JMU was halfway through the $200 million Unleashed campaign when the pandemic hit the U.S. in mid-March, Nick Langridge, the vice president of university advancement, said. Quickly, Langridge said, it became clear that the campaign needed to “pause” in the month of March and into April.
In response, the focus of JMU’s fundraising efforts shifted from campaigning for the university’s growth to providing aid after the economic impacts of the coronavirus hit students, donors and the university itself. JMU Unleashed is a comprehensive fundraising campaign that aims to raise $200 million in donations from students, families and alumni.
JMU's coronavirus bill totals around $33 million, and The Breeze has looked into why that is.
“March and April just did not feel like the time to be asking people to give to the Unleashed campaign,” Langridge said. “But, we continued to stay in touch, and we continued to call our constituents, our alumni, our parents, our friends in the community to hear from them, to hear how they were doing, to check in on them and express our care.”
Langridge said he learned in those conversations that donors’ priority lists were topped by taking care of their families and supporting community nonprofits, but many donors renewed their interest in donating to JMU after the focus of fundraising shifted to supporting scholarships. The first priority was to ensure renewable scholarships for returning students, Langridge said. Even with the economic downturn COVID-19 caused the university, the same amount of financial aid, including renewable scholarships, was provided to incoming freshmen for 2020-21 as previous years, Brad Barnett, the director of financial aid, said.
University endowment hurt by pandemic
The stock market crash at the start of the pandemic put that goal in doubt, Langridge said. The JMU Foundation endowment consists of small sums that have been invested by alumni and investing advisors, which often are designated for certain purposes by donors and can’t be used for anything else but their intended purpose. The total endowment value dropped from $119 to $102 million when the Dow Jones Industrial Average dropped to 19,000 points from around 29,000, Langridge said.
“There was definitely a time when we were wondering how severe that hit would be,” Langridge said. “But thankfully, we've been able to endure.”
Langridge said the university is now confident that it’ll be able to “keep those current commitments to students on scholarship.”
Barnett said there “definitely were some challenges” to making sure that renewing scholarships would be possible. But, the system the university uses to fund scholarships through donations to the endowment that are gradually released meant the Office of Financial Aid “felt OK going into next year,” Barnett said.
The university’s endowment has a 4% spend rate, and a percentage of that spendable fund — which changes based on the total endowment value each year — is spent on funding scholarships each academic year. Langridge said the university learned a lesson during the Great Recession in 2009, leading to the Foundation adopting “conservative” accounting principles to act as buffers during financial downturns while still allowing the university to uphold its current commitments, like scholarships.
This new approach is the “12 rolling quarters” plan, Langridge said, created to “roll out” the funds given by donors slowly over 12 financial quarters. This system creates a buffer ensuring that not all of a donor’s contribution is spent in the quarter it was received.
“We talked to our donors at the forefront of every new endowment that's created,” Langridge said. “And, we said, ‘Look, we want to make these [donations] robust against economic downturn. And so, we're going to have a slower start.’”
Langridge said an example of how the “12 rolling quarters” system works is if a donor funds a $100,000 balance, the endowment would invest that amount into the foundation’s investment portfolio for a full year. The 4% yield on that investment would create $4,000, which could be awarded to a scholarship immediately that year. This will continue over the next three years until the endowment is fully funded in the 12th quarter.
While it may not be as exciting for the donor “on the front side,” Langridge said, the system ensures that most of the endowment’s funding is protected against going “underwater.”
But with the uncertainty of what the total financial impact of the coronavirus will be on the university’s endowment investments over the next year, Barnett said the university is carefully watching for changes in funding and the strength of the market.
“It’s just on the radar,” Barnett said. “No one’s raising the red flag or the warning signal, no one’s creating a panic or causing a stir, but we wouldn’t be responsible if we didn’t just think through it.”
In 2018, the amount spent by the foundation for scholarship support was $3.8 million, and the annual investment income was $4,118,419, significantly increased from the 2017 and 2016 investment revenues at $626,064 and $355,716, respectively.
The endowment has increased significantly over the past decade, with the 2017 endowment of $93.2 million showing an increase of 39.1% from 2013’s endowment of $67 million. Now, the value of the endowment, after dropping significantly from the previous value of $119 million with the stock market in the wake of the coronavirus, is at $108 million.
Caitlyn Read, director of communications and university spokesperson, said in an email that the financial aid expenditure in the university’s 2020-21 budget will be $21.7 million. The sources of revenue are 47.3% non-general funds, which include tuition and application and orientation fees, and 52.7% general funds, which are funds allocated to the university from the state.
Giving Day raises $500,000 over expected donation
Once the university’s ability to provide renewable scholarships for the 2020-21 school year was secured, the Office of Financial Aid began to focus on providing emergency aid to students through the CARES Act funds and collaboration with the University Advancement office to determine the funding needed for the Madison for Keeps scholarship fund, a campaign that was renewed from 2009 to provide emergency financial aid to high-need students.
JMU received just over $12 million in funding from the federal CARES Act, with half going to students and half going to the university.
After a meeting between Langridge and Barnett in which they discussed the number of appeals for financial aid that had begun to "pile up" as students and families grew more anxious about returning to the university while facing income adjustments, Barnett said he determined that the aid necessary to help students with the Madison for Keeps program would be $5,000 per student.
The number of appeals for general financial aid grew past 200 by the end of May, Barnett said, which was more appeals based on income reduction than the financial aid office had ever received in the past. Barnett said the appeals received in May and June had already surpassed the total number of appeals the office saw in the entire 2019-20 academic year. He said the bulk of appeals made to address income reduction historically come in the middle of the summer, and he’s expecting to receive many more appeals by the end of July.
The initial goal of $250,000 — which would have been able to help 100 students — was surpassed May 5, due in large part to prior agreements made with some donors to commit “challenge matches,” Langridge said, and to conversations the University Advancement office had ahead of Giving Day with organizations that committed to “100% giving.”
Langridge said groups such as the Board of Visitors, the JMU Foundation board, the JMU Alumni Association board, the Parents Council, Women for Madison and the university’s senior leadership team “stepped up” on Giving Day as a “show of unity.”
Over the summer, the JMU Board of Visitors met virtually three times and made several large decisions about the university's response to the coronavirus.
By the time the campaign reached its updated goal of $750,000 to help 150 students, 1,300 Dukes had donated funds to the campaign. Langridge said that creating a dialogue with families about the growing number of appeals was “critical to the decision for many families to invest.”
“What we've learned is the importance of just being transparent and connecting your ask for help to the need that exists and how gifts are going to make a direct impact,” Langridge said.
The next two years of the Unleashed fundraising campaign will have a “laser focus” on scholarship support, Langridge said, because it’s the most important of the priorities planned for the eight-year campaign. Langridge said the overwhelming support for Madison for Keeps has increased his team’s resolve to drive forward to raise $200 million for the Unleashed campaign.
“People were uncomfortable, it might've been inconvenient, but they cared enough to give anyway,” Langridge said. “That behavior heartens us and gives us confidence that we are not lowering our goal.”
This is the sixth article in a series by The Breeze's investigations desk examining the financial impact of COVID-19 on JMU. The next and final article in this series, covering the effect of the pandemic on enrollment at JMU, will be published Monday.
Contact Jamie McEachin at email@example.com.
Contact Jake Conley, investigations editor, at firstname.lastname@example.org. For more coverage of JMU and Harrisonburg news, follow the news desk on Twitter @BreezeNewsJMU.