Running a college without tuition: Berea builds endowment - Three Questions

University Business, March, 2004

Fundraising is part of every president's job, but for Larry Shinn at Berea College (KY), it is lifeblood: That's because Berea does not charge tuition. Instead, it gives students--many of whom come from and remain in the region--access to education. In return, they work a "service education" program.

"We're probably the only U.S. school that says, 'If you can afford to come, you can't,'" jokes Shinn, who recently sat down with University Business. Berea, a nonsectarian Christian college, was founded in 1855 as the first interracial and co-educational IHE in the South.

How can you manage to not charge tuition?

Unlike other schools' endowments, ours is used to pay tuition. At Berea, 74 percent of our operating budget comes from the endowment. At other colleges, tuition funds 60 to 80 percent of the operating budget; endowment covers 12 to 15 percent. The test of the costs are covered by fundraising efforts and grants.

So fundraising is front and center for you, isn't it?

We have to raise about twice as much per year as schools our size. This year, we're raising over $4 million. Our current enrollment is 1,500 and we estimate that it costs $21,700 to educate each student. We raise funds to cover these costs and also to complete new projects. The total endowment is currently valued at $350 million not including a six-year capital campaign to raise $150 million.

What are some of the unusual ways Berea raises money?

Because our student pool has to remain modest (to cover costs), our alumni pool is Limited. So we reach out to people who've never been here, but believe in us. Eighty percent of gifts are from "friends."

We rent 600,000 names per year and do direct mailings, which yield an average response rate of 1.8 percent. Respondents usually send $25 to $50, and many become annual givers. Our goal is to increase the number of givers each year. But planned giving is also important. One woman who had never been to Berea sent people to campus to "spy" on us. She ended up changing her bequest from 10 percent of her estate to 90 percent--or about $3.6 million.