WWeesstteerrnn MMiicchhiiggaann UUnniivveerrssiittyy SScchhoollaarrWWoorrkkss aatt WWMMUU Dissertations Graduate College 4-2014 FFrroomm AAllttrruuiissmm ttoo IInnvveessttmmeenntt:: VVeennttuurree PPhhiillaanntthhrrooppyy aanndd iittss IImmppaacctt oonn SShhaarreedd GGoovveerrnnaannccee aatt LLiibbeerraall AArrttss CCoolllleeggeess Joshua D. Merchant Western Michigan University, [email protected] Follow this and additional works at: https://scholarworks.wmich.edu/dissertations Part of the Higher Education Commons, Nonprofit Administration and Management Commons, and the Public Administration Commons RReeccoommmmeennddeedd CCiittaattiioonn Merchant, Joshua D., "From Altruism to Investment: Venture Philanthropy and its Impact on Shared Governance at Liberal Arts Colleges" (2014). Dissertations. 257. https://scholarworks.wmich.edu/dissertations/257 This Dissertation-Open Access is brought to you for free and open access by the Graduate College at ScholarWorks at WMU. It has been accepted for inclusion in Dissertations by an authorized administrator of ScholarWorks at WMU. For more information, please contact [email protected]. FROM ALTRUISM TO INVESTMENT: VENTURE PHILANTHROPY AND ITS IMPACT ON SHARED GOVERNANCE AT LIBERAL ARTS COLLEGES by Joshua D. Merchant A dissertation submitted to the Graduate College in partial fulfillment of the requirements for the degree of Doctor of Philosophy Educational Leadership, Research, and Technology Western Michigan University April 2014 Doctoral Committee: Andrea Beach, Ph.D., Chair Daniel Gaymer, Ed.D. Kirk Heinze, Ph.D. FROM ALTRUISM TO INVESTMENT: VENTURE PHILANTHROPY AND ITS IMPACT ON SHARED GOVERNANCE AT LIBERAL ARTS COLLEGES Joshua D. Merchant, Ph.D. Western Michigan University, 2014 Competition for philanthropic dollars has escalated in recent years, particularly in higher education. A new type of charitable giving – venture philanthropy – has emerged and is impacting both educational policy and practice. Venture philanthropy involves donors using business models, championed practices of venture capitalists, and decision making procedures to drive their philanthropy and ongoing engagement with organizations they support. Venture philanthropy has the potential to improve the financial vitality of colleges and universities. However, it also poses significant questions to the academy as more colleges and universities engage with donors who embrace its tenets. The primary research question seeks to understand in what ways venture philanthropy has impacted shared governance of private liberal arts colleges. Secondary research questions explore who the decision makers involved in the cultivation, solicitation, acceptance, and implementation of the gift were; the benchmarks, goals, and results that were agreed to before the gift was received; the motivation and process of accepting the gift; and, the lessons learned. Administrators and faculty leaders at two liberal arts colleges were interviewed to determine how such gifts functioned within a collegial shared governance model. The study indicated that the collegial model of shared governance needs to evolve to reflect the changes of philanthropy in higher education. Faculty members want to be more engaged both in setting priorities and in the fundraising process. Administrators need to promote increased transparency, trust, and engagement with faculty in the philanthropic process. A new gift process needs to be formalized to manage venture philanthropy gifts. Finally, the collegial model, in practice, does not match theory. Venture philanthropy donors have an incredible opportunity to financially impact colleges and universities nationwide, but traditional theories of shared governance have not kept pace with the changes of external influence on higher education. Recommendations for practices include promoting a shared vision more widely, increasing transparency and consensus building, improving faculty engagement in philanthropy, strengthening leadership in negotiating gifts, creating strategies for embracing venture philanthropy, and improving the process of venture philanthropy gift acceptance. © 2014 Joshua D. Merchant ACKNOWLEDGMENTS It is with sincere gratitude and appreciation that I recognize the friends and family who have helped me on this journey. First, I would like to recognize my three committee members who have provided me with support, wisdom, perspective, and insight throughout the dissertation process. With that said, I acknowledge Dr. Andrea Beach, Dr. Daniel Gaymer, and Dr. Kirk Heinze. A special thanks to Dr. Andrea Beach who consistently believed in my ability and pushed me to succeed. I am thankful for your friendship and your guidance. Secondly, I want to thank my wife, Carrie, and my sons, Elijah and Griffin for their patience and sacrifice they have given me throughout the doctoral program. I dedicate this work to you. You are the joys of my life and I would have not made it through this process without your love and encouragement. I love you all so much. Lastly, I want to recognize my friends and colleagues who have helped me throughout my program. It has not been an easy journey and your inspiration was immeasurable. A special thanks to Shannon Duvall and Donna Randall who provided support and encouragement at various points along the way. Thank you for believing in me. Joshua D. Merchant ii TABLE OF CONTENTS ACKNOWLEDGMENTS............................................................................................... ii LIST OF TABLES........................................................................................................... xiv CHAPTER I INTRODUCTION............................................................................................... 1 MODEL OF THE COLLEGIAL INSTITUTION............................................... 8 THE CHANGING LANDSCAPE....................................................................... 11 CONCERNS FOR THE ACADEMY................................................................. 12 RESEARCH AND FOCUS QUESTIONS.......................................................... 15 SIGNIFICANCE OF THE STUDY.................................................................... 16 LIMITATIONS................................................................................................... 17 DEFINITIONS.................................................................................................... 18 SUMMARY......................................................................................................... 23 CHAPTER II: LITERATURE REVIEW INTRODUCTION............................................................................................... 25 ORGANIZATIONAL THEORY........................................................................ 26 Defining shared governance.................................................................... 27 Defining the collegial institution............................................................. 28 Characteristics of the collegial institution............................................... 29 Presidential leadership within the collegial institution............................ 32 iii Table of Contents – Continued CHAPTER II: LITERATURE REVIEW External influence and the collegial institution....................................... 34 Liberal arts colleges as collegial institutions........................................... 35 CHANGING CLIMATE FOR GOVERNANCE IN HIGHER EDUCATION................................................................................. 36 FUNDRAISING AND ITS ECONOMIC IMPACT ON HIGHER EDUCATION............................................................................... 37 WHAT IS VENTURE PHILANTHROPY?........................................................ 39 A historical perspective........................................................................... 41 A comparison of traditional and venture philanthropy............................ 43 The rise of performance driven philanthropy.......................................... 44 Defining venture philanthropy................................................................. 46 Venture philanthropy motivations........................................................... 47 Outcomes..................................................................................... 48 Impact.......................................................................................... 49 Sustainability............................................................................... 49 A POPULARIZATION OF VENTURE PHILANTHROPY............................. 50 A paradigm shift...................................................................................... 51 A focus on accountability........................................................................ 51 CHALLENGES AND CRITIQUES OF VENTURE PHILANTHROPY.......... 55 VENTURE PHILANTHROPY AND HIGHER EDUCATION......................... 61 The emergence of venture philanthropy in higher education.................. 61 iv Table of Contents – Continued CHAPTER II: LITERATURE REVIEW Examples of modern day venture philanthropy in higher education....... 63 Tufts University........................................................................... 63 The University of Arkansas......................................................... 64 The University of Michigan........................................................ 67 Florida State University............................................................... 67 A push for more accountability in higher education............................... 69 CONCERNS FOR THE ACADEMY................................................................. 70 Presidents are at a crossroads.................................................................. 71 A disconnect between the donor and the academy.................................. 73 A lack of understanding venture philanthropy management....... 74 Untrained and inexperienced development staff......................... 75 A disregard for shared governance?........................................................ 76 Minimizing academic freedom and autonomy........................................ 78 A threat to core mission........................................................................... 80 THE FUTURE OF VENTURE PHILANTHROPY........................................... 83 THE NEED FOR CONTINUED RESEARCH................................................... 86 SUMMARY......................................................................................................... 88 CHAPTER III: METHODOLOGY INTRODUCTION............................................................................................... 91 RESTATING THE RESEARCH FOCUS AND RESEARCH QUESTIONS.... 91 v Table of Contents – Continued CHAPTER III: METHODOLOGY QUALITATIVE TRADITION............................................................................ 92 RESEARCH DESIGN......................................................................................... 93 Cases and participants............................................................................. 94 Role of the researcher.............................................................................. 96 Data collection......................................................................................... 97 Data analysis............................................................................................100 Triangulation...........................................................................................102 Limitations...............................................................................................103 SUMMARY.........................................................................................................103 CHAPTER IV: FINDINGS............................................................................................105 INTRODUCTION...............................................................................................105 PARTICIPANTS.................................................................................................106 RAPID RIVER COLLEGE.................................................................................107 Shared governance at Rapid River College.............................................108 Philanthropic decision making at Rapid River College...........................115 Understanding institutional mission and vision at Rapid River College................................................................................121 Final thoughts on shared governance......................................................124 The gift of venture philanthropy..............................................................128 Characterizing the donor.........................................................................129 vi