Wealthy alumni, megadonors pour money into OSU

The departure of E. Gordon Gee as president not expected to slow goal of $2.5B fundraising target.

By the Numbers:

OSU’s $2.5 billion ‘But For Ohio State’ fundraising campaign

Started: Jan. 1, 2009

Goal: $2.5 billion

Raised through May 31: $1.56 billion

Alumni: 480,000

Alumni donors: 116,903

Average alumni donation: $3,181

Median alumni donation: $103

Campaign budget: $45 million per year

Campaign staff: 315, including 133 fundraisers

Source: Ohio State University

Top 10 OSU donors 2007-2012

Wexner Family Charitable Fund $23.9M

IMG College $20.5M

Les and Abigail Wexner $19.2M

Columbus Foundation $18.8M

Huntington National Bank $16.6M

Wexner Center Foundation $13.8M

Limited Brands Foundation $8.7M

TRC Inc $8.7M

Anonymous $8.4M

Elizabeth Ireland Graves Foundation $7.1M

Ohio State University has tapped a mixture of deep-pocketed alumni and companies with huge stakes in maintaining business ties with the university for a fundraising campaign that is nearly two-thirds of the way toward reaching the university’s target of $2.5 billion, a Dayton Daily News examination found.

The biggest of the megadonors is Leslie Wexner, the self-made billionaire who founded The Limited in 1963 and built it into a retail clothing empire that employs 90,000.

In February 2011, Wexner and the Limited Brands Foundation pledged $100 million to Ohio State — on top of another $130 million previously contributed or promised to the university.

But Wexner is hardly the only multi-million-dollar donor to the state’s largest university, also one of the largest in the nation. Records obtained from Ohio State through a public records request show that banking giant Huntington Bank and business tycoon Sam Covelli are among those who are credited with making big-monied gifts to the university.

It’s not always clear what motivates such generosity, but Ohio State has taken steps to show its appreciation. It named its medical school after Wexner, a 1959 alumnus and past member of the board of trustees, and will name a multi-sport facility after Covelli, who pledged $10 million to build it.

Megadonors typically make up the bulk of the money raised by universities both public and private, according to the Council for Advancement and Support of Education, which tracks fundraising campaigns. The top 10 percent of the donor class contribute 96 percent of the money in large campaigns, according to CASE’s survey of campaigns between 2006 and 2010.

Typically, 36 percent of donations come from alumni, 17 percent from foundations, 14 percent from corporations, 14 percent from other individuals and 10 percent from trustees, CASE found.

Gee departure

Ambitious fundraising campaigns typically have a face, and at Ohio State it has long been E. Gordon Gee, whose courting of potential donors with receptions, dinners, tailgate parties and personal attention was often used by supporters to tout his worth to the school.

But while Gee stunned many with his announcement that he was retiring as president on July 1 — he says he still wants to raise money for the school — donors and experts say his departure as the face of the campaign is unlikely to make a dent.

Stanley Ross, a retired Columbus area lawyer who has given $3.97 million to Ohio State, said he is sorry to see Gee leave. But, he added, “I don’t know that (fundraising) is going to be a problem. Ohio State is a big institution with lots of momentum.”

Don Fellows, president and chief executive of Marts & Lundy, a national fundraising consulting firm, said a university president’s departure typically doesn’t interrupt a fundraising campaign.

“I’d be more concerned about it if it was a university that was trying to raise its first $200 million but Ohio State has a big alumni base and it has great support,” Fellows said.

Ohio State quietly began the campaign, named “But For Ohio State,” in January 2009 and raised $1.31 billion before kicking off the public phase of the campaign in September 2012.

Through May 31, 2013, the campaign brought in $1.56 billion — $1.2 billion in cash and the rest in pledges and planned gifts.

Last fall, Gee recruited Michael Eicher from Johns Hopkins University as OSU’s top fundraiser. He was given a salary of $700,000 with a guaranteed bonus of $300,000 in the first year. Eicher oversees an effort with 315 staffers, including 133 frontline fundraisers who research and reach out to potential donors, including 480,000 living alumni. The campaign’s annual budget is $45 million.

So far 116,903 alumni households have contributed with the median gift falling at $103 and the average at $3,181.

But it’s the big donors who turn heads, and none in recent years has been bigger than Wexner.

Our examination found that since 2007 Wexner, his family and the Limited Brands Foundation have given the university a combined $65.6 million, easily making the family OSU’s top benefactor during that period.

In at least two cases, Ohio State collected contract money from vendors and then put a portion of it to the fundraising campaign and gave credit to the businesses as the donors.

IMG College has a 10-year contract with Ohio State’s athletics department worth $128 million for radio broadcast rights and other multimedia rights. IMG College and its sister company IMG Communications are listed as having contributed a combined $20.6 million between May 31 and June 8, 2012.

“Details of our relationships with our university partners are private and confidential,” IMG said in a written response.

OSU fundraising documents list Huntington National Bank giving $16.6 million to Ohio State since January 2007, including $15 million on June 29, 2012. In February 2012, Huntington signed a $25 million contract with OSU to be the official bank on campus, giving Huntington the exclusive right to put branch offices and ATMs across campus, make pitches to students and faculty and improve the functionality of the BuckID cards carried by more than 50,000 students.

The contract also stipulates that OSU will provide data to Huntington but will not publicly disclose what information is being provided. Several pages of the 101-page agreement were redacted by the university.

The university took $15 million of the $25 million received from the bank contract, put it into the fundraising campaign and marked down Huntington as the donor. Huntington’s contract did not require this arrangement.

“As outlined in the agreement, Huntington was required to make a $25 million payment to Ohio State. In accordance with Ohio State guidelines, $15 million of the $25 million was counted in the campaign,” said university spokeswoman E. Gayle Saunders.

“Institutions have to be very careful to make sure that decisions related to contracting are not influenced by an organization’s potential to give to the institution,” said Rae Goldsmith, vice president of advancement resources at CASE. “So most institutions have a pretty good firewall between the purchasing office and the fundraising office.”

Bryan Rothenberg, director of the liberal policy group ProgressOhio, said the universities need more independent oversight, particularly as their ties to business interests increase.

“I think that the potential for conflict of interest is huge and that the lack of an inspector general to independently look at expenditures at state universities is a glaring ethical oversight in government spending,” he said. “The fact of the matter is there is a very complicated web of university spending, university contracts and even tentacles that reach into the (state’s) Third Frontier and JobsOhio programs in which some of these donors may actually benefit from decisions made by university officials.”

“They need an ethics czar and an auditing czar just like state government does,” Rothenberg said.

Naming game

Some donors get to see their name in lights, or at least on a building, in return for their multi-million-dollar contribution. Like other universities, OSU is willing to name buildings, rooms, sporting arenas and other areas after donors — for a price. Universities typically have guidelines for donation thresholds for scholarships, endowed chairs, rooms, buildings, departments and labs.

In November, Covelli Enterprises owner Sam Covelli, the single largest franchisee of Panera Bread stores in the country, pledged to donate $10 million to OSU for the construction of a multi-sport facility that will be named Covelli Arena. The university agreed to the naming deal even though Covelli has been sued multiple times for employment discrimination. The gift agreement stipulates that OSU can remove the name if continued use of it would compromise the university’s reputation or integrity.

The Blackwell Inn on Ohio State’s campus is still named after marketing guru Roger Blackwell, even though he served more than four years in federal prison for insider trading.

Often, though, the naming is on a less grand scale. In November, the OSU board of trustees voted to name five children’s cubbies after contributors to a day care center.

Bob Hartsook, a fundraising consultant, said some donors like to have fun with naming rights, citing one client who donated $25,000 to a college to have a bathroom named after him. The ribbon cutting involved toilet paper, Hartsook said.

Courting donors

Some donations come from unexpected sources. Belle Joseph, who earned a master’s degree from OSU, taught math in the Toledo area for 40 years, retired in 1970, and traveled the world with her sister, Bess, according to The (Toledo) Blade. Joseph, who never married, died in 2006 at the age of 96 and 18 months later, OSU received a $2.5 million donation from her estate.

Many donors start out as poor college kids who blossom into inventors, business titans, doctors or other success stories. Lawrence Barnett started at OSU as a young man from Orrville and ended up making millions in the entertainment industry as an original holder of MCA stock and as the agent to stars such as Benny Goodman, Judy Garland, Marlon Brando and Ronald Reagan. Barnett, who died in 2012, never forgot his alma mater and over the past 20 years has given money for arts programs and building renovations on campus. In the last five years, the Lawrence and Isabel Barnett Charitable Foundation gave OSU $4 million.

Once donors are on the radar, the standard operating procedure is for university fundraisers to reach out to them, sometimes using university events as a lure. And at OSU, there is no bigger lure than football.

Gee, university trustees and senior managers entertained more than 500 guests in the president’s suite at Ohio Stadium during the five home football games last season. The guest lists include politicians, chief executives, doctors, judges and other VIPs.

Hartsook said the president’s suite at a Big Ten football game is “a front door to the university.”

“Obviously, there are a lot of people who support Ohio State athletics and will make gifts to support Ohio State athletics,” Hartsook said. “I’d bet 80 percent of the prospects in the president’s box are not athletic prospects.”

Big donors want to be treated as insiders when it comes to the university.

“In my experience, that’s the most important part,” Hartsook said. “They want to be part of the institution and they want to be counseled and they want to be asked for their opinion.”

Ross said he has dined with Gee and been invited to the presidential suite at the football stadium, but such schmoozing isn’t what convinced him to give nearly $4 million to Ohio State. Initially, Ross and his wife Jodi donated as parents grateful for the medical care OSU delivered to their son, Malcolm Ross, who was critically injured in a race car accident in 1993. They gave money for Dodd Hall, an inpatient rehabilitation facility on campus.

“That put us on the radar as far as Ohio State was concerned,” said Ross, who graduated OSU in 1962. It also put the Ross name on the foyer at Dodd Hall — a block away from the Ross Heart Hospital, which was named after Stanley Ross’ aunt and uncle.

Next, Stanley and Jodi Ross met Dr. Ali Rezai, a brain surgeon whose research investigates the use of deep brain stimulation to control the symptoms of Parkinson’s disease, tremors, epilepsy and other movement disorders.

“This is the kind of thing that has the potential to do a great deal of good for people for a long time to come. Once we saw what the doctor was doing, that’s pretty much what decided it for us that we wanted to do that,” Ross said.

Now, Rezai holds the Stanley D. and Joan H. Ross Chair in Neuromodulation at the Wexner Medical Center.

Ross, a retired attorney and auto racing investor, said he has been approached by OSU about his “next big gift.”

“That’s a little thing they don’t tell you. You get on a list. You’re very popular,” he said. “We’re learning to say ‘No, not at this time’ or ‘We’ll take it under consideration.’”

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