11

The Private Sector:
Indiana University Foundation

At the time of Indiana University’s Centennial in 1920, a fundraising effort was planned to provide for three badly needed structures that would also serve as a memorial to the sons and daughters of Indiana University who had lost their lives in World War I and commemorate those who had served in earlier wars. A centennial is a logical time for fundraising. The goals selected were for a Student Union Building, a stadium, and a building for women’s housing and activities.

In August, 1921, William A. Alexander, an alumnus who had been serving as dean of men at Swarthmore, was brought back to Indiana to head the Memorial Fund campaign and was named university librarian to dignify his leadership of fundraising activities. Under his direction a mighty campaign was organized. A team that included President and Mrs. Bryan and several student leaders journeyed with Alexander to Washington, Philadelphia, New York, Boston, and Cleveland, speaking to alumni groups on behalf of the campaign.¹

A tremendous effort was made also to arouse the student body and the faculty, and as a consequence a substantial amount of money was pledged by these two bodies. In fact, the student campaign and the faculty campaign were responsible for most of the money raised, since, although in many individual instances alumni were generous, as a whole they were not oriented to supporting their alma mater. Edward Von Tress, who became alumni secretary in August, 1923, traveled throughout the West and the South on behalf of the campaign; President Bryan carried it to our alumni in the East. Sufficient funds were raised to furnish financing for the first unit of the Union Building, for the Memorial Stadium—now called the Tenth Street Stadium—and for Memorial Hall, the first building of the Wells Quadrangle complex; however, the campaign in large part demonstrated that the university’s fundraising mechanisms were woefully inadequate and that the natural constituency of the university, composed of its alumni and friends, was ill-informed about the university’s needs and the importance of individual giving.

In the course of the Memorial Fund campaign, the fundraising activities of Indiana University were inevitably compared with those of the other Big Ten institutions and their equivalents throughout the country, usually to Indiana University’s disfavor. Then the recession of the late 1920s and the deepening of that recession in the 1930s increased the university’s financial problems, and the discussion of ways and means to stimulate alumni contributions to the university and to raise additional money to aid the institution grew lengthier and ever more insistent. Gradually some interested alumni began to perceive that only with outside funds could the peaks of excellence so desired and essential to the university’s overall distinction be attained. Discussions and debates continued through the late 1920s and throughout the early 1930s. Certain alumni were especially interested in this subject, principally John Hastings of Washington, Indiana, and Uz McMurtrie of Indianapolis. They worked closely with George “Dixie” Heighway, the successor to Ed Von Tress as alumni secretary, and among them they kept alive the debate and discussion on the fundraising issue. The early success of the James Whitcomb Riley Association served as a pattern and spur to their direction. The growing interest culminated in the decision to incorporate a nonprofit foundation affiliated with, but in dependent of, the university. The express purposes of the Indiana University Foundation were to stimulate alumni and other friends of education to make gifts and bequests to aid Indiana University over a broad field: to finance research, to subsidize publications, to establish scholarships and fellowships, to hold patents² and other property, and in general to aid the university in any undertaking for which funds were not otherwise available. The purposes of the Foundation were thus limited solely to the support and enhancement of Indiana University. They remain so today.

The foundation concept, as we know it, took form in the early years of this century through the humanitarian impulses of such pioneers as Andrew Carnegie and John D. Rockefeller. It was in the beginning a uniquely American creation with roots in the spirit of voluntarism that characterizes our culture. The combined contribution of the principal private foundations to the welfare of our nation and of the world is beyond measure; it stands as a remarkable testament to the capabilities inherent in philanthropy administered with the imagination, flexibility, and venturesomeness possible in a private organization.

Major state universities now typically have one or more affiliated foundations designed to help them better serve their students and their states. Through their foundations universities are able to achieve higher levels of excellence than otherwise possible by increasing the funds and options open to them for the encouragement of talent, ideas, and scholarship. State university foundations, it may also be remarked, are free to seek the donation of private funds, whereas states themselves are limited to obtaining funds through the compulsory route of taxation. An additional consideration favoring the development of state university foundations is the necessity of an instrumentality that has the flexibility to carry out functions that are special and essential to the work of a university but that are not customary in state government.

In this regard it should be mentioned that people who would not make a gift or a bequest to an agency of the state will give to a private body such as the Indiana University Foundation. Aside from fearing possible political influence in the disposition of the gifts, they are averse to having their gifts subjected to state restrictions. Also, some donors for good reason wish to remain anonymous: they may want to avoid being harassed by requests for money, to keep members of their family from knowing of the gift, or to prevent publicity that might lead to robbery and assault when it is known that they have money.

Gifts to the university directly are subject to state constraints that were not designed for an operation like the management of gifts and bequests. For instance, the state is limited by law in the kinds of investments it can make. In fact, although legislation would be needed to permit the admixture of university with Foundation gifts, the benefits of fiduciary management by a single office would be many: reduction of cost, uniformity in investment policy with some consolidation, greater diversification and security, and greater efficiency of management.

In 1936 the concept of the foundation was sufficiently new that, notwithstanding the strict limitation of purposes set forth for the Indiana University Foundation, some administrative officers of the university were a little fearful that the movement might represent an effort on the part of certain alumni to try to interfere with the operation of the university. As a consequence the provision was made in the Foundation’s bylaws that the board of the Foundation should always include the president of the university, the president of the Board of Trustees, and two other trustees nominated by their fellow trustees.

The corporate charter of the Indiana University Foundation was issued by the Indiana secretary of state on June 15, 1936. The incorporators were Paul V. McNutt, George A. Ball, John S. Hastings, Ora L. Wildermuth, William Lowe Bryan, Hugh McK. Landon, Clair Scott, William A. Alexander, Albert L. Rabb, and Uz McMurtrie. The first bylaws provided for a board of directors not to exceed fifteen, nor to be less than ten, in number. The incorporators constituted the first board. These busy and, in several cases, eminent men were willing to serve partly because of their faith in the university’s future but also because they were assured of freedom from partisan pressures and political influence in directing the Foundation as they saw fit. I joined the board upon becoming acting president of the university in July, 1937, one year after the board’s inception, and have served on it ever since. During the period from 1937 to 1962 I held the dual offices of chairman of the board and president of the Foundation. When Elvis Stahr became president of the university, he was made chairman of the board of the Foundation, and I continued as its president. Among the administrative officers of the university who gave valuable service to the Foundation during this period were Ward Biddle, Joseph A. Franklin, John Hicks, and T. Edwin Randall. My responsibilities with the Foundation now include the offices of vice president and chairman of the Executive Committee, chairman of the Real Estate Committee, and president of FounFarm, the wholly Foundation-owned corporation for the management of the Foundation’s gifts of real estate, operated for profit. I am also a member of the Nominating Committee and the Investment Committee.

The articles of incorporation of the Foundation state that “the purposes for which it is formed are in general to promote educational and charitable purposes and objects; and specifically, but not in limitation of the foregoing, to receive, hold, manage, use and dispose of properties of all kinds, real and/or personal, whether given absolutely or in trust, or by way of agency or otherwise, for the benefit of Indiana University, and the educational and charitable activities and any or all of them that may be conducted by Indiana University or the trustees of Indiana University, or such corporation or body as may be established to succeed the trustees of Indiana University.”

The initial funds for organizing the Foundation were contributed by George A. Ball of Muncie, then a trustee of the university. He gave $5,000 and stated that he expected his gift to be used as seed money to attract other funds that would sustain the growth. At the start George “Dixie” Heighway added to his duties as secretary of the Alumni Association those of executive secretary of the Foundation. Thus from a very simple beginning the present vigorous Indiana University Foundation has been developed.

Soon after becoming president of the Foundation, I began the expansion of the board. The first board was made up of alumni and friends solely from the state of Indiana, with the exception of Clair Scott, an alumnus from Chicago. As we expanded the board and finally amended the bylaws to increase its size to thirty members, we tried to achieve something of a national distribution of our board members. One of the strengths of having an auxiliary foundation to raise money for a state university is its board membership, and board interest therefore may be drawn from the nation or from the world, for that matter, rather than from the state alone.³ The trustees of Indiana University must by statute be citizens of Indiana, even though our alumni are scattered all over the United States and the world. While the trustees of the university may be representative of the citizens of the state, it would be difficult indeed for them to be representative of the whole alumni body. The Foundation, on the other hand, gives us the opportunity to have a strong, national board working for the university.

As I have suggested, the Foundation office staff in the beginning consisted solely of Dixie Heighway, who served on a part-time basis, and volunteers. In addition to his knowledge and understanding of Indiana University’s great need for private money, he had a remarkable range of information about our alumni and about whether or not they were likely prospects for gifts. He also had many excellent ideas for fundraising techniques. As the years went along and as new managers came and went, he continued to be the secretary and the important link with the past. An institution needs a memory.

By the mid-1940s we realized that we needed a man who could devote full time to the affairs of fundraising. We were able to secure the services of Lawrence Wheeler, an alumnus, who served the Foundation from January 1, 1944, to July 1, 1949. He was the first professional manager of the Foundation, having gained a broad background in money raising with the Ketchum organization in Pittsburgh. He knew all the techniques to be used and was a skilled writer, adept in the preparation of fundraising materials. To his advantage, Lawrence Wheeler had a wide acquaintanceship and fine reputation among the professionals in his field, and he had a rare historical sense of the university’s values as well as an ability to articulate its aspirations.

At Wheeler’s retirement, Howard “Howdy” Wilcox was recruited. He had a good grounding in newspaper work and a natural flair for public relations. Howdy was innovative and energetic. The achievement of his period was remarkable, considering the shortness of its duration (1949–52). To interest students in the work of the Foundation and to make them aware of the university’s needs, he organized the Student Foundation Committee, forerunner of the Student Foundation. Drawing upon the student leadership on campus, the executive director’s office selected thirty-six men and women students, both organized and unorganized,⁴ for the first committee. They received their appointments from me as the university’s president and were honored a few days later at a dinner given for them by the Foundation. From the beginning the purpose of the Foundation was impressed upon them, as were the needs of the university and their role in interpreting those needs to other students. It was hoped and believed that they would carry this knowledge with them into their adult lives, when many of them might have the means and influence to have a major role in the Foundation’s fundraising. The assumptions underlying this approach are necessarily speculative and as such dictated a cautious allocation of the Foundation’s direction and resources to this development, but the concept of student involvement had the approval of the president of the Foundation and of the university.

Howdy Wilcox also launched a feature that was to become famous, the annual Little 500 bicycle race, patterned after the Indianapolis 500. The Little 500 has served as a rallying point for the activities of the Student Foundation Steering Committee. From the beginning the net proceeds from the sale of tickets have been used to provide scholarships for students who are working their way through school and need some help. The Student Foundation also sponsors other events such as Red Carpet Days for prospective students and the Telefund solicitation. Even after Howdy joined the Pulliam newspapers in 1952, he remained close to the Foundation and has for many years served as a very loyal and effective member of the Foundation’s board of trustees. From 1963 to 1966 he was also an Indiana University trustee.

William S. Armstrong, a former sports newscaster and dairy company executive in Owensboro, Kentucky, succeeded to the Foundation directorship in November, 1952. He brought to the job a considerable experience in selling as well as enormous energy and enthusiasm. As an undergraduate Bill had been active in promoting university events along with Danny Danielson and Bill Menke, a powerful troika of student leaders. His devotion and dedication remained strong when he became an alumnus. Bill has given to the Foundation the valuable advantage of continuity of leadership. During this period, the Foundation has had its greatest growth—a period within which annual fundraising has become increasingly important, the Student Foundation has multiplied its program, and the Foundation itself has developed importantly as a factor in the support of university activities.

In the first decade and a half of the Foundation, the limited funds raised were mostly from private gifts and were applied directly to faculty use, to scholarships, to loan funds, and to the purchase of important collections for the libraries. A major effort was directed toward securing patents for faculty research products and, later, toward placing information about bequests and life income trusts in the hands of lawyers who might have as clients potential donors to the university. During the 1940s, the appeal for funds was organized into an annual giving campaign, and by the end of that decade the yearly drive was given visibility and impetus by the appointment of a national campaign chairman, Byron Elliott, with aides heading the solicitation in each state. Meanwhile the federal government became active in support of university research, and large private foundations stepped up their programs in direct aid to research. The Foundation, as a result, became increasingly involved in the field of grantsmanship and in the administration of grants. The vigorous recruitment of new, research-minded faculty members at Indiana University in the late 1930s had stimulated a search for increased research funding from government agencies and foundations. In the period following World War II, from 1945 on, the Ford Foundation, the Carnegie Foundation, and the Rockefeller Foundation were all interested in supporting a variety of university activities, at home and abroad. The Ford Foundation, for instance, furnished much of the financing for the development of the university’s Russian and East European Studies program. It also helped finance a variety of overseas activities. The Rockefeller Foundation was a source of funding for many projects in biology such as the addition of Herman Muller to our genetics team and the initial funding of Alfred Kinsey’s Institute for Sex Research. Several other projects were financed by the Carnegie Foundation and Corporation.

At about this same period the federal government’s increased interest in supporting research was evidenced at Indiana University in the Navy’s grants for fundamental work in mathematics and in the support of physics, biology, and chemistry by other departments of government. Our noted, bright new members of the faculty were energetic in pursuing research grants that, upon receipt, were channeled through the Foundation. For several years we retained in the Foundation that portion of every government grant designated for indirect costs so that these funds might be used flexibly as needed in the development of the university. In time we accumulated a relatively substantial sum of unobligated money through this means and allocated it where it was needed most in the university. We used it to seed new programs that in turn would attract more support. We used it for specialized equipment that would make it possible for the science faculty, particularly, to refine their research and even be more productive. We used sizable amounts of it for specialized library acquisitions, general library enrichment, and the purchase of special collections. Eventually we had sufficient funds to use as matching monies for federal grants to help in the construction of new buildings made necessary by our research activity and growing enrollment. All of this was done with the full knowledge of the faculty, to whom I reported from time to time on the use of these funds and from whom I received suggestions and comments. As I mentioned, had we put the indirect-costs reimbursement back into the General Fund, it might well have been dispersed too widely to be effective in any one way; instead, we used these funds for specific project objectives that were designed to enhance the quality of the university. The same policy was followed at the University of California at Berkeley during this period: the trustees of the University of California placed its indirect-cost money in a special fund that was drawn on for purposes similar to those for which ours were used. It was during this period that Berkeley made its greatest advance. I suspect that I may have learned this tactic from Robert Sproul, then president of the University of California. But, whatever the source of the idea, as I look back on it, it may have been the most effective of our administrative policies during that period in promoting the rapid development of the scholarly and research interests of the university.

In the development of an institution there is no substitute for a reasonable reservoir of money that can be used propitiously as opportunities present themselves. The university is no longer allowed by state authorities to follow that practice with regard to indirect costs reimbursement and, as a consequence, undesignated funds have to be raised from alumni and friends for these opportune grants. The solicitation of undesignated funds is one of the most important functions the Foundation performs today, and it is devoting much of its energies to that work.

Those in university fundraising should like to respond to every request for funds from members of the University family. To do so is impossible for several reasons: the desires of individuals frequently conflict with each other; there is insufficient staff to attempt to meet all needs at one time even if the requests are equally worthy—phasing and priority determination are essential; certain types of needs should be met by the state, and it is not in the long-range interest of the university to relieve the state of doing so; and certain kinds of projects simply have no appeal to private donors, regardless of how eloquently the need or advantage may be presented. The staff charged with soliciting private funds and federal and foundation grants can be enormously aided by faculty understanding in what is involved in donor solicitation and by active faculty participation through sharing suggestions and ideas with the staff.

A quantum leap forward in the affairs of the Foundation came with the success of the 150th Birthday Fund drive in 1970. The purposes for which this fund was to be raised had been brought before the Faculty Council by President Stahr during the latter part of his administration, and the fund goal and the individual objectives had been explored with alumni and potential donors. The campaign was launched publicly on December 11, 1968. The announced goal set for the campaign was $25 million; by the conclusion of the campaign on July 28, 1972, we had raised $51,218,045.25 in cash, pledges, and pledged bequests, distributed among the goals of the campaign according to the designations of the donors (see Appendix [G]).

Such a major effort required additional staff who could devote themselves exclusively to the campaign. Fortunately we were able to enlist as the national chairman of the campaign Byron Elliott, a senior member of the board of the Foundation, a highly successful and respected insurance executive and alumnus, and, as already mentioned, the first chairman of the annual giving campaign. We were also exceptionally fortunate to be able to attract to the university Major General Joseph Butcher, who took early retirement from the Marine Corps in order to undertake the assignment as director of the campaign. General Butcher was a very loyal alumnus who had served as president of the Alumni Association and enjoyed a wide acquaintanceship with our alumni. He was ideally suited for this responsibility, which he performed remarkably well. The campaign was integrated with the university’s Sesquicentennial celebration, which was the greatest academic and historical festival the university has ever had. It was very effectively headed by Claude Rich. The university’s year-long celebration with its many important events and famous speakers helped to bring the campaign to the attention of alumni and other interested parties and performed an important role in assuring the drive’s success.

The Sesquicentennial campaign benefited from several circumstances not present at the time of the Centennial campaign. Among these were the fact that the annual giving campaign of the Foundation had helped to make our alumni more aware of the university’s need for private gifts. Also, as an indirect result of President Bryan’s policy of broadening the curricular base of the university, a higher percentage of alumni were in more remunerative fields than teaching. (The alumni body was made up primarily of teachers at the time of the Centennial.) Younger alumni, many of whom had been in Student Foundation activities, readily undertook the work of solicitation in geographical regions. Some of our older alumni who had been successful in their fields and had retained a strong interest in the university, in several cases serving on the Foundation board or as an Alumni Association officer, contributed handsomely. And, last, the growth of some family fortunes in Indiana (the Krannerts, the Lillys, the Balls, the Irwin-Sweeney-Miller family) made possible the generous gifts from these friends of the university that were a major factor in the campaign’s success.

It is a truism in academic fundraising circles that special campaigns must be conducted in addition to annual giving campaigns in order to stimulate the interest of alumni and friends. Therefore, at regular intervals appropriate occasions must be found for such campaigns. The 150th anniversary of Indiana University was, of course, an especially fit occasion for the launching of a campaign, and the university’s need for certain facilities and resources that are not typically provided by the state furnished the rationale. The success of the campaign has had a marked influence on the activity of the Foundation. Since that date, the amount received annually by the Foundation, in part from the payment of campaign pledges but in addition as a result of the aroused interest in giving to the university, has increased steadily during the past five years, as has the number of givers.

The rapid growth of the Foundation in assets and responsibility has necessitated additional executive personnel. Bill Armstrong has been fortunate in attracting a number of competent people for administrative positions in the Foundation, notable among whom are the two vice presidents, James Elliott and Jerry Tardy. Jim Elliott, trained both as an accountant and a lawyer, has remarkable competence in the financial field. Knowledgeable about taxes, he is a topflight investment man and an exceptionally capable money manager. These abilities aid him in successfully counseling major donors. Jerry Tardy is in charge of the annual giving campaign as well as the medical school campaign, but especially attends to the Foundation’s administrative management as Bill Armstrong’s able assistant. Another personnel development that merits mention is the service of alumni who, after having had distinguished business or teaching careers, have elected to spend their retirement years in assisting the Foundation. Harold Lusk and Edward Von Tress were the first to demonstrate the value of this practice. Currently this role is being filled effectively by Eugene Fletchall, who is charged in part with the operation of the Well House Society. The Well House Society, launched two or three years ago, has as one of its main purposes the amassing of an unrestricted fund for the use of the president of the university to meet urgent needs.

The longer I live with the problems associated with the financing of the university, the more I realize that the peaks of excellence are provided typically by private money, as I have already remarked. The state, within the limits of its means, out of tax revenues, attempts to provide for the basic necessities of the institution: the campuses, the teaching staff, the classroom buildings, and the housekeeping—the heat, light, fuel, and so forth. But there is rarely ever enough money from this source to fund the exceptional, the special—areas unusually important in research and basic scholarship. They require outside money, outside grants, which make the real difference between simply a good teaching institution and a true university that must not only teach—and teach well—undergraduates but also provide graduate and professional education. To do so it must be heavily engaged in research. Needed funds for this purpose go far beyond the basic support provided by the state. It is for this reason that the Foundation’s money-raising efforts and the other money-raising efforts to aid the university are of such vital importance. In addition to the Indiana University Foundation, the James Whitcomb Riley Memorial Association, which built the Riley Hospital in Indianapolis, has been one of the major sources of outside support to the university for research in children’s diseases as well as for the Medical Center research of benefit to children.

As the result largely of individual gifts and bequests in the past, the Foundation is heavily engaged now in investment and property management, along with the administration of wills, trusts, and designated gifts. Possibly better than any other, this feature of the Foundation demonstrates the distance that the Foundation has traveled since its beginning. This feature, too, according to the way it is managed, is crucial in developing the confidence needed for individuals to entrust gifts and bequests to the Foundation for the benefit of Indiana University.

Another crucial component for future success is the attitude and interest of students and faculty. The members of the university community need to understand the importance of gifts and bequests for the maintenance and enhancement of the university’s distinction in the future. They need to understand as much as possible the attitudes of potential private donors. With this understanding, in their many individual contacts they can tell the story of the university’s needs and the special opportunities those needs provide for all who are interested in supporting youth and higher education. In addition they can help to bring prospective donors to the attention of Foundation officers.

Perhaps sufficient time has now passed to begin assessing the effectiveness of directing ever more attention and resources of the Foundation toward development of student leaders as the funding source of the Foundation. The Pacesetter Fund, or Armstrong Student Foundation Endowment Fund, a campaign honoring William Armstrong’s twenty-five years with the Foundation, is designed to give a first answer to that approach. Meanwhile the annual giving campaigns will continue to profit from the accumulated experience of conducting yearly drives.

In 1986 the Indiana University Foundation will be fifty years old. It is therefore appropriate to mark that significant anniversary by concluding another major capital-gifts campaign, launched in good time and comparable to—or in excess of—the 150th Birthday Fund drive. Such an endeavor will furnish an ideal vehicle for recapitulating the record of the Foundation in service to the university for the information of students, faculty, alumni, friends, and the state. More important, it can provide funds for the critical needs of the university in the late 1980s and 1990s and inspire the rise to a new level of annual giving.

The first official portrait in my term as president. (Harris and Ewing)

On the way to my inauguration, 1938, with Governor Henry Schricker at my side and William Lowe Bryan behind me.

Bipartisan support at a football game in the 1940s—Charles Halleck on my right, appropriately, and Paul McNutt on my left.

Coach Bo McMillin and I rejoice over Indiana University’s first Big Ten football championship, 1945. (Allan Grant)

On the chicken-and-mashed-potato circuit early in my presidency.

The president’s office housed its share of returning G.I.’s, 1946.

Celebrating James Whitcomb Riley’s birthday with some young friends, October, 1947.

Postwar German education as viewed with Frank Banta, 1948.

With J. K. Lilly at the groundbreaking for the Lilly Library, March 7, 1958.

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1. The “Flying Squadron” included five students: Noble Butler, John S. Hastings, James S. Adams, Elisabeth Johnston, and Helen Coblentz.

2. The Crest toothpaste patent is a later example of this advantageous provision.

3. Seventeen of the current directors live in Indiana and twelve are from out of state; see Appendix (F).

4. Students who belonged to fraternities or sororities were spoken of as “organized,” and others were referred to as “unorganized.”