Riding high: The role of university charitable trusts in UK fundraising

Charity, it seems, is part of the human condition, and education has always been a prominent beneficiary of our giving. Some of the oldest and most well-known universities were established as acts of charity by the Church, monarchs or simply wealthy benefactors. According to a recent Harvard UBS study into philanthropy, education is the main beneficiary of charitable foundation giving today.

As we have argued in other blogs, the UK is an important centre internationally for philanthropy. The UK’s Association of Charitable Foundations estimates £3.3bn is given by British charitable foundations and trusts and that education receives the largest share so it is no surprise then that universities have become increasingly sophisticated in their efforts to tap into UK-sourced giving.

One such effort is the topic of our latest research, namely the role of charitable trusts set up by non-UK universities in order to facilitate fundraising and donor-giving in the UK. This is the second such survey of UK university charitable trusts that we have undertaken and it provides an insight in to giving trends notably as they relate to alumni giving.

Why set up a charitable trust?

In the UK, the establishment of charitable foundations and trusts carries a number of key advantages for non-UK universities. Channelling funds through a local charity may assure donors that funding shall be used solely for charitable purposes, increasing the likelihood of larger or more recurrent donations. Furthermore, many charitable foundations and trusts will only give to, or are limited to donating to, locally registered charities thus allowing international institutions to bypass such barriers. Establishing UK charitable foundations and trusts thus allows international tertiary education institutions to foster relationships with and appeal to UK philanthropic funding networks.

“Charitable trusts are a key component of the fundraising infrastructure that many overseas universities invest in to tap into the well-established, yet expanding, UK philanthropic sector.”

There are economic incentives to such arrangements as well with tax benefits available to local charitable foundations and trusts including income tax exemptions, as well as the Gift Aid system which serves to amplify the value of UK taxpayer donations. Such benefits are unavailable to charitable foundations and trusts that are not registered locally. As our research demonstrates, such charitable vehicles are a key component of the fundraising infrastructure that many overseas universities invest in to tap into the well-established, yet expanding, UK philanthropic sector.

Weizmann and Wolfson - A model for university philanthropic partnership

The first observation to make is that the establishment of dedicated charitable foundations and trusts to further university activities is not new, and the earliest trust we have identified appears to have been set up seventy years ago.

On the 2 June 1950 British newspapers reported that the prominent UK businessman and founder of Great Universal Stores, Isaac Wolfson, made a donation of £100,000 (£3m or US$3.88m in today’s money) to the Weizmann Institute, an Israeli public research university founded in 1934. At the time, Britain’s economy was desperately fragile and strict currency controls were in place in the UK limiting outbound traffic of sterling.

How Isaac Wolfson was going to be able to make the donation and send the money out of the UK was less than clear. However, six days after the British media reported the Wolfson donation, the Weizmann Institute Foundation (Companies house link) was established on 8 June in the UK, initially as a limited company. We don’t know the exact date but there is a very good chance its establishment was directly related to the Wolfson donation and provided a vehicle by which the donation could be transmitted to Israel. The purpose of the donation was the building of what is now known on the Weizmann Campus as the “Old” Wolfson Building, home to the Electron Microscopy Unit, the Irving and Cherna Moskowitz Center for Nano and Bio-Nano Imaging, and part of the Department of Molecular Cell Biology.

“The enduring relationship between the Wolfson family and the Weizmann Institute speaks to a shared commitment to higher education research and tuition which is surely the envy of universities and philanthropists world over.”

“There is a strong correlation between the age of a trust and the income it generates”

And this leads us to our second significant conclusion to our research. Not only have such trusts been around for decades, but there is a strong correlation between the age of a trust and the income it generates. Aside from being the oldest and most established charity, the Weizmann Institute Foundation was the third biggest income generator in our study between 2014-19 generating £38.5m in income. The Tel Aviv University Trust – the fourth oldest in the UK – was the fourth biggest by income (£35.1m).

It is a measure of the long lead times and long-term investment required in alumni and major donor giving. It should come as no surprise that US and Israeli universities – which come from a longstanding culture of sophisticated fundraising – should be those that have the most established and successful non-UK charitable trusts.

Sir Issac’s support to Israel’s leading scientific research institute defined modern UK university philanthropy. Not only did the Weizmann Institute Foundation become the model which many non-UK universities since adopted to facilitate fundraising in the UK, but the enduring relationship between the Wolfson family and the Weizmann Institute speaks to a shared commitment to higher education research and tuition which is surely the envy of universities and philanthropists world over.

The Wolfson Foundation and the Wolfson Family Charitable Trust set up by Sir Isaac Wolfson and his wife have provided generous support for major projects in health, science and education in both the UK and Israel for decades, and they continue to generously support the Weizmann Institute (and other Israeli institutions of higher learning). Few other philanthropists and foundations can match that level of enduring partnership.

Success comes with age

According to our research the next university to set up such a dedicated foundation was Witwatersrand in South Africa. In May 1955, it set up its University of Witwatersrand Appeal Fund UK charity. The University went on to set up a second trust in 2001, and has the distinction of being the only non-UK university to have two charitable trusts for fundraising purposes. Interest in such charitable vehicles soon widened with a number of universities following suit. And it was Israel’s universities that have been ahead of the curve for a very considerable period of time in engaging in this market, and universities elsewhere are slowly waking up to their success.

In 1957 Bar-Ilan University established a UK charitable trust. Tel Aviv followed in 1969, Haifa in 1975 and Ben Gurion in 1978. The first US university we have identified which set up a dedicated charitable foundation or trust appears to be Harvard in 1984. In all, 76 percent of non-UK university charities were established over 10 years ago.

According to our research of the top 40 income generating university trusts were established before 2010 – with one exception the 2014-registered M.I.T. Foundation, which was a replacement to the MIT Development Trust established in 1984. In other words, those trusts which have been established since 2010 are likely to take time to bed down and become significant revenue generators.

Governance matters

There are, of course, other factors at play here. One is the governance, namely the trustee body. Charitable organisations can achieve extraordinary things if they have an effective set of trustees who are prepared to invest a lot of energy into the business of fundraising.

Our research suggests that trustees of university charitable trusts breakdown into three categories:

In-house - Members of the university`s professional staff, such as the vice-chancellor, institutional advancement staff or alumni relations.

Alumni - Many universities turn to their alumni network to step up as trustees and help mobilise alumni-related activities and fundraising.

Champions and influencers - A number of universities turn to high profile or well connected UK- based champions or influencers to join the charity’s board.

It is very difficult to discern a pattern between the type of trustees a university charitable trust appoints and the overall effectiveness at fundraising. But the University of Cape Town (UCT) does provide an interesting illustration.

Established as a registered charity in 1990, the University of Cape Town Trust is overseen by a Board, comprising a former UK High Commissioner to South Africa, a significant philanthropist and an internationally-renowned barrister, as well as UCT alumnus. The day-to-day administration of the trust is dealt with by two part-time self-employed consultants. Between 2014-19, the UK trust has received philanthropic funds to the sum of £5.4m, the most successful of Commonwealth universities with dedicated trusts in the UK.

UCT’s UK success is unlikey to be solely attributable to who it points to its board of trustees. It has long been the darling of international philanthropic organisation and individuals wishing to give to higher education in Africa. The other important consideration to note is that the trust also benefits from an extensive South African community within the UK. Only Wits University compares to UCT among other African universities in terms of scale and presence of its alumni in the UK. It should be added that Wits has also an impressive story of income generation in the UK both via its UK charitable trust, and apart from it.

So this leads to another important conclusion from our research. There is no consistency in the way universities use such charitable trusts. Some universities use their trust as the primary vehicle in collecting revenues raised from UK philanthropy. Others use it largely to support fundraising from the alumni. Equally, some donors choose not to donate via a charitable trust, preferring to give directly to the university in country.

In other words, the charitable trusts are therefore only one measure, albeit an important one, in the fundraising efforts and performance in the UK. But it does not necessarily reveal the full picture of university fundraising in the UK.

85 charities and growing

According to our survey, there are now 85 such charitable foundations in the UK, established by non-UK universities in over 20 countries.

“Between 2014-19 85 non-UK university charitable trusts raised over £342.5m in Britain”

Between 2014-19 these charitable trusts received over £342.5m ($460m) from UK based philanthropic giving, and 2019 was the most successful year yet, collectively reporting 37% growth over 2018 income. Collectively these trusts raised £78.6m compared to £57.5m in 2018. And we know this doesn’t reflect the full picture of university charitable fundraising. At the time of writing Israel’s Technion University’s trust and Boston University’s UK trust have not reported their 2019 accounts. These are university trusts which typically report significant income.

The US, Israel and South Africa are the top destinations for UK outbound philanthropic funding via charitable trusts for universities and, as I have already spelt out, are also some of the oldest such university charitable trusts.

US universities are the chief beneficiaries by volume of donations. 25 US institutions raised £162.4m between 2014-19.US universities raised £39.8m in 2019 compared to £18.6m in 2018, a rise of 114% year on year.

Israeli universities raised £150.9m from 2014-19, and £30.6m in 2019, an 82% rise since 2014.

The top five universities to benefit from UK giving through charitable trusts collectively raised £181m between 2014-19. They are:

Hebrew University (£45.8m)
University of Pennsylvania (£43.8m)
Weizmann Institute (£38.5m)
Tel Aviv University (£35.1m)
Princeton University (£17.7m)

Commonwealth charities

Commonwealth universities comprise 42% of non-UK charitable trusts identified in the research, reflecting the UK’s historical ties and a home to alumni from Commonwealth institutions. In 2019, Commonwealth universities had their most successful year yet in terms of raising funds through their charitable trusts, in step with the wider trend. But there is one exception.

South African universities are the most successful of Commonwealth countries in terms of fundraising through their charitable trusts between 2014-19. Collectively seven South African universities reported £9.1m raised through their UK trusts. As already explained, it is the University of Cape Town that is the main South African beneficiary of UK trust fundraising between 2014-19.

However, 2019 saw a noticeable drop in their success, with only one South African university reporting an increase in giving over 2018. The beginning of 2019 saw South African universities buffeted by the Fees Must Fall student protests and it could be this put a brake on appetite to donate to institutions there.

In contrast, the cohort of New Zealand universities were the biggest Commonwealth winners in 2019. Five universities received £1.44m, 60% of which was donated to Massey University following a £800,000 legacy. Legacies form an important contribution in the success of a charitable trust. In 2019 Ben Gurion University trust benefitted from a £4.7m legacy propelling it to the fourth biggest university trust by income.

Nicolai Tangen’s philanthropy

But the most successful trust in 2019 in terms of fundraising was the University of Pennsylvania which secured a £17m donation from the AKO Foundation, established by one its alumni, the UK-based hedge fund manager and recently-appointed head of NBIM Nicolai Tangen. Unquestionably through his AKO Foundation Tangen is one of Britain’s most significant donors to non-UK universities at this time, with donations in 2019 made to the University of Pennsylvania, Florida International University and Agder University in Norway. Please look at our recent study on non-UK university giving by the top 100 foundations for more information on funding by the AKO Foundation.

Conclusion

The main takeaway is that a UK charitable trust is now a key part of the fundraising infrastructure that a significant number of the world’s leading universities invest in to benefit from UK philanthropic funding sources.

The success of a charitable trust is not only a reflection of the investment by a university in its UK fundraising efforts, but also an institution’s ability to mobilise its alumni. From our assessment, those universities which are most successful in leveraging the role of a charitable trust, are those which have an active and engaged alumni who are either steady or significant donors. But the story of UK university charitable trusts is not always one of unbridled success.

Over the years a number of universities have closed their UK charitable trusts, suggesting it failed to deliver against expectation. Universities to do so include Tufts University in the US, Makerere University in Uganda (and one of Africa’s most successful universities when it comes to international fundraising) and North West University in South Africa.

For more detailed information on our research please click here