An atypical gift to Iowa State University’s College of Liberal Arts and Sciences will generate $52 million more than expected when the ISU Foundation first announced the donation in January.
Instead of an anticipated $93 million, the gifted equity stake representing a majority ownership of Curriculum Associates LLC – a Billerica, Mass.-based education firm – will create a new endowment worth about $145 million.
The university realized the increased value of the donation in releasing its gifted share to Berkshire Partners, a Boston-based investment firm – although the transaction is pending federal approval. ISU Foundation President Larissa Holtmyer Jones compared the shift in the gift’s anticipated worth to selling a house and discovering differences between appraised and market values.
“You get an estimated amount, but until you really go to market, you don’t know,” she said.
ISU graduate Frank E. Ferguson, now in his 90s, founded Curriculum Associates and decided to pursue a less common brand of philanthropy by donating his share to his alma mater. The gift was the first of its kind for Iowa State, which expected to procure the benefits of the donation through a management-led transaction to an independent buyer.
In looking to make that transfer, Holtmyer Jones said, Iowa State benefited from favorable market considerations coupled with Curriculum Associates growth in the intervening months.
The transaction is not yet final, but Iowa State no longer will be a shareholder when it is – which Holmyer Jones said should occur “in the coming months.”
“We’re being bought out essentially,” Holtmyer Jones said.
The proceeds of the transaction will create a permanent endowment generating $5 million to $6 million annually for the College of Liberal Arts and Sciences, which this year reports among Iowa State’s highest enrollments – second only to the College of Engineering.
University officials, in announcing the better-than-expected reaping Thursday, called the recipient college “the very heart of learning and discovery at Iowa State,” offering core courses for students in every major. Thus, the donation promises to touch nearly every ISU student.
“The proceeds from this generous donation will allow us to begin transforming the college and the university for generations of students,” ISU Interim President Ben Allen said in a news release.
More specifically, the endowment will enable the college to expand scholarship opportunities and financial support “to expand student participation in internships, undergraduate research, and study abroad opportunities.” It also aims to connect students with world-renowned artists through an artist-in-residence program and enhance career development support, among other things.
“The new endowment will more than triple the amount of scholarship dollars awarded by the college, boost our ability to provide Iowa State students with the opportunity to learn from superb faculty, and accelerate innovation in teaching and research,” Beate Schmittmann, dean of the College of Liberal Arts and Sciences, said in a news release.
The college initially will focus endowment resources on the arts and humanities and on enhancing the student experience; empowering educators, scholars, and researchers; driving discovery, engagement, and innovation; and enriching learning environments.
The boon comes at a time of mounting fiscal pressure on Iowa’s public universities, which lost more than $30 million in base state appropriations during the last Legislative session. The institutions – ISU, University of Iowa, and University of Northern Iowa – have requested annual tuition increases for five consecutive years, proposals its governing Board of Regents is considering.
ISU’s Allen made the tough call this year not to mandate salary increases, while UI President Bruce Harreld has said faculty pay is one area he won’t short – even if it means cutting other areas. The financial woes have forced each of the schools to think outside the box when it comes to funding, and Holtmyer Jones said her entity is open to unique philanthropic ideas.
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“Certainly it takes the right kind of donor with the right kind of circumstances for this to work,” she said. “But we’ve had board members who’ve made this suggestion over the years, and this is just the first time we’ve actually been able to align that interest with a donor for whom it made sense.”
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