Economics 324 = Philanthropy 101
The academics of making a difference
By Neva S. Trenis
Like most economics majors, Tom Hayden ’07 is used to studying the science of making money. But when the UMW junior opened the Mary Washington track book last summer, he found an intriguing surprise – a new class in which students are entrusted with giving money away.
By early December, the 28 students in UMW’s first “Economics of Philanthropy and the Nonprofit Sector” class had awarded $10,000 to two Fredericksburg area charitable organizations. Under the guidance of Robert Rycroft, professor of economics, the undergraduates had formed a bona fide charitable foundation, hammered out a mission statement, crafted a 14-page application, and chosen two recipients from 20 grant applicants.
“What was great about the class was the challenge of taking $10,000 of real money and going through the process of giving it to the charity that was most worthy,” Hayden said. “It doesn’t sound difficult, but it really was. I didn’t expect it to be as big a responsibility as it ended up being.”
The money came from philanthropist Doris Buffett and her Sunshine Lady Foundation. Buffett, sister to billionaire Warren Buffett, is familiar with UMW not only because she lives in Fredericksburg, but also because her daughter, Robin Buffett Haymes, is a 1988 graduate.
Since Buffett founded the Sunshine Lady Foundation in 1996, it has given more than $30 million in grants for education and assistance to underprivileged children, victims of domestic violence, the working poor and families in crisis. Buffett’s foundation has been generous to the Fredericksburg community, where it gave $1.5 million for the Fredericksburg Regional Boys & Girls Club.
Alex Buffett Rozek, Buffett’s grandson, directs Sunshine Lady Foundation academic programs, including “Learning by Giving,” the partnership with select universities that sponsored the UMW class. Buffett’s foundation became interested in teaching college students about effective giving for several reasons, he said. First, the philanthropic sector is a growing force in the U.S. economy. There are 1.2 million charitable organizations accounting for 8.8 percent of the Gross National
Product and employing 11 percent of the U.S. workforce. Second, Rozek said, donors are no longer content to hand over money only to get a plaque engraved with their names. Givers demand that nonprofits spend money wisely.
With these factors in mind, Rozek said, Buffett thought undergraduates should learn the ins and outs of nonprofits before they enter the “real” world. In 2003, the Sunshine Lady Foundation formed a partnership with Davidson College to offer a class called “Philanthropy and the Non-profit Sector.” That class was such a success that Buffett’s foundation approached the University of Virginia’s McIntire School of Commerce, which offered a similar class in spring of 2005, and UMW, which offered its class for the first time last fall.
“This is not a class that is meant to address the ills of society,” Rozek said. “We want to give students the tools to understand how – within philanthropic organizations or nonprofits – to look at different ways to allocate money and do it in the most effective way possible. It’s almost a course on investment, learning how to spend money in a way that will get the best return.”
The UMW class announced its “investments” at a December 2005 ceremony in the Jepson Alumni Executive Center. Rozek and Buffett were there, along with journalists from such newspapers as The Washington Post and The Richmond Times-Dispatch, community leaders, UMW students, professors and administrators. The crowd applauded as the class presented $5,000 checks to Fredericksburg Regional Boys & Girls Club and Rappahannock Refuge Inc./Hope House, a women’s shelter.
Though Buffett and her foundation had not stipulated how the class should choose recipients, the students could see from her look of satisfaction that she approved of their choices. And she said as much when she addressed the students at the end of the ceremony. “I had nothing to do with it,” she said of their work, “but you certainly hit it on the head as far as I’m concerned.”
Rozek said the Sunshine Lady Foundation was pleased not only with the students and their decisions, but also with Rycroft’s innovative teaching methods. Rycroft divided the students into two working committees, made contacts with local nonprofit organizations, and stipulated that the money be given to organizations in the Fredericksburg area. The work of the student-run E.C.O.N.O.M.I.C.S. Foundation (an acronym for “Economics Class On Nonprofit Organizations Mightily Improving Community Services”) went entirely to the undergraduates.
The combination of hard-working students, an effective professor and support from the University, Rozek said, led the Sunshine Lady Foundation to offer funding for the class for at least three more years.
“Mary Washington did a great job,” Rozek said.
Rycroft is as eager to teach the course the second time as he was the first. Though not a specialist in the economics of philanthropy, Rycroft jumped at the opportunity to take on such a task, he said. Many economics professors get the opportunity to teach about the nonprofit sector, but it’s rare to get to help students give away $10,000 – no strings attached – to a nonprofit group.
“You don’t have the chance to offer college classes like this one very often,” Rycroft said.
“I had virtually every spectrum of the nonprofit community represented in the class,” Rycroft said. “My students really got a picture of what the nonprofit sector is.”
The student committees ran the foundation: One committee crafted a mission statement and developed an application, the other received and read applications and made recommendations to the class about who should get the money. All final decisions were made by vote of the class.
“I counted the votes,” said Rycroft, who was not a member of the foundation.
Political science major Andrea Keefer ’06 found freedom in Rycroft’s “hands-off” approach; it was what made the class a success, she said. The professor’s assignments provided the background and motivation needed by 28 smart, engaged students – each with strong ideas about where the money should go. They would not have learned so much, or worked so hard, had they been micromanaged, Keefer said.
An example of that came early in the semester when it was time to write a mission statement to determine the purpose of the group. The class discussion was contentious, people argued passionately, and many students were uncomfortable, but the exercise had good results. The clash illustrated how strongly members felt about their mission, Keefer said, something common in philanthropic organizations. And, the process alerted the group to difficulties of teamwork and nonprofit giving.
“Most of the time you would never have a class where it was that confrontational, but it was good because it woke us up. It gave us an insight into how heated the final decision could be, and it caused us to make a system that avoided that,” Keefer said. “Dr. Rycroft gave us such well thought-out assignments, and he just let us run the class, but it never would have worked out without all his work and planning.”
The difficult early days of the semester and long hours spent in preparation paid off. When it was time to select from among 20 applicants, the class chose their top two without rancor.
News of Rycroft’s class was carried not only by local, state and national media. It gained international attention when an Italian Web site devoted to philanthropy picked up the story, followed by a spot on mtvU and an article in The Chronicle of Higher Education. For Rycroft, who has spent his career in a discipline that concerns itself mostly with the abstract, having his work spotlighted was a new phenomenon.
“I admit getting the positive publicity around the city and around the world was kind of fun,” Rycroft said.
As for Tom Hayden and his classmates, what they got from the class was the real-world experience of working with colleagues to make an important decision. And they got the satisfaction of helping others.
“The best was the day we gave the money away,” Hayden said. “It was just awesome to see the look on the two charity directors’ faces. It made me feel like I made a difference.”