National Edition

New trend: Colleges taking money from scholarship funds

Published: Tuesday, Nov. 26 2013 5:05 p.m. MST

Steven Roy Goodman, an education and admissions advisor in Washington, says schools taking a percentage of scholarships isn't strange to him. He says universities do other things that lower the amount of money students might get — such as decreasing financial aid, if a student gets an outside scholarship.

But, like Collins, he speculates taking a percentage of a scholarship can't make it easier to find people to give money to the university.

"It raises the issue," says Goodman, who founded the website www.topcolleges.com, "of backlash on the part of donors."

Backlash from donors like Gann.

"They don't have to take this from what is meant to be aid for needy students," says Gann, who lives in Independence, Mo. "I'm on the side of the students."

Tom Hiles, University of Missouri vice chancellor for advancement, explains, however, that more is going on than just applying a fee for gifts: "Most donors know that it costs money to raise money," he says.

Research grants, for example, take large percentages for administrative costs. Applications for grants build those administrative costs into the research grant package. When looking for scholarship endowment money, however, administrative fees are often not a part of the donor's consciousness.

The administrative costs for fund raising are often paid out of a university's central foundation. Missouri, however, doesn't have central foundation as most private schools have.

Hiles also says the cost ratio for raising money is better than at most non-profit agencies.

He says the endowment assets are well-managed and returned about 13 to 14 percent last year. Since the scholarships are paid out depending on how large a particular endowment fund is, the amount earned in interest affects how much money gets to scholarship recipients.

Currently, he says, there is about a 50/50 mix between using central funding and the gift fee funding to support the fund raising programs of the university.

Hiles says the university started its gift fee about two years ago.

"I think all of our donors know that it costs money to run a major operation that is raising gifts and pledges," he says.

At the same time, Hiles says he certainly understands the sensitivity some donors might have to the fees, and appreciates the support and pride in the university. He also says he would welcome discussing the issue with any donors who are balking at the fees.

Collins says she would also like to talk with disaffected donors such as Gann.

"How about donating to the University of Sciences?" she says with a laugh. "We'd be happy to take his very generous donation."

EMAIL: mdegroote@deseretnews.com

Twitter: @degroote

Facebook: facebook.com/madegroote

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