up a scholarship for a math student from a specific geographic area, how could that scholarship support be part of the Wildcat Scholars Program?

The answer is relatively easy once we think it though. If the University is giving $48 million to a huge number of students each year based on their merit and need, surely one of those students must also be a math major who is from the geographic region the donor has stipulated. And, when financial aid and/or admission finds that student, the message sent to that student is simple:

“Congratulations, again, on being a Wildcat Scholar! As you might recall, when we offered you this scholarship we shared that we may contact you in the fall with information about a donor (or donors) who have given generously to support your specific Wildcat Scholarship. We are please to let you know that the donor who is supporting your Wildcat Scholarship is Mr. and Ms. Smith. As part of your participation in the Wildcat Scholars Program you are asked to write a note of thanks to Mr. and Ms. Smith. . . .”

This type of communication with the student recipients helps ensure an effective foundation for donor stewardship. For the vast majority of scholarship donors, all they want to see is that they have supported a student financially who matches the criteria they believe to be important.

This is exactly what has happened in this example. When the donor receives a note of thanks from the student, they are being introduced to a student who received a scholarship and is a math major from the geographic area of their choice. And, an additional significant benefit is that this donor also has helped the University’s operating budget!

Far too often, advancement professionals do good work with donors and then stop. Instead, the best advancement professionals go a step further and ask, “how I can I delight the donor, while at the same time, make the biggest possible positive impact on our institution?”

And, in the case of scholarships for most universities, there is a huge opportunity to do this – in fact, for this University – that opportunity is exactly $48 million.

The post A $48 Million Opportunity first appeared on Jason's Blog.

Jason's Blog

Message History

Delivery option(s)