How we can learn from American business schools

American schools are the envy of Europe when it comes to their ability to raise money. Midge Gillies finds out how we can learn from our transatlantic cousins

Published: 19 April 2007

Paola Barbarino is used to getting her hands dirty. Her first job after leaving university in Italy was as a field archaeologist. She spent nine years grubbing around for Roman remains. Today, as the first development director at Cass, her task is to unearth funds for the London-based business school.

Cass only set up its development office three years ago but now recognises fundraising as a priority - so much so that Richard Gillingwater recently joined the school as its new dean. Gillingwater was previously chairman of CSFB European Investment Banking and joint head of Global Corporate Finance at BZW. Cass is one of several schools to appoint a dean from a financial - rather than an academic - background.

"There is a lot to be said for having a businessman as a dean," Barbarino comments. "Richard will have a wealth of contacts which hopefully he'll be able to approach and get interested in Cass."

London Business School (LBS) has also appointed a dean from a non-academic background for only the second time in its history. Robin Buchanan is credited with turning round the UK operations of management consultants Bain and Company, where he was senior partner. Buchanan, who has an MBA from Harvard Business School, will face the huge task of boosting LBS's endowment from around £6.4m to something nearer its American counterparts. Harvard Business School, for example, has an endowment of over $2bn (£1.1bn).

American business schools have always been the envy of their European rivals when it comes to raising money. Insead hopes that its new dean, Frank Brown, will bring experience of the world of finance and of doing things the American way. Brown was formally global leader of Advisory Services for PricewaterhouseCoopers and is only the second American Insead has appointed to the position. It is also the first time since the Sixties that it has looked outside the school for a dean.

Brown says his work on the boards of several not-for-profit organisations gives him an insight into how business schools can raise money and is as important as his professional qualifications. He adds that the size of Insead's endowment is crucial.

"I don't actually buy into the concept that people in Europe aren't as generous. People need to have more of a relationship and a purpose behind the giving and that's what I'm trying to focus on here - that the purse strings follow the heart strings."

As well as making sure that donors have a strong relationship with Insead, Brown wants to prove that their money is being put to good use.

"You have to show people that you're going to be very good stewards of their money. If someone gives funds to Insead we have a responsibility to communicate with them the terms of the investment. That goes a long way to creating that lasting connection."

Brown plans to introduce annual reports to tell donors how their endowments are performing. He would also like to build closer relationships between students and donors, adding that he and his wife, who contribute towards scholarships at Bucknell University, Pennsylvania enjoy their regular contact with students.

Professor Michael Luger, the new director at Manchester Business School, is spending much of his time travelling the world to meet some of their 24,000 alumni and possible corporate donors.

"We're the product of a merger and one consequence of that is that the image that we project is a little bit muddled. I want to make sure that people understand what we're all about, what our ambition is. If we capture their imagination, that will go a long way to getting them to be partners with us."

Luger joined from Kenan-Flagler Business School, part of the University of North Carolina, where he specialised in city and regional planning.

"Faculty support the fact that I'm not British, and that I want to do things a little bit different."

But Luger adds that British schools have never felt the same pressure to raise cash as American schools. US tax laws make it much more attractive for individuals and companies to give money to education, and American business schools have well-trained and numerous staff to spearhead campaigns. Luger wants to make some "strategic hires" to help the Manchester school to raise money and believes the Government's new initiative of adding £1 to every £2 a university raises from donations will provide useful leverage.

Barbarino agrees that giving to education has a much lower priority in Europe. "In England it comes at the very bottom of what to give to. Before that come all sorts of things, like cats and dogs." She adds that the British find it very difficult to grasp the concept of an endowment, whereas the Americans get it immediately. Fundraising has to be approached "delicately, with kindness," she says.

Perhaps having worked as a field archaeologist provides the ideal training.

'There's a lot of talent that has to go out of Wales. We are interested in creating businesses to bring some of these people back'

David Stevens set up insurance company Admiral in Wales with Henry Engelhardt, whom he met at Insead. Together with a third Insead graduate, Peter Marissen, Admiral pricing manager, they have donated €80,000 (£57,140) for two endowed MBA scholarships for Welsh students at their old business school.

The thing that stops people going to a place like Insead is it's a big financial step. But it was very good for me. I wouldn't have had the opportunity to be involved in something as exciting as Admiral.

We're very glad we came to Wales. There's a lot of Welsh talent that has to go out of Wales to London or further afield. What Admiral is interested in doing is creating enough interesting and intellectually stimulating businesses in Wales to bring some of those people back.

The scholarship candidates must have a Welsh link and write an essay on: "There are 'x' number of headquarters of Footsie 350 in Scotland and there are only two in Wales. What should Wales do to match Scotland?" Answers are judged on both creativity and fun.

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