2002 / 11月
Teng Sue-feng /photos courtesy of Jimmy Lin /tr. by Phil Newell
Since 1996 an endowment fund sys-tem has been in place in Taiwan to help provide funding for national universities. This means that while they are still mostly subsidized by the Ministry of Education (MOE), these universities must come up with 20% of their own funding. How have universities done in the six short years that they have been seeking donations? Who has been most successful?
Tien Chang-lin, formerly the chancellor of the University of California at Berkeley, has said: "When I was chancellor I only had to worry about three things-sports teams, parking problems, and raising money."
A few years ago when Dr. Nannerl Keohane, president of Duke University, another of America's most respected schools, came to Taiwan to give a speech, she pointed out: "Having a big budget does not necessarily make a first-rate university. But without sound financial backing, it will forever be impossible to become a first-rate university." She reported that only 9% of Duke's annual revenues come from tuition, while donations account for 14%.
Starting from scratch
As the ROC government has faced growing financial problems, the glory days of the past when universities could rely entirely on government subsidies are ending. In order to deal with the shortage of money for universities, the MOE, referring to long-standing funding systems for European and American universities, began implementation in 1996 of an endowment fund system, and at the same time began writing "self funding" next to university budget items in order to encourage them to seek outside support.
"The endowment fund is a reform method which can solve problems of rigidity of civil service budgeting rules, lack of autonomy for schools, and lack of flexibility. One important difference is that allocated funds can be rolled over to future years, so that the endowment fund can increase over time, which will be helpful to the long-term development of schools," says Chang Kuo-pao of the Department of Higher Education at the MOE.
In the past, there was always the problem of the "implementation rate" at state-run universities. If a school did not use its budget up, the school president could actually be punished. As a result, every year at the end of the fiscal year, schools rushed to buy new equipment and contract out new projects, and were often accused of wasting money. Another problem was that research programs had to show short-term results. If the annual research budget was cut, the research plan would have to be terminated in mid-course. Such civil-service type budgeting methods hardly suit the operations of a university.
Even more important is that since the implementation of the endowment fund system, school income such as tuition fees, joint projects between academia and industry, continuing education, and intellectual property rights from R&D can all be freely used by the school, rather than being turned over to the national treasury as in the past.
Targeting high-tech alumni
The advantage of an endowment fund system is that the results of efforts to cut back waste and increase revenues will all end up in the school's own pocket. So how have things gone over the past six years?
In June of 2002, Fu Jen University sponsored a Symposium on Educational Advancement in the 21st Century, which focused on the issue of fundraising. At the conference, Yip Ming-chuen, secretary-general at Tsing Hua University, told the conference that his school had raised more than NT$650 million in the past three years, including a NT$300 million donation from Macronix International Co. Ltd. (to build a learning resources center to be known as "Macronix Hall"), NT$150 million from the Taiwan Semiconductor Manufacturing Company Education and Culture Foundation (to build a College of Technology Management building to be called "TSMC Hall") and one million shares of stock, worth over NT$100 million on the market, from Bruce Cheng, chairman of Delta Electronics Inc.
"One reason that donors give money is that they identify with and support the academic focus of the school, but the school president also plays an important role," explains Yip Ming-chuen. Former Tsing Hua president Liu Chung-laung had taught in the US for more than 40 years, and he was very well informed about the history of fundraising at American universities. During his four years as president of the school, he was very active in sending out feelers and building up relationships.
Yip says that these contacts are essential because fundraising is largely a matter of discovering willing donors by maximizing the number of people contacted, rather than persuading reluctant donors to part with their cash. "It was only by fortuitous circumstance that he was able to get a donation of NT$300 million. President Liu will tell you that he visited Macronix chairman Hu Ding-hua three times in order to reach agreement, but this was more a case of 'channeling water which was already coming in the right direction.' Liu simply explained the future prospects and current bottlenecks of Tsing Hua in a direct and sincere manner," says Yip. If you deduct the three gigantic contributions, in fact more than half of the remaining amount comes from small donations, so fundraising is still largely a matter of "a river resulting from many small streams."
The annual budget at Tsing Hua is an estimated NT$3.1 billion. The government provides half of this amount, but that is only enough to cover personnel costs. If there are major projects in the works, the school has to come up with funding somewhere else. Yip Ming-chuen points out that income from donations is mainly used in purchasing hardware and in construction, because the MOE budget in this regard is very tight, and the school knows it cannot get full subsidization.
Taking construction of TSMC Hall for example, the NT$150 million donated by the company covers one-third of the costs. An application can be made to the MOE to cover the other two-thirds, but as for when such assistance can be received, the school will just have to get in line and wait for the plan to be reviewed. If the school can come up with a higher percentage of the funds themselves, then the MOE will give them higher priority in the review process.
A steady trickle
In principle, subsidies to national universities from the MOE only provide for with current commitments. Universities which want to do something new must do so on their own. This is why National Chiao Tung University (NCTU) has set a target of raising NT$150 million for development of new campuses.
NCTU has always been plagued by a shortage of campus space. It is one of the few national universities in Taiwan with less than 100 hectares (only 77 in fact, compared to about 200 at National Taiwan University). In 2000 NCTU reached agreement with the Hsinchu County government to build a combination university town/industrial park/residential zone near the Hsinchu station of the high-speed railway, in a plan to promote local economic development. The Hsinchu County government is responsible for acquiring the land, and will provide 100 hectares to NCTU free of charge.
Besides the new Hsinchu campus, NCTU is also moving ahead with new facilities at the Tainan Science-Based Industrial Park and near the Chiayi high-speed railway station. The development of these three campuses is called the "Hsinchu Jade Development Plan," and funding for the first phase of the plan is expected to come entirely from outside donations.
Last April, NCTU established a special Hsinchu Jade Development Plan team, led by Lin Chien-cheng, with four full-time staffers for fundraising, and launched a series of fundraising activities. First they invited famous alumni Stan Shih (chairman of the Acer Group) and Huang Ho-ming (chairman of the Institute for Information Industry) to inspect the new Hsinchu site from a hot air balloon, getting NT$25 million in donations. In October, they held the "President's Cup" golf tournament at a course in Hsinchu, raising another NT$4 million-plus. At the end of the year they picked up another NT$4 million at a fundraising dinner, NT$5 million on homecoming day, and so on.
In November of 2001, NCTU established the first integrated fundraising and sales website in Taiwan. The site includes an "enterprise diagnostic center," in which well known alumni such as Stan Shih, Huang Ho-ming, and Nita Ing from time to time provide management advice to alumni.
This September, they came up with the Grains of Sand Project for alumni who commit themselves to fixed donations as fixed intervals. Anyone joining for even one year can become a member of the "Chiao Tung Family Club." That is to say, if an NCTU student donates NT$1200 in a year, or an alumnus donates NT$12,000 in a year, they will be able to purchase products offered through the club at discount prices. Among the recent hot items have been electronics provided by ASUSTeK Computer, Global View, and Weltrend Semiconductor, such as mobile phones, PDAs, and notebook computers, as well as bicycles.
In two months, NCTU has raised NT$15 million with this site. Over the past year, these various events and activities have brought in NT$50 million in donations from school alumni.
Force of circumstance
"On average we visit two company chairmen per day," says Tracy Cheng, a staff member on the Hsinchu Jade Development Plan team. NCTU has graduates spread throughout high-tech industry, and it is estimated that there are about 500 school alumni with positions at the level of chairman or general manager. Although NCTU is a small school, 80% of its alumni are still in Taiwan, and they keep in close touch with each other and with the school.
However, while they have had some success in fundraising, team leader Lin Chien-cheng states that, "Although alumni are the most important resource, you have to develop other sources of funding as well. It is especially difficult to do fundraising in Taiwan, and everybody uses the same old tactics. But it is even more important to set down roots and broaden participation to create regular and long-lasting sources of funds."
If you look very carefully you will see that when universities raise money, sometimes circumstance is more important than people. One often hears about corporations in Taiwan donating money to universities. For example, Chung Hsing University received NT$700 million from alumnus Gerald Hsu, an overseas Chinese entrepreneur in the high-tech industry. National Cheng Kung University and National Taiwan University (NTU) received donations of NT$200 million each to construct new buildings from two of the Wu brothers of the "Tainan gang" of business and political leaders. NCTU alumnus David Lee and Microelectronics Technology Inc. together donated US$5 million to support research. Former Tsing Hua president Shen Chun-shan picked up a donation of several tens of millions in only a single meeting with Robert Tsao, chairman of United Microelectronics.
Moreover, NTU puts another NT$10 million or so on its books at the alumni fundraising dinner every year, not to mention the fact that former ROC president Lee Teng-hui and former vice president Lien Chan, both NTU alumni, have made donations to the school. In fact, there are NTU alumni scattered throughout the top ranks of every profession, and they donate money to their alma mater whenever they can. For example, when the College of Electrical Engineering wanted to put up a new edifice, graduates who are now leading members of the "technobility" in Taiwan provided considerable amounts.
The point of all the above examples is this: National universities that have a long history and tradition, or that emphasize engineering and sciences, are the main beneficiaries of corporate donations.
Many people agree that donations to universities by social and business leaders are often a case of "gilding the lily." That is to say, the better a school's reputation and the more people recognize and support its academic orientation, the more likely it is to get donations.
But if national universities, especially those that are strong in engineering and the sciences, have the upper hand in fundraising, private universities, which must come up with all of their own revenues, nonetheless have their own independent strategies.
"The approach of private schools is to proceed step by step. They show more consideration in dealing with students and alumni than state-funded schools do," says Chang Kuo-pao of the MOE. He points to the example of Feng Chia University, whose annual alumni meetings-one each for northern, central, and southern Taiwan-often draw more than 3000 participants. "They keep a close eye on their graduates, who in turn feel a sense of lifetime obligation to their alma mater."
John Ning-Yuean Lee, president of Fu Jen University, says that in the 41 years since the founding of the school they have put away a surplus of about NT$4 million per year on average, so their financial position is sound and they can take chances in investing. He says that by just putting the money in the bank and living off the interest, they would have an easy time of it. But every few years the school comes up with a new development plan. The current mid-range plan is to build a medical research building to complement the existing medical school and department of medicine. The estimated cost is more than NT$840 million, with plans to develop an even larger medical complex and residential area beyond that.
John Lee says that because the funding sources of the private universities in Taiwan differ, each should be free to pursue its own academic ideals. Fu Jen, which was founded by the Catholic Church, does not regret spending lots of money on setting up the colleges of medicine and the arts in order to move in the direction of educating "well rounded" individuals.
Although not currently under any financial pressure, Fu Jen is actively fundraising for future development. Last year, they established the Fu Jen University Fund in the US, legally registered with the federal government, to pave the way for fundraising in the States. Over the last year they raised US$67,000 (over NT$2 million) plus a single very large bequest. Added to donations from Taiwan, last year Fu Jen raised almost NT$100 million. John Lee concludes: "You could consider us the 'model student' among private schools."
There is a large gap between government funding of public as opposed to private universities. Seventy percent of the money that goes to higher education subsidizes state universities. John Lee believes that the government should do more to encourage well-run private schools. While these private schools do not need funds to survive, he explains, they do need money to improve the quality of education.
Many private schools feel that the tax incentives in domestic tax law governing private or corporate donations to public vs. private schools are unfair. Both private and corporate donations to state schools are 100% tax deductible, while private donations and corporate donations to private schools are only 50% and 25% tax deductible, respectively.
Chang Kuo-pao explains that the Ministry of Finance sees a donation to a public university as being the same as money given to the government. Private universities, on the other hand, are considered "legal persons," like foundations. If donations to private universities are fully tax deductible, then other legal persons and groups will seek comparable treatment. However, these differences in tax incentives are being altered in the amendments to the private school law that have recently been sent to the legislature for deliberation.
"The biggest problem at private schools is in financial structure. What I mean by that is that tuition and fees provide for more than 60% of outlays. In comparison with universities overseas, this is excessive reliance on tuition and fees," says Chang Kuo-pao. He feels that private universities should step up their efforts in academia-industry cooperation, funding for research, continuing education, and other areas in order to make up their financial shortfall.
Changing social attitudes
It has been six years now that universities have been trying to raise money from donations. Strictly speaking, results have not been impressive. The main reason is that citizens in Taiwan still are not very familiar or comfortable with the idea of donating money to schools.
Tsing Hua secretary-general Yip Ming-chuen says that whereas many people think that it is quite easy for schools that emphasize engineering and science to raise money, that is not necessarily the case. Tsing Hua began raising money for their endowment fund in 1996, but in the first year collected only a few million NT dollars. In that same year, on the other hand, he heard that a Buddhist organization that wanted to found a university was able to raise NT$170 million. "To us that was an astronomical figure, and really illuminates the phenomenon of 'buried treasure among the common people' in Taiwan."
Lin Chien-cheng notes in a similar vein that not long ago he saw a newspaper report in which a temple in Kao-hsiung raised NT$4 billion in just a few months for a renovation project. In fact, generally speaking, people in Taiwan are more familiar with the idea of donations to religious or political groups. At some of the larger temples, believers donate astonishing amounts every year, and the temples boast enormous assets.
An American who participated in the Symposium on Educational Advancement held in June reminded everyone that there are necessarily cultural differences between the US and Taiwan, and that the concepts of donating money and charitable gifts are deeply implanted in American culture. He suggested that besides referring to the strategies of American universities, it is even more important for Taiwan universities to understand how local people feel, to try more things and to make adjustments in order to create the most appropriate approaches.
An example of the American model is Harvard University. At the school's 350th anniversary, they reached their fundraising goal of US$350 million. At that time Harvard established a special committee which targeted 500 big corporations, letting their alumni in these corporations understand that Harvard needs them and that Harvard can give them assistance in their corporate development.
Lin Chien-cheng points out that Harvard's annual budget is NT$40 billion, equivalent to ten state universities in Taiwan. It may be hard for people in Taiwan to believe, but the department at Harvard with the most personnel is the one in charge of fundraising, with 340.
C.Y. Chang, president of National Chiao Tung University, agrees that Taiwan cannot simply follow American methods in fundraising, but must take into account Taiwan's culture. For example, two years ago he worked out a plan with John Hsuan, chairman of United Microelectronics, to create venture capital funds to raise money. Subsequently alumni of NCTU in Taiwan and the US established four venture capital funds, totaling about NT$3 billion, which return more then NT$10 million to the school each year. Besides NCTU , other schools-including Cheng Kung, Sun Yat-sen, and National Taiwan-have all established venture capital funds as a long-term source of income.
Much to be done
Summarizing the experience of fundraising so far, besides the need for creativity in fundraising strategies, it is necessary to strengthen consciousness of the importance of fundraising at universities.
"Universities still have not realized that they will have no choice but to raise funds for the future," says Chang Kuo-pao. Many schools have no one specifically responsible for fundraising and are passive about it; they lack any shopwindow, so that even persons who want to donate money don't know where to send it. While fundraising is a specialized field in itself, universities, being packed with talent as they are, should show better results simply by putting more effort into getting the word out.
"One of the main functions of university presidents in the US is fundraising, whereas in Taiwan in the past, people looked most at the personal character or academic ability of school presidents," says Lin Chien-cheng. In the era of the endowment fund, Taiwan schools will have to recognize that there is a change in the role played by the president. His or her job will be to plan the long-term development of the school, find good faculty, ensure adequate financial resources, and create a first-rate research environment. . . in a word, to come up with the cash.
Lin says that the current situation in American universities is how Taiwan will look in 20 years. That is to say, 20 years from now universities in Taiwan will have to rely on themselves for most of their funding, and the era of low tuition will be over. This is because public and private schools understand that if they accept government subsidies, then they must accept control-over the number of students, tuition, which departments they can have, and so on. Only if there is liberalization of higher education can universities have a future and competitiveness.
The revolutionary task of university fundraising has not yet been a success. But fundraising after all is like a slow trickling stream. So long as a school can earn the respect and admiration of students, alumni, and society, then "one hundred streams will a great ocean make."
(opposite page) Stanford University has produced many outstanding alumni and helped make Silicon Valley what it is today. Alumni have in turn given generously to the school, making it one of the largest recipients of corporate donations in the US. (above) In order to proceed with its Hsinchu Jade Plan for a new campus, Taiwan's Chiao Tung University is trying to raise NT$150 million; the fundraising team leader is Professor Lin Chien-cheng, seated at left.
The high-profit high-tech industry has been the focus of appeals for donations from universities in Taiwan, and the industry has proven generous in supporting school development. The photo shows a ceremony at which Taiwan Semiconductor (TSMC) donated money to Tsing Hua University for a new building which will bear the company name. (photo courtesy of Taiwan Semiconductor Manufacturing Company Education and Culture Foundation)
Schools in Taiwan are exploring new sources of income. One of the hottest new approaches is to offer Executive MBA programs, with tuition fees of NT$10,000 or more per credit.
"There is buried treasure among the common people." The people of Taiwan have always willingly donated money in times of disaster or to religious or social groups, but they remain "untapped" as a source of funds for universities.
Universities are the talent pools for corporations, so corporate donations to schools are really beneficial to both parties. The photo shows a computer show; such shows have always been jam-packed sources of profits for the high-tech industry.