Eleven months after taking the helm of the LSU Foundation, Stephen Moret is ready to revamp the way the university raises money
Editor’s Note: This story has been revised from a previously published version to clarify statistics relative to what LSU spends on institutional advancement.
(LSU Foundation President and CEO Stephen Moret. photo credit: Brian Baiamonte)
When Stephen Moret took over as president and CEO of the LSU Foundation in April 2015, LSU President F. King Alexander charged the former economic development leader with creating a new fundraising model that will position LSU with one of the best advancement programs in the country.
That would be a lofty goal at most any university. It’s a particularly daunting challenge at LSU, which has one of the worst advancement programs around—if not in the nation, then certainly among its peer institutions in the Southeastern Conference. LSU’s rate of alumni giving ranks last in the SEC, and its endowment growth trails all but two of its counterparts in the conference.
But Moret is up for the challenge. In his 11 months on the job, the former secretary of Louisiana Economic Development—known for his brainiac problem-solving skills, encyclopedic command of facts and figures, and tireless work ethic—has brought in national experts, researched the data, identified the issues and begun to lay the groundwork for a completely new approach to fundraising at LSU. It will include a major capital campaign with a goal that Moret will only say is “well in excess” of $1 billion.
“This will be a big effort,” says Moret, who led the Baton Rouge Area Chamber for more than three years prior to serving as LED secretary between 2008 and 2015. “This will be a campaign that will be about establishing LSU’s future in the state and the country.”
BEHIND THE CURVE
LSU has long lagged behind its peer institutions in the area of fundraising, or what is known in the industry as advancement. Its three-year rate of alumni giving participation is just 6%, the lowest in the SEC and less than half the conference median of 14%. Its endowment per student, at $14,100, is also at the bottom of the list. By comparison, Texas A&M’s is $193,600, Arkansas’ is $37,800, and even that of neighboring Ole Miss is $27,200. LSU also has less than half the SEC average number of annual donors, who, statistics show, are most likely to make large gifts of $25,000 or more.
There are several reasons for the university’s lackluster performance in the advancement arena, and much of it boils down to the fact that fundraising at LSU has never been done correctly or comprehensively. The university hasn’t cultivated its donor base aggressively enough, hasn’t targeted enough nonalumni donors, and has allowed its three main advancement entities—the LSU Foundation, Tiger Athletic Foundation and LSU Alumni Association—to operate as independent silos with separate databases and outmoded technology.
There’s also the fact that the university has not dedicated the necessary resources to its advancement efforts. It takes money to make money, and LSU hasn’t spent enough on its team of development officers. The university spent about $4.7 million on development efforts in 2014, virtually all of which came from endowment management fees. In terms of direct investment in development efforts, the university spent $0. By comparison, SEC universities on average spent $7.4 million in endowment management fees and an additional $1.2 million in direct investment. Another telling metric: LSU has just 32 development officers. The University of Florida, by comparison, has 100.
All this matters because there is a direct correlation between a university’s level of alumni support and its national rankings. For example, Moret says experts have told him that one reason LSU, at No. 129, didn’t rank as high on the U.S. News and World Report’s 2016 Best Colleges list as did the University of Alabama, at No. 96, is because its rate of alumni giving is much lower.
“The single biggest reason for the difference between us and Alabama in the rankings is our alumni giving,” Moret says. “So it’s important for our national ranking and for the value of the LSU degree.”
When Moret took over at the LSU Foundation last May, one of the first things he did was begin looking for one of the top consulting firms in the nation to advise him on overhauling the university’s fundraising apparatus and preparing for a major capital campaign. Originally, that campaign was to focus on the flagship campus. But when leaders at the LSU Health Sciences Center in New Orleans found out about the nascent plan, they were eager to be part of the effort. Other campuses within the LSU System also expressed an interest in joining in.
The result is that for the first time in the history of the university’s advancement efforts, the Pennington Biomedical Research Center, LSU Shreveport, LSU Alexandria and LSU Eunice will join LSU Health Sciences Center and the flagship campus in planning for a major capital campaign, which will launch sometime in mid-2018 at the earliest.
Late last year, a committee led by Moret retained Marts & Lundy, the New Jersey-based firm that will help lead the effort. The consultants are conducting an assessment of the university’s current efforts and helping craft a blueprint for future development. “They’re helping us understand where are we weak, what big opportunities are out there, where can we go and ultimately what kind of capital campaign we can launch,” Moret says. “They’re also determining what pieces we need to put in place.”
The first phase of the consultant’s report is due in May. It won’t offer a specific blueprint for the campaign just yet, but it will identify opportunities. Moret likens the process to one used during his tenure at LED, where the agency’s business intelligence team studied companies and identified prospects. He credits that approach with LED’s success in attracting business to the state and believes the LSU Foundation can employ the same tactics in attracting donors to LSU.
LEAVING MONEY ON THE TABLE
While consultants are working on the long-term plan, Moret is already addressing areas he knows to be problematic. For starters, he is preparing to hire more development officers, with a goal of doubling the number on staff from 30 to 60. Many of the new officers will focus on cultivating major donors, an area where LSU has seriously underperformed.
Consider that the university has roughly 200,000 alumni in its database. Moret estimates between 40,000 and 45,000 of them are in a financial position to make a major gift of $25,000 or more. Currently, the university is actively cultivating only about 4,000 of such donors because it doesn’t have enough boots on the ground.
“We are leaving a lot of philanthropy on the table for lack of cultivation,” he says.
More LSU Foundation officers are also needed to work on the university’s annual fund team, which is virtually nonexistent at the moment. Though annual funds are not as glamorous as capital campaigns and do not generally bring in big gifts, they’re important because research shows that donors who make major gifts typically come from among those who have given to the annual fund over a number of years. Moret recently hired an executive director to oversee the annual fund.
Moret also is planning to beef up LSU’s corporate and foundation relations, or CFR, team, which, until recently, had just one officer. As its name implies, this team of development officers will focus on soliciting area companies and foundations—even if they don’t have a particular alumni relationship with the university. As much as one-third of the donations that roll into universities with successful advancement programs come from corporations and foundations, and Moret hopes to eventually get between 30% and 50% of all donations from CFR sources. He recently hired a CFR director after conducting a national search and plans to build a team around him.
“This is a greenfield opportunity for us,” he says.
In another change, Moret plans to better coordinate the advancement efforts of the LSU Foundation, the Alumni Association and TAF. Part of that effort will involve upgrading the foundation’s outmoded database and integrating it with those of the other two organizations.
In a more general sense, though, he is already working to open lines of communication between the three organizations in an attempt to break down the silos that have historically led them to carefully guard their own turfs.
It’s hard to say yet whether the effort is working, but Moret is optimistic. As an example of the newfound cooperation, Moret points to the fact that TAF and the Alumni Association are picking up half the tab for the Marts & Lundy report, which will cost well into the six figures, he says. TAF is the larger of the two but the important thing is all three organizations are contributing.
“It’s a sign of how serious TAF is about working together with us,” he says.
A PARADOXICAL PROBLEM
For now, one of Moret’s biggest challenges centers on finding funding to pay for the stepped-up efforts. For every $1 invested in advancement, universities typically see a return of between $5 and $6, he says. That’s huge. But with higher education once again facing state budget cuts, there’s little—if any—extra money to put toward advancement efforts.
The LSU Foundation is exploring ways to generate its own revenue, specifically with projects like the LSU Gateway, a mixed-use development to be built on a 28-acre site on Nicholson Drive, between West Chimes Street and Skip Bertman Drive. But the project is still in the planning stages, and it will be several years before it starts turning a profit.
Then there’s the fact that threatened state budget cuts, paradoxically, make it harder to raise money, even though the money is more badly needed than ever. Donors, especially those making major gifts, want to feel as though their contribution is making a lasting difference. It’s hard to give them such assurance when there are serious questions about the university’s very sustainability.
“Folks want to feel like they’re investing in something that will move the institution forward—that they’re impacting students or research or the state,” Moret says. “That presumes the investment they’re making is building on top of a foundation that is sound.”