In May San Antonio businessman Red McCombs and his wife, Charline, gave $50 million to the college of business at the University of Texas at Austin, the largest single gift in the university’s history. “It started with me working with Johnnie Ray, who heads up the capital campaign for all of the university,” says McCombs. “Johnnie was looking for some insight into how we could put a little more energy into the campaign and particularly the business school.” But as McCombs began thinking about it, he looked beyond the campaign to what he and Charline could do that would have the biggest impact on the entire state. “It became so obvious to me,” he says. “Whether you are coming from fine arts, from medicine, from law, at the core of all those is business staff.” McCombs, a billionaire who grew up in Spur and attended Southwestern University, in Georgetown, before transferring to UT-Austin, where he studied business and law in the late forties, is used to giving away his money. The CEO of Red McCombs Enterprises, co-founder of Clear Channel Communications, and owner of the Minnesota Vikings, who made his first fortune with car dealerships, usually contributes around $8 million a year to institutions, particularly to education and health organizations. But with his single, massive gift to UT, he got something else in return as well: a permanent legacy. UT decided to rename the school the Red McCombs School of Business. (The largest single gift to a university in Texas history was the $52 million gift of land to Texas A&M by Dwight Look in 1992. The second largest was the $51.4 million that John and Rebecca Moores gave to the University of Houston in 1991.)
In a nation afloat in stock market cash, and in an era when charitable giving is reaching record highs, philanthropy is an increasingly pointed, purposeful activity. Some $27 billion went to educational institutions in 1999, a robust increase of 8.5 percent from the year before, and while donors want to do good, they also, increasingly, want to make a visible, measurable impact. In an economy rife with mergers, buyouts, and IPOs, along with fast employee turnover, the idea of permanence, or a permanent legacy, seems all the more attractive. And one of the best ways to do that is to give to colleges and universities. Across Texas, schools are not only collecting record contributions from alumni and corporations but also soliciting and receiving large, single-purpose gifts—and often naming colleges or sports facilities after the donors.
Texas Christian University, in Fort Worth, is a notable beneficiary. In March Fort Worth entrepreneur James A. Ryffel and his wife, Linda, gave $5 million to the M. J. Neeley School of Business to fund an endowment for a new entrepreneurial studies center that had been founded with an initial gift of $2 million from the estate of businessman William Dickey. The forty-year-old Ryffel, who made his fortune in real estate and high tech, has also pledged to raise $1 million to create a student-run venture capital fund at TCU. The gift grew out of a meeting Ryffel had with longtime friend David Minor, a fellow TCU graduate and the director of the center, who approached Ryffel about getting involved with the center. “We went to lunch and Jim liked the vision we had for the center and asked how he could help,” Minor recalls. “I told him, and he stepped up and made a pretty significant commitment to the university.” Both men had read Bob Buford’s book, Halftime, which is about people between the ages of 35 and 55 who have achieved financial succcess but are looking for deeper meaning in their lives. “Basically, at the end of the day, it doesn’t mean a whole lot unless you do good things with it,” Minor says. “Jim mentioned that he was at a point in his life where he wanted to make a difference in other people’s lives.” The center is now called the James A. Ryffel Center for Entrepreneurial Studies.
The booming economy has also spawned a new type of philanthropist. “Younger donors who are becoming major donors want to see results,” says Marc Raney, the vice president of university relations and development at Trinity University, in San Antonio, “and sometimes quicker than the previous generation.” For example, even though a scant few months have passed since Ryffel announced his gift, rough plans are already being drafted for a 40,000-square-foot meeting hall and classroom as well as wired lecture halls and courses on venture financing and family business.
TCU isn’t the only school to benefit from the new philanthropy. In June Rice University, in Houston, received a $3 million gift from Enron chairman and CEO Ken Lay and his family. The Lays’ gift will go toward the development of a research and teaching center, the Ken Lay Center for the Study of Markets in Transition. (That’s in addition to $5 million given by Houston’s Enron itself to endow two new chairs at the Jones School of Management.) At UT-Austin, Bill and Bettye Nowlin recently pledged $5 million. The gift is divided into three parts: $2 million to establish the William and Bettye Nowlin Chair in Engineering, $1 million to the College of Fine Arts, and $2 million to build the Texas Astronomy Education Center at the McDonald Observatory. Nowlin, who received his bachelor’s and master’s degrees in electrical engineering at UT, co-founded Austin-based National Instruments in 1976. In January Thomas O. Hicks and R. Steven Hicks gave Southern Methodist University, in Dallas, $1 million to establish an endowed scholarship fund at the Perkins School of Theology in memory of their grandfather John H. Hicks, a Perkins faculty member. Tom Hicks is the chairman and CEO of the private equity firm Hicks, Muse, Tate, and Furst. His brother Steve has followed the family tradition by going into radio.
While young, wealthy New Economy donors seek more specific uses for their gifts than traditional benefactors, Raney says he believes they are pursuing the same goal: seeing their gifts make a difference. So across the state, the development pros are working harder than ever to come up with major projects that will provide ever faster and more gratifying results to their megadonors. Though universities have always done this, they are doing it more aggressively. “Most of the major donors have a record of giving to you, so if you know them, you know generally where their interests are,” says Bronson C. Davis, the vice chancellor for university advancement at TCU, which has a wide range of committees that work on just that. “In that case, donations would be largely project-driven.”
Projects, in fact, are the name of the game. An example is the recently completed “feasibility study” on a new TCU baseball stadium. “Our list is primarily baseball-driven,” says Davis. “They’ve either played [baseball] here, they’ve shown a longtime interest, or they are generally interested in athletics.”
Most such special, or “project-oriented” gifts fall partly into the category of endowment, which means that, unlike ordinary capital contributions that are consumed immediately, they last forever. A new biology building is not just bricks and mortar: Behind it are investments that produce the income to maintain it in perpetuity. When a donor gives money to endow a chair (a minimum requirement of $1 million at UT-Austin), that money is going to support the position for as long as the school is operating.Endowments make up the permanent, long-term wealth of the university, and in Texas they span a broad horizon. By far the largest in the state, and indeed the second biggest of any university in the United States (behind Harvard), belongs to the University of Texas System. That’s because the whopping $8.13 billion endowment has long been tied to the ownership of Texas land—some 2.1 million acres that have historically yielded huge oil royalties. That same land partly accounts for why the Texas A&M System’s $3.75 billion endowment ranks tenth in the country. The two big Texas state systems share money from something called the Permanent University Fund (PUF), which was established in the Texas Constitution of 1876 through the appropriation of land grants. Two thirds of the proceeds from the PUF go to the UT System and one third goes to the A&M System.
Rice leads the pack of private universities with a $2.94 billion endowment that places it thirteenth in the country. The size of its endowment is all the more important because, measured on a per-student basis, it is significantly higher than UT’s. UT’s endowment is spread over the entire UT System, while Rice has only to cover its 4,251 students. The fewer the students, the more money per student. In the same way, Trinity’s endowment is relatively small—$584 million—but so is its student body—2,465. According to TCU’s vice chancellor for finance and business, Carol Campbell, “Endowment per student puts everybody on a level playing field, and that’s really what it comes down to—how many faculty can you support, how many scholarships, how many library acquisitions.” Other Texas endowments are as follows, with national ranking in parenthesis: TCU, $836 million (45); SMU, $790 million (50); Baylor, $587 million (73); Trinity, $584 million (74); the University of Houston System, $413 million (97). (Rankings are from the 1999 National Association of College and University Business Officers study, based on the market value of endowment assets.)
Rice stands out in the other principal measure of giving: the percentage of alumni who contribute. The following are the rankings of some Texas universities from last year (figures are for the fiscal year, which varied at each university): Rice, 34 percent; TCU, 30 percent; Trinity, 24 percent; SMU, 22 percent; Texas A&M, 21.5 percent; UT-Austin, 21 percent; Baylor, 18 percent; U of H System, 6 percent.
Here too the raw numbers don’t necessarily tell you the whole story. The University of Houston, for example, receives a huge percentage of its donations from corporations and foundations, as do many public universities based in big cities. “If you look at the six percent of alumni who donated, we would be low compared with other Texas schools,” says Spencer Yantis, U of H’s associate vice president for development. “But if you look at urban-metropolitan universities, which the University of Houston certainly is, they historically run ten to twelve percent of [alumni] support.”
Also, since one might expect that the percentage of alumni giving would be higher at private schools simply because of the lack of state support, why is UT-Austin’s percentage higher than Baylor’s? “In Texas the situation is complicated by the fact that taxpayer support has not only declined but the state has chosen to keep tuition at public institutions low,” says James Kunetka, the director of communications and constituent relations at UT-Austin. “Those two factors alone give added importance to private giving.” In other words, in spite of its endowment and in spite of its guaranteed funding from the Texas Legislature, UT has aggressively solicited alumni giving. So has A&M, which has four independent, private, nonprofit organizations that conduct fundraising, one of which manages endowment gifts. In a booming economy that is producing millionaires by the score, that ought to help charitably minded alums make up their minds.