While campus growth is an important priority for many higher education institutions, each new building comes with substantial upfront and recurring costs. Unfortunately, campus leaders often focus on first costs (e.g., design and construction) without considering how to appropriately fund recurring costs (e.g., maintenance and renewal) across a building’s lifecycle. While some institutions obtain incremental bumps in their Facilities operating budget for each new building, those funds often do not account for the building’s true needs (much less the major repairs and renovations required throughout a building’s lifetime).
One solution is to secure long-term funding for the building upfront through a maintenance endowment. Senior Facilities officers (SFOs) can partner with leaders in advancement to create a formal policy that donor-funded projects include money for a maintenance endowment. The initial investment and resulting accumulated interest will secure a long-term revenue source for future needs.
To help SFOs make the case for maintenance endowments, EAB created the Compendium of Maintenance and Capital Renewal Endowment Structures. Each endowment option is presented with detailed implementation guidance and a case study from a higher education institution. Furthermore, each tactic is evaluated on its maintenance funding potential.
To simplify navigation, tactics are organized from least to most impactful. Below is a preview of the tactics.
| Tactic | Capsule Description |
|---|---|
| #1: Divert leftover contingency funds into a maintenance endowment | Institutions allocate a completed capital project's unused contingency funds into a maintenance endowment. |
| #2: Require donors to contribute to central infrastructure | Institutions request that donors who fund new construction provide additional dollars to support an upgrade to central infrastructure or shared utility systems. |
| #3: Bundle deferred maintenance costs with college fundraising efforts | Institutions require deans to cover the cost of addressing deferred maintenance in spaces where donor funds are supporting programmatic renovations. |
| #4: Steer donors toward high FCI (Facility Condition Index) buildings | Institutions coordinate with undecided donors to support projects in buildings in poor condition. Donors fund either a complete renovation or demolition and replacement. |
| #5: Fundraise for a fixed percentage capital renewal endowment | Institutions establish a capital project fundraising target that reflects both the cost of construction and the creation of a capital renewal endowment. The fundraising goal for the capital renewal endowment is a fixed percentage over the cost of construction. |
| #6: Fundraise for an operations and maintenance endowment based on projected building needs | Institutions include an allocation for an operations and maintenance endowment when they ask donors for money for new construction. The amount requested is calculated based on the building’s projected maintenance needs. |
| #7: Create separate endowments for capital renewal and for operations and maintenance | Institutions ask donors to give a certain percentage beyond the cost of construction of a new building to create two maintenance endowments specifically for that building. One endowment is reserved to fund long-term capital renewal needs while the other supports annual operations and maintenance costs. |
| #8: Require new building occupants to allocate a percentage of direct construction costs to a renewal fund | Institutions share funding responsibility for future capital renewal needs with new building occupants by requiring them to set aside apportion of construction costs into a centrally managed endowment. Units can source these funds from gifts, internal operating dollars, or other sources. |
| #9: Request central funds for capital renewal to match donor-funded renovations | When donors fund partial building renovations, Facilities requests additional money for deferred maintenance projects in the building. The goal is to bundle projects and reduce overall costs and construction time. |
| #10: Offer naming rights for existing facilities to establish maintenance endowment | Institutions offer potential donors the opportunity to name a building in exchange for funding a maintenance endowment. |
To explore case studies of higher ed maintenance endowments in more detail as well discern each tactic’s funding potential, download the full Compendium.
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