Europe’s business schools adopt US art of big fundraising

Twice a year Frédéric Mazzella, chief executive of ride-sharing service BlaBlaCar, travels to Insead on the outskirts of Paris to share stories about his entrepreneurial journey with students at his alma mater.

He sees it as a way of giving back to the Insead Centre for Entrepreneurship, which he credits with helping him develop the skills needed to build a tech business operating in 22 countries.

Having received a full scholarship from Stanford University for a masters degree in computer science and a partial scholarship from L’Oréal for his Insead MBA, Mr Mazzella expects to one day give thanks with a financial gift to the business school.

But not yet. “They are very proud for me to show that the Insead recipe works for entrepreneurs,” he says. “But for now they haven’t asked me for money.”

Mr Mazzella’s situation encapsulates the challenge facing many European business schools. They have made great strides in building strong alumni links but fundraising teams have yet to match donations raised by top US schools.

European institutions celebrate campaigns that raise tens of millions of euros — like the €10m donated to Insead between 2005-10 by its former student Rudolf Maag, a medical devices entrepreneur, and his wife Valeria. That money provided an endowment for teaching staff at the ICE and helped expand its activities.

But at the same time, their US counterparts have been securing donations in the hundreds of millions, such as the $300m handed to the University of Chicago Booth School of Business in 2008 by David Booth, founder of an investment firm.

Insead is among the few non-US business schools to rival American schools when it comes to donation size so far in 2016, whose early months have yet to produce much showstopping philanthropy.

It is one of just a dozen institutions worldwide to have secured a seven-figure gift this year with $1.1m given for scholarships by Paul Forster and Rony Kahan, co-founders of Indeed.com, a US-based jobs website.

However, almost all donations of $1m or more so far in 2016 have been made to US schools, several of which were gifts in the tens of millions.

The need to raise money in Europe is becoming more pressing. The sector there had been cushioned to some extent by government funding but state cash has been harder to find in several EU countries, focusing institutions on the need to find private support.

It is not all doom and gloom, though. The 70 European business schools that are members of the Council for Advancement and Support of Education (Case), a professional body for fundraisers and alumni relations staff, raised £850m ($1.2bn) between them last year, up from £695m in the previous 12 months.

The European arm of the Washington DC-based Case will acknowledge this progress in the summer when it holds a conference in continental Europe for the first time.

The improvement in Europe has been driven by the globalisation of business education, including adopting the practices and senior people from US fundraising teams, according to John Middleton, executive director of Case Europe.

“The Americans started funding education through philanthropy 250 years ago and they never stopped,” he says.

Many institutions in Europe had similar foundations, but almost all became state-financed in the intervening years, Mr Middleton adds, making it harder to persuade students to donate.

The achievements among top European schools have been tempered by the reality that it takes time to get a potential donor to the point where they are in a position to give, according to Joanne Shoveller, associate dean for advancement and alumni relations at Insead.

“The joy is matching their aspirations and their gratitude with what the school can do,” she says. “That takes time.”

Imperial College Business School is another of Europe’s most successful fundraisers. Its financial analysis centre was launched in 2013 thanks to a £20m gift from Brevan Howard, the world’s third-largest hedge fund, at the behest of its co-founder, and Imperial alumnus, Alan Howard.

“It is the big ideas that attract the big gifts,” says Janet Alexander, the school’s head of development. Putting extra resources into fundraising has been key, she adds. The advancement team at Imperial College Business School, a combination of fundraising and alumni-relations staff, has doubled in size in the past year.

Ms Alexander also credits the leadership of Anand Anandalingam, dean of the business school, and Alice Gast, the university’s president, both of whom spent time in senior roles at US universities.

Although schools such as Imperial can match their US counterparts in terms of manpower, they still face a journey to nurture wealthy alumni to give the sums that US business schools raise.

The advancement team across Imperial College, a combination of fundraising, events, support and alumni-relations staff, has more than 60 people, seven of whom are dedicated to Imperial College Business School.

In terms of headcount, Imperial College Business School, although growing, is a way behind the University of Chicago Booth School of Business, which employs 75 people in fundraising, alumni relations and event organising.

However, it has already received $20m since the start of the year and Joseph Buck, Booth’s associate dean for the office of advancement, claims they have a conservative forecast for another four or five gifts of more than $5m before the end of the year. “These things do take years,” he says, claiming that most of the ideas for which people are now writing cheques were first pitched in 2013.

As much as non-US schools are progressing towards these goals, they are unlikely to catch their American peers soon. In addition to Chicago’s $300m windfall from David Booth, Stanford, Columbia and Michigan Ross business schools have also received gifts of $100m or more. The latter was named after Stephen Ross, a rich property developer who twice donated $100m.

The driving force in the US is the increasing cost of fees and the resulting need to offer scholarships both to maintain the diversity of students and lure the best talent from rival schools, Mr Buck says.

As a result, he cannot see an upper limit to fundraising campaigns in the future. “This is not just an arms race, where we are putting money in a closet,” he says. “The pressure to raise money is not going to subside.”

Although US schools are considerably ahead of overseas counterparts in raising funds, Mr Buck feels US schools have had to learn lessons from their peers, especially in Europe, about attracting a broader range of donors.

“What they learn from us is best practice,” he says. “What we learn from them is the importance of regional differences.”