12 Ways Endowing a Department Benefits the Department, College and Society
February 20, 2020 | By Matt Waller
This article was updated on September 3, 2021.
It’s not uncommon to name scholarships, buildings, stadiums and arenas in honor of the donors or family members of the donors who helped fund them. And, as is the case with the Sam M. Walton College of Business, some endowment donations are so significant that a university honors the donor by renaming the college.
What’s less common, however, is naming a department within a college based on a gift given specifically to support that department. This type of endowment might not be common, but its impact is far-reaching – which, in my experience, is the primary motivating factor behind these types of donations.
William Dillard Department of Accounting
The William Dillard Department of Accounting, one of only two “named” departments at the University of Arkansas (the other is the Ralph E. Martin Department of Chemical Engineering), is a recent example of an alumnus making a significant donation with the goal of making a transformative difference for society.
This type of endowment provides revenue in perpetuity. So, for example, a $10 million endowment will generate $400,000 to $500,000 per year in revenue that helps the department advance its mission and accomplish its strategic goals in an accelerated manner. It also improves the brand image of the department and increases its marketing visibility.
Ripple Effect of Endowments
The money is earmarked for the department, but there’s a ripple effect to the benefits because the success of the department benefits the college, the university, and society at large. It begins, however, with the department, which benefits in at least 12 ways:
- It funds new scholarships.
Many different types of scholarships can be offered with income from a departmental endowment, and they can be offered at the undergraduate and graduate levels. In some cases, the benefactor may provide guidance on this, but optimally it should be driven by the strategic direction of the department. Scholarship money can be used to support diversity and inclusion efforts, for instance. If the department has a new master’s program, then scholarships can be used to attract the top students to that program. And if the department is part of a land-grant university, then scholarship money can be limited to undergraduates from that state.
- It provides support for faculty development.
There are many great programs for faculty to grow in teaching and research, but clinics and continuing education often require travel and tuition. While some courses work well online, others, for example a course on how to use the case study method in teaching, are best learned with a group in a face-to-face setting.
With the growth of big data, analytics needs to be taught in more and more courses, and this often requires faculty to learn new software or methods. It also helps faculty develop in terms of their research capabilities. For example, Python is a great programming language for faculty because it allows for scraping the web for data. This type of professional development helps faculty become more effective and productive as teachers and researchers.
- It provides support that aids faculty retention.
Few things are more frustrating for academic administrators than to watch helplessly as other universities poach their top-performing faculty members. Many times, neither the college nor the department have the resources to provide a raise for the targeted faculty member, especially in the time frame required, but income from an endowment can be used to move more quickly.
Universities typically don’t like using endowment income to support salaries for tenured faculty, but it can be a stopgap measure and eventually replaced with regular budgetary money. In other cases, it could remain in place for the remainder of the faculty member’s career. In addition to salary, it could support the faculty member in other ways such as by funding travel or additional administrative support.
- It allows the department to bring in speakers and scholars from outside of the region.
Some guest speakers, such as local executives, don’t charge a fee for speaking, but it is always nice to have refreshments, especially if it is in the evening. If you bring in scholars from other universities, you usually must pay for travel and it’s common to pay an honorarium, as well.
Students and faculty benefit by learning from different perspectives, and it can make research faculty more productive because they learn new theories, methodologies and sources of data. In some cases, they wind up partnering on research and becoming coauthors with the guest speakers. Bringing in guest speakers from industry, government or other universities also builds the brand of the department.
- It allows the department to develop innovative courses and programs.
The income from an endowment of a department inspires innovation and more concretely, provides time for a faculty member to do the work needed to revamp an existing course or create a new one.
Developing a course properly requires focused time for dedicated thought and planning. Many times, course releases (teaching less than normal in a semester) are needed to create a new course or to redesign a course. Sometimes departments are teaching courses that needed revamping long ago.
In some cases, a new minor, concentration, certificate or major within the department is needed. This is nearly impossible to do while also doing everything else that is needed for teaching, research and service. Consider, for instance, the time it takes to benchmark other programs. If a department in a college of business decided to create a concentration in entrepreneurship, it would be wise to benchmark some of the best programs in the country prior to designing the program. To do that well, a team of faculty and staff needs to travel to other universities to learn about their programs.
- It allows the department to purchase databases for research and teaching.
With the growth of big data and data science, students need to use large, complex datasets in their courses, cleansing data, harmonizing disparate datasets, conducting analyses, interpreting analyses, presenting results and telling stories with these analyses.
Students who have the opportunity for such course projects will have an advantage in the marketplace compared to those in departments at other universities that are not using such datasets for projects. This is a huge benefit to students. Sometimes quality datasets for these purposes can be expensive to purchase or acquire organically. This is true for faculty research, as well.
- It provides funding for summer research.
Summer research funding is particularly important for departments in research universities. It helps attract top faculty and increases the productivity of current research faculty members. A more productive research faculty provides additional visibility for the department and improves its position in a number of different rankings.
- It provides funds for faculty to attend conferences.
Attending academic conferences allows faculty to present their research and receive constructive criticism and feedback from practitioners and other academics. It also helps them network with others in the same discipline from other universities. In addition to helping cover the expenses related to attending conferences, departments with doctoral programs can use the money for receptions that bring together alumni and friends of these faculty members. All of this gives more visibility to the department.
- It provides money for students to attend conferences and competitions.
There are a number of outstanding case competitions and business planning competitions for students, but these, too, cost money. These competitions offer opportunities to network with students from other universities and with executives, small business owners and entrepreneurs who often serve as judges. The competitions help students improve their presentation skills and teamwork experience and give departments visibility to other universities and companies.
- It helps attract the best doctoral students.
Doctoral students carefully compare programs, including the stipends associated with graduate assistantships. As a result of funding constraints, most departments are not allowed to increase their graduate assistantships. Departmental endowments can supplement existing graduate assistantships, sometimes called doctoral fellowships, and thus make the difference in the decisions of prospective doctoral students.
Having top doctoral students improves the prestige of the department because they end up being placed at higher ranked schools. It also improves the research productivity of the department because faculty collaborate with doctoral students on research projects.
- It allows the department to create executive-in-residence programs.
Executive-in-residence programs allow seasoned business leaders and managers to teach classes and collaborate with faculty and administrators. Scholarship, theory development and testing, and education in general benefits from this type of close connection to practitioners. In addition, these executives in residence sometimes enhance placement of students in these departments because of their industry networks.
- It supports broader experiences and lifelong learning.
Departmental endowment funding can support student organizations, continuing education for alumni and collaborations with other strategic endeavors at other colleges. It can also support important study abroad experiences for students. Staff members can benefit when funding is used to further their education – possibly earning a degree or certificate.
All of these benefits to a department with a named endowment lead to better teaching, better research and better prepared graduates. The research impacts the teaching and the best practices throughout the industries connected to the department’s discipline. Graduates filter out into the workforce where they contribute to their local economies and the social fabric of their communities. In gratitude, most of them give back with their time, talents and finances, and that’s the true legacy of endowment gifts to a specific department.
Understanding the full benefits of an endowment is just one of the many lessons I’ve learned as dean of a business school. For more insights from my leadership journey, read my book The Dean’s List: Leading a Modern Business School. Additional information on The Dean’s List is available on my website.This article was updated on September 3, 2021.