ASU and Starbucks Partner to Educate Thousands

I am proud to be part of ASU.

 

Last week ASU rolled out a groundbreaking and innovative new partnership with Starbucks. ASU and the coffee giant will collaborate to offer a free undergraduate education to thousands of full-time and part-time Starbucks employees across the nation.

 

Starbucks employees over 135,000 people, many of which are young adults with some college education. Using ASU’s online platform, Starbucks will become the first corporation in America to offer full tuition coverage to juniors and seniors who work 20 hours or more.

 

Starbucks’ CEO Howard Schultz, ASU President Michael Crow and I spent last Monday and Tuesday meeting with CBS, CNN, the New York Times, the Wall Street Journal and virtually every other major news organization in the nation. The media response was amazing. The announcement was even picked up in other countries.

What really struck me though was the response of Starbucks employees and their families. At a Starbucks town hall, Howard directly answered employee questions. Several employees broke out in tears. At some point life just “got in the way,” but now Starbucks and ASU were bringing the dream of a college degree back into reach.

 

This is the power of public private partnerships. Starbucks and ASU are working together to create solutions and enable all students regardless of their socio-economic status to lift themselves and their family up through education. Starbucks gets committed, loyal employees, ASU gets a globally recognized partner with similar values, and the country gets a better educated workforce.  Everyone wins.

 

So, the next time you are in Starbucks, you should flash the fork to your barista.

 

The Business of Public Higher Education

Unless you are talking about a business degree, it is almost taboo to use the word business in the same sentence as higher education. The combination conjures up images of unethical practices and a disregard for the culture of universities – pursuit of knowledge for the sake of knowledge. University leaders who dare to suggest there is a business to higher education risk the wrath of their faculty and students alike. We must move beyond this mindset and imagine a new type of business, one that doesn’t exist to grow wealth but rather serve and enable impact.

If you look at the market today, it is easy to understand why some naysayers prophesize an impending higher education bubble. Legislators are cutting public funding at alarming rates and even when they actually vote to increase appropriations they rarely do so at a rate that meets growing demand and inflation. On the other side of the equation, students and families are increasingly burdened with the cost of attendance.

Colleges and universities across the country are rushing to develop solutions and new business models. Some have focused on fundraising. Others are reducing costs, finding their niche market and creating new revenue streams. For most large universities the answer has to be “all of the above.” This is especially true for young growing institutions like ASU. Our youth at ASU is both a strength and weakness. We are not burdened with an entrenched bureaucracy or culture resistant to change like many older institutions. However, we don’t have a long and deep history of support either. This means there are fewer mature alumni to advocate on our behalf and contribute financially. As such we must think outside the box of traditional higher education. We must reinvent business to preserve legacy and leverage it to the benefit of our faculty, staff and students. We have to ask, can we build organizations within ASU whose purpose is to generate predictable revenue for the university? Can we acquire smaller competing institutions and consolidate our shared intellectual strength? Can we provide broad access while being experts in niche markets? Can we break down walls instead of simply staring helplessly at our barriers?

It is time to get creative. It is time to demand of universities nothing short of what we demand of our students – spirit, persistence and a drive to succeed. Thinking about the business of higher education doesn’t diminish its long history and culture, it enables a long and bright future.

NYTimes – ASU among top 100 universities worldwide for employability of graduates

ASU

94th among all universities world wide.

26th among American universities

7th among American public universities

Ranked above:

Univ. of Michigan – Ann Arbor (96)

Univ. of Arizona (123)

Univ. of Wisconsin – Madison (124)

Emory (131)

Rice  (132)

Vanderbilt (134)

Notre Dame (143)

A New American University Foundation

It is an exciting time for higher education philanthropy. Last year, the higher education sector collectively raised a record $33.8 billion.

A large part of that growth is due to more public institutions getting into the business of fundraising. Prior to the last few decades, most publics relied on the state and tuition for the bulk of their budget. However, significant declines in state funding and pressure to keep college affordable have forced many public institutions to turn what had previously been a just a hobby into a serious endeavor – philanthropy.

To illustrate how young the field of public fundraising is, take ASU for example:

In 1990 the total endowment of ASU was less than $37 million. New gifts and commitments were just $20 million that same year. Philanthropy contributed less than $7 million dollars annually to ASU’s budget.

Today ASU’s endowment is nearly $600 million. New gifts and commitments last year topped $136 million and the Foundation contributed $63 million to ASU’s budget.

We had to evolve rapidly to support this level of growth. In doing so we have learned from our private counterparts and adapted their models to our unique needs.

While publics are relatively new to philanthropy, many private institutions have a long and successful history of fundraising. Privates, of course, have a distinct advantage: they are not beholden to a state legislator. They are free to construct their own governing boards and can invest with a greater degree of freedom. The average size of a private governing board is about 30 and is self-perpetuating. By comparison public boards tend to be almost one-third of that and publicly appointed.

So what does that have to do with philanthropy? Most private institutions and boards are more than governing bodies; they are a major source of fundraising. Not only do they give their own money to the school, these board members – deeply invested as legal fiduciaries of the institution – leverage their connections to attract additional funds outside the board.

By comparison, politically appointed public boards have little to no fundraising responsibility. They serve two primary roles: govern the institution and ensure the state’s funds are spent in the interest of the state. There is, of course, nothing inherently wrong with this approach to governance. Indeed, publicly appointed boards ensure that our public institutions stay true to their public mission. However, this structure deprives public institutions of what would be an excellent source of philanthropy.

So what can be done? At Arizona State University we are adapting the private model of governance to our needs, while maintaining our public structure and mission. This past November we launched a new board of trustees. While Arizona State University is still governed by the Board of Regents, there are many duties – typically performed by private boards – that are not the responsibility of the Regents. Here is the catch; I am not talking about fundraising though. Yes private boards fundraise. But the reason they are so successful at fundraising is not because they are wealthy or connected, it is because they are invested in the institution and are its greatest advocates and evangelists. Money comes from affinity. Money comes from service. Money comes from belief and passion. By creating a board with meaningful advocacy and advisory responsibilities that do not infringe on the governing responsibilities of the Regents, we are filling the gap between public and private board responsibilities. We believe this along with other innovative solutions, will help us lay the groundwork for a strong philanthropic culture at ASU and eventually catch up with our private peers.

ASUF 101: Design Aspiration #2 – Transform Society

Sometimes the best way to transform society and advance a groundbreaking idea, is to give that idea the space and independence to grow.

Several weeks ago ASU, in collaboration with the ASU Foundation, launched the National Biomarker Development Alliance (NBDA). The Alliance, an independent nonprofit, is a trans-sector organization that brings together academia, patients, enterprise and advocates to solve critical problems in biomarker development. By leveraging the knowledge from multiple stakeholders, NBDA will create evidence-based standards that will encourage the industry to pursue more rigorous FDA approved pathways. From discovery, to development and validation, NBDA is dedicated to advancing biomarkers end-to-end.

This new alliance has the capability of revolutionizing personalizing medicine. Today, despite an explosion of discovery, less than 100 biomarkers are in common use. By supporting the development of new biomarkers and standards, NBDA will enable future patients to make more informed decisions and identify unique treatments rather than one-sized-fits-all therapies.

The ASU Foundation enabled the development of this new non-profit. We took a big idea – to create and multi-sector partnership for the advancement of biomarkers – and created the structure necessary for such a partnership to have a national impact.

A New American University Foundation, enables the creation of new organizations that can and will transform society.

ASUF 101 / Introduction: What is a New American University Foundation?

The ASU Foundation’s mission is to ensure the success of ASU as a New American University. That is simply said, but not easily accomplished. In this new blog series, I want to explore what it is that makes the ASU Foundation as innovative and engaging as the university we serve.

As an institution, ASU is transforming higher education and becoming a major engine for economic and social change. It hasn’t accomplished this alone though. ASU’s commitment to responsive action and impact has resulted in countless external partnerships.

The ASU Foundation is the conduit between ASU and these partners.  We find investors. We create solutions. We raise resources.

We lead – We transform – We impact

War on Poverty

January 8th 1964, President Lyndon Johnson delivers his State of the Union address and proclaims “this administration today, here and now, declares unconditional war on poverty in America.”

Fifty years later not a lot has changed. The poverty rate today sits at 15% of the population. Simply put that is unacceptable. To move forward, we have to think strategically about not just alleviating current hardship, but aggressively fighting the root of the problem.

Our economy has changed. Gone are the days of low-skill medium-wage jobs. According to a 2012 report from Georgetown, 65% of U.S. jobs will require some form of postsecondary education by 2020. Higher education has always been the best predictor of future earning potential, but the market is changing.

Postsecondary education isn’t just an avenue to financial stability and the middle-class it is becoming necessary to employment.

Consider this, between December 2007 and January 2010 during the Great Recession the economy lost 5.6M jobs for American’s with a high school education and 1.7M with an associate degree or some college.

During that same period, despite the recession, the number of jobs for American’s with bachelor’s degrees actually grew though by 187,000.

So what does this all mean today on the fiftieth year of the war on poverty? Simply put, if we want to fight poverty and promote financial security, higher education is the best weapon in our arsenal. To move the needle though, we need to invent new business practices for higher education. We need approaches that don’t just maintain the status quo but allow for rapid yet sustainable growth. It is time to renew the call to legislatures, inspire a new generation of philanthropists and create new revenue streams.

Beyond Tuition: Philanthropy in an International Context

Last week the Chronicle of Higher Education released its 2013 Influencer List. The list recognizes “people who shaped higher education” and reflects some of the most significant trends in academia from athletics to adjunct salary and college access.

While most influencers on the list are individuals, Karin Fischer identifies Chinese parents collectively as “influential customers.” I would extend that logic and say that these parents are more than customers, they are an under-tapped philanthropic body.

It is undeniable. Chinese students are an increasingly important demographic at most American colleges. With enrollment numbers approaching a quarter million nationally, many cash strapped campuses look to these students’ ability to pay full tuition as a crucial source of income.

What makes these students different from the traditional American student is the role their parents play in their education. Fischer points out, in China the demand for education and well-paying jobs far outweighs the country’s supply. This disconnect, when combined with state policy that has limited most families to one child, has led many families to place their hope for the future squarely on the shoulders of their child’s educational and financial success. So while many American students may make choices based on their peers and teachers, the Chinese student typically is more influenced by the wishes of their parents.

Institutions that want to attract this important demographic – and by extension their tuition payments – would be wise to look beyond the student and ask what is important to the parents. To stop there is short sighted though.
Last year, I wrote a case study for a new book published by the Association of Fundraising Professionals on global fundraising. In the study, I suggested that global giving to universities is the next trend in higher education philanthropy.

In 2009 U.S. universities received over $200 million in monetary gifts from international sources. While 59% of the gifts came from Europe, Mexico and Canada, Asia and the Middle East combined contributed 37%. In my opinion that number will grow significantly over the next decade. While philanthropists have established methods for raising funds in western countries, we are only beginning to tap markets in Asia and the Middle East.

A Chinese student with the means to attend an American university is often supported by parents with a large untapped giving capacity. In America we invest significant resources to engage parents and encourage parental giving. Here is a demographic of parents that is already actively engaged and is extraordinarily invested in the education their child is receiving. While there are challenges to turning engagement into giving, the potential philanthropic payoff is huge.

Even beyond the parents, the students themselves are a future fundraising source. We must also inculcate a culture of giving among these students. Given that access to education is minimal in China, we can expect that many of these students will use their education to secure senior positions in business and government. In 20 years, these students could themselves have significant giving potential. Turning that future potential into giving starts with teaching philanthropy now on our campus, but staying in contact after graduation is essential to keeping affinity alive.

The Chinese parent is an influential customer, but they are also a yet untapped affinity group. At ASU we are working to develop innovative new methods for reaching this audience from alumni engagement, to athletics, distance education and international partnerships. The next frontier for American higher education philanthropy is not local or even western, it is global.

Risk and Reward: Leveraging College Athletics

This Friday, Moody’s Investors Service released a report citing the reputational and financial risks of a heightened focus on athletics.  This concern is nothing new.  As college athletics have transitioned from avenues for school spirit to essential branding tools, many in the academy have questioned the wisdom of the investment.

Unfortunately athletics suffers from image problems not unlike arts and the humanities.  In an economic recession, easily quantifiable investments in business, science and engineering are easy to sell.  Its human nature really.  We fear uncertainty and so certain investments seem safer.  ASU embraces the fact that we need better prepared leaders in business along with innovative engineers and more scientists to solve the world’s pressing problems.  Our business school is one of the best in the world and our experiential approach to teaching science and engineering is attracting – and perhaps more importantly retaining – larger and more diverse student bodies.

A New American University cannot afford to focus only on these easily quantifiable investments though.  Our directive is to impact the community, state, nation and world – to leave a large footprint that improves lives and creates positive change culturally, socially, politically and economically.

To have that type of impact we need to think strategically and see the bigger picture.  Quantitatively athletics is an investment.  The infrastructure and operations are balanced by revenue from media rights and ticket sales.  That is a simple calculation.  What is not captured in this calculation though is in many ways more important.  Athletics plays a central role in holistic student development.  Athletics teaches healthy competition, teamwork, leadership and decision making skills that are crucial to success after college.  Moreover, every game is an opportunity to engage the student population, to build morale and increase affinity all of which are essential to persistence.

Every major athletics event is also a donor cultivation event.  Nothing draws in philanthropists for one-on-one face time with university leaders than the thrill of a game.  The Moody’s report notes that on average athletics expenses have doubled since 2004 compared to a 58% increase in total expenses.  That trend must be understood in context though.  Over the last decade legislatures have disinvested in public higher education.  As a result, in this same period we have seen philanthropy become essential to our future.  Record gifts and increasingly loftier fundraising goals are the new trend.

Athletics is an essential component of branding as well.  To compete with the likes of long established brands like Harvard and Princeton, we younger institutions must think creatively about how we get our brand in the public eye.

Recently, I had the honor of accompanying our basketball team to China where almost as many people play basketball as there are people in the whole of the United States.  The publicity and branding opportunities were immense.  When our Sun Devils stepped off the buses, crowds amassed to ask questions and take pictures.  We went to high schools to talk recruitment, met with local team coaches and spoke with leaders.  Sure ASU already has a footprint in China.  We have had an extension of the W.P. Carey School in Shanghai since 2003.  If you are a corporate or political leader in Shanghai the extraordinary education offered by W.P. Carey is the ASU brand, but if you are an aspirational student or family in China – as so much of the population is – athletics generates the type of excitement that produces real returns for the future of ASU.

Recession is all about fear, but the lessons of history teach us that wise innovative investment during recessions is what makes future leaders.  It is good that we are having this conversation about the risks and rewards of higher education spending, but we cannot let fear deter us from seeing hidden returns and making smart long term investments.

Managing Image: Perception vs. Reality in Higher Education

Last week controversy emerged in California when it became known that the University of California was seeking to spend $3.5 – 6 million to renovate a mansion for the newly appointed UC System President Janet Napolitano.

In the last five years, the University’s state funding has been cut by nearly $1 billion, prompting teacher layoffs and significant tuition increases.  Given these financial troubles, some have suggested that the renovation is a misuse of funds as is the alternative – leasing a mansion for nearly $10,000 a month.

In reality, the state budget problems are not connected to this issue.  If renovated, the funding would come from a private endowment.  The mansion would be used not only as Napolitano’s residence, but also for fundraising and other university functions.  To that end, the building’s purpose would be in part to raise additional funds for the University.  By most measures, this could be a wise investment that will become a resource not just for Napolitano’s Presidency, but for future presidents as well.

Unfortunately, reality is not everything.  Higher Education is a political world that has as much to do with image and perception as it does truth and sound business practice.  Higher education leaders are more than executives making key decisions and raising money, we are figureheads for the institution and industry.  Our decisions must always have multiple bottom lines.  We are not only meeting strategic goals, we are laying the foundation for a stronger future by communicating clearly and building confidence in our brand.  At the ASU Foundation, we are creating a new type of foundation.  Ranked this year by Charity Navigator as the highest ranked university charity in the nation, we are building transparency, communication and confidence into everything that we do.

Over the last five years, higher education has come under increased scrutiny.  State funding cuts, federal legislation, public concerns and tuition increases have created a landscape where all eyes are on higher education.  Now more than ever we must think strategically about multiple bottom lines.  When a multi-million dollar renovation is a wise investment, we have to also think about how we communicate that decision to our constituents and ask ourselves how we build confidence in an uneasy market.