Q&A: Task force considers new non-state campus funding sources

Michael Knetter, known for his creative fundraising as dean of the School of Business, is stepping into a new role helping the university target new sources of private funding.

Chancellor Carolyn “Biddy” Martin named Knetter as her special assistant and liaison for long-term strategy and development. In that unpaid role, he will lead a task force to identify non-state sources of revenue during a difficult budget cycle.

“Like our peers, we rely increasingly on private sources of revenue and the proportion of our budget that comes from private sources will increase over time,” says Martin.

Knetter, who orchestrated the 2007 gift that brought in $85 million from 13 donors to preserve the Wisconsin School of Business’s name for 20 years, will continue as business school dean. Wisconsin Week spoke with Knetter about his new role.

Wisconsin Week: Can you describe your charge and the job ahead?

Michael Knetter: The task force that I’m leading as part of this role is charged with identifying ways to increase unrestricted funds available to UW–Madison to pay for base budget activities. State GPR and tuition have been the foundation of the university’s base budget, which provides the funds to hire faculty and essential staff. The state’s inability to provide higher levels of support in a challenging economy, the political pressure to hold tuition down, and the rising cost pressures due to growth initiatives in higher education around the globe have together created a perfect fiscal storm. While we have a great track record of winning research grants, those pay for the research mission, not the direct costs of our educational mission.

Public universities need to be more entrepreneurial in finding alternative sources of funding to maintain quality. The task force will identify ways the campus can generate more revenue and be more entrepreneurial. One of the biggest obstacles we face is that our tradition of excellence makes it too easy to be complacent and assume that our base budget challenges will resolve themselves. They won’t.

We have to be smarter about the ways we use the great assets we have at UW–Madison to generate the cash flow to sustain them. One of the greatest strengths of the university is the stock of outstanding and loyal alumni we have produced. Can we do more to create higher participation in unrestricted giving? The UW Foundation, the Wisconsin Alumni Association, the Office of Corporate Relations and the Wisconsin Alumni Research Foundation will all be great partners in that effort.

Our physical plant and human capital are extraordinary. Are there new program revenue opportunities in online education, new degree programs or nondegree experiences? Many enterprises benefit from the work we do. As a public university we have not always focused on how that value creation is shared with external beneficiaries. Can we capture more of the value we provide directly and indirectly to the companies that benefit from our research and our graduates?

WW: Chancellor Martin emphasizes the opportunities that we might find in a recessionary economy. Is that part of your philosophy, too?

MK: In an absolute sense, we’re going to go through a very difficult budget period.

There are ways to think differently about your own endeavors when you’re at a point where resources are scarce. It often takes a crisis to generate different thinking about how we can do more with less, or how we can add new value. Our stakeholders are often more willing to entertain different ways of doing things at times like this. So yes, we must seize that moment and explore new ideas.

WW: It seems that the university may need to view private fundraising through a different lens, as well. Is there a culture change that will be required?

MK: The University of Wisconsin Foundation has a fabulous track record. It is the envy of almost every public university fundraising unit. But it’s no secret that, on a per-capita basis, private universities raise a lot more in gifts than public universities. Some say that it will always be that way because people are more willing to give to a private university. I don’t concede that. We provide educational and career opportunities like those you would find at a great private university, but at a fraction of the cost.

The motivation to seek private support is newer to public universities, because historically we’ve all relied on primarily public support and tuition dollars. A third leg to that stool, private giving, is relatively new to public universities.

When you start that tradition of private giving, you naturally focus on the highest potential donors among your alumni — say, the top 1 percent — and you focus on major gifts. That is where we excel. But we have 370,000 living alumni, so the 99 percent that are not major gift prospects at any given time could still help a great deal if they did something. That’s where we’re very different from a private — there’s not the pervasive rank-and-file belief that ‘I received a great education, I got a lot of return and it’s my duty to keep that opportunity available for the next generation.’ I don’t see how a public university graduate would see that any differently about that than a private university graduate.

Adding that third leg to the stool adds complexity to the funding problem, however. When the state, the students and alumni are all contributing, it’s only natural for each group to look at the others and think, ‘I think you ought to do more, so I can do less.’ You have to turn that natural tendency on its head and use those groups to inspire one another, reverse that game of finger-pointing and turn it into goodwill, where you’re inspiring each other and trusting one another to build something bigger than any one of us could build alone.