A group of second-year students have begun meeting with members of the administration and the HBS Fund to consider spearheading a Class of 2001 Gift Program. The group currently includes Kumsal Bayazit (OC), Shana Hunter (OA), Demond Martin (OB), Stephen Moret (OC), Julie Neenan (OH), Mike Pierce (OB), Anoop Prakash (OC), Andy Stevenson (OB), Conley Wake (OG), Margaret Woolley (OD) and Doug Leister (NG).
“I have to admit that I was initially skeptical about this idea. I mean HBS has all the money it needs, right?” a student said at the beginning of the group’s first meeting. “But, I was surprised to learn that there are real needs for additional funding.” Stephen Moret added, “Sure, HBS does have more resources than probably any other business school, but it also aspires to create the best MBAs and develop the most significant business ideas in the world. That takes significant resources.”
The formation of the group resulted from a class project by Andy Stevenson (OB), Chip Baird (OD), and Charlie Ledley (OG) that indicated that HBS students want to enhance HBS for future students but don’t think the school needs their money. Andy Stevenson (OB) said “We learned that many HBS students think that HBS has an endowment of $14 billion and have no idea where the financial resources are used. In undertaking this project we learned how tuition would have to be much higher, possibly 80% higher in fact, if it were not for the generosity of Alumni.” Working with External Relations, the group has seen just how important Alumni involvement is to the school and is planning to help communicate that to the rest of the class of 2001.
The group recently met with Dr. Howard Stevenson who heads up External Relations and is a member of the MBA Class of 1965. Dr. Stevenson gave a presentation on the current operating budget, HBS financials, and outlined the financial needs of the school going forward. As HBS enters the 21st century, continued investment is needed to ensure that HBS can have as much impact on the world of business in the 21st century as it did in the 20th. In order to be able to fund the long-term endeavors of professors, the school will need to invest more in faculty development and research. The desire to make the curriculum more global and bring technology into the classroom has also made case and course development more expensive. Furthermore, many of the buildings on campus need to be updated (as Hamilton residents know well). All of these increases in expenses, coupled with a heavy reliance on income sources that are highly volatile, could lead to a precarious situation. In bad times the returns from the endowment go down and executive education revenues can decrease by 30 to 40%. In addition, well over 90% of the endowment is restricted, which means it can only be used for the sources specified by the donor.
Surprisingly, HBS ranks poorly compared to other business school in terms of graduating class gift programs. Some believe this is partially driven by the belief that HBS has a lot of money, coupled with the perception that young alumni cannot make a significant impact. Below is a table that compares amounts donated per student at other business schools.
In fact, not only is the total amount of HBS donations low, but the participation levels for the class gift are also very low. The highest level of participation at HBS was only 36% for the graduating class in 1992, whereas the other schools average 83%, with a low of 70%, for their participation levels.
The research done by the field study project indicated that 70% of the students would give to HBS to enhance the experience of future students. The Class Gift team feels that the most appropriate way to give back to the school is to have fellowships sponsored by Class of 2001. They hope to create a program where we can have an immediate impact on helping future students at HBS. “Yes, the school does have a large endowment, but we can help make an impact where the majority of our classmates felt it was most important. If each of us gives a little over the next few years we will be able to ensure that future students are able to afford the education regardless of their backgrounds,” said Julie Neenan.
The group will get back together again to finalize the terms of the class gifts and you will be receiving pledge cards before the semester ends. So when you are helping HBS, keep in mind that our class gift can give the much needed financial aid to future students, and HBS needs our dedication and help as we head into the 21st century. If you would like to be involved in the process, please contact Andy Stevenson at firstname.lastname@example.org.
WHAT IS A CLASS GIFT?
It is a donation by the graduating class to the MBA program. While class gifts are very common in the United States education system, they are rarely given in international schools. As many of the United States higher education institutions are private and do not have public funding, one of the main financial resources that enables the school to continue operations at an optimal level is the donations by the alumni. Typically, students fill out a pledge card before graduation that is a promise to donate the specified amounts to the school in the three to five years after graduation. Usually the amount of the donation increases as the student spends more time in the work force, and the student does not have to have an outflow of cash before joining the workforce.