Never in our lifetimes have most of us experienced the breadth and depth of health, social and economic trauma that has inflicted the world these past few months. At this writing, the COVID-19 virus has taken the lives of more than 30,000 Americans and directly impacted the health of another 600,000 residents and their families. The human toll is staggering only to be compounded by social and economic consequences from this widespread disruption. Furthermore, the impacts we are witnessing are interrelated and have multipliers that are shaking the core of our society and our systems. Federal and state health responses are showing early signs of tempering the spread of the virus, however, economic and financial strategies have yet to produce short term results. Thankfully, private philanthropy has again exhibited its longstanding generosity and altruism to alleviate some of the short-term pain, even as it suffered its own disruptions amid the erosion of its capital base.

One of the social systems experiencing both short-term and longer-term consequences is higher education; each day brings more fallout. In the short-term, universities have cancelled in-person spring 2020 classes, transitioned spring and summer classes to online instruction, emptied residence halls, delayed or halted many research agendas, cancelled international learning opportunities, and eliminated service-learning projects. In short, the learning and campus environments have been upended. Furthermore, the extended university/college environment that is complemented by alumni, community, and family interactions via alumni and donor gatherings, graduation ceremonies, and athletic events suffers and will require focused attention in the future.

Budget Challenges

Besides dealing with the short-term consequences, university leadership is faced with budget planning challenges for the coming academic year. We are rapidly approaching the commitment date for incoming fall 2020 first-year students, and of course, that means commitments to financial aid allotments. The overall enrollment outlook is particularly uncertain given that institutions will now have to undertake unforeseen efforts to retain continuing students.  Of course, interrelated multipliers will impact faculty and staff hiring/reappointments, the mix of in-person/online course offerings, and opening/mothballing of residence halls and other facilities.

Financial Fallout

The intensity of the cumulative effects will vary across American higher education, but it is a foregone conclusion that all institutions will feel the pain. Covenants that govern lines of credit will become more stringent; note that the outlook for higher education by Moody’s Investor Service has already been downgraded to ‘negative.’ Coupled with the eye-popping decline in the equity markets and the relatively small amount that most universities count as unrestricted endowment, sources of non-tuition funds available to assist in budget planning shrinks quickly. For the majority of public universities, another direct negative impact will be the reduction in state appropriations and state-supported financial aid to students.

Donor Dilemma

Donors and private foundations are now in precarious positions. The immediate needs of society are critical and may entail longer term commitments by donors and foundations; e. g. food security, health and safety, medical supply needs, accelerated research to craft new testing and vaccines. These cannot be ignored or relegated to lower priorities. Unfortunately, financial resources have been significantly reduced and discretionary giving will probably assume a lower priority. Clearly this development represents another complicating feature of the university budget planning process.

Strategic Positioning

Equally important is the evolving long-term impact on university fundraising and advancement. For example, capital campaigns are characterized by multi-year planning and implementation time horizons with important benchmarks along the way; all of these features are now thrown into disarray from both donor and university perspectives and thoughtful consideration of the progress of such campaigns will be called for. Furthermore, donors will be placed in the position of becoming more strategic in their giving. Donors have repeatedly demonstrated that they are focused on impacting quality at universities. An outcome of this unanticipated disruption in higher education is that donors will be sought after to assist in rebuilding competitive advantages and investing in new directions.  In the end, transformative giving will take on a new character.