Reshaping the Future

Reflecting higher education's current age of optimism, the university looks to some huge academic investments and to a $2-billion fund-raising goal.
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January 31, 2001

In his fast-forward-to-the-future book The Age of Spiritual Machines, Ray Kurzweil estimates that in a century's time, an average citizen's net worth will be $149 billion. That financial projection promises quite an altered reality-endless money-making potential in an information-hungry world where human-machine interfaces make us all (humans and machines) smarter.

Well, we aren't yet that smart. And in today's reality, a billion is still mindboggling. So when Duke announced in December that it had raised $1.3 billion through a comprehensive fund-raising campaign, this was a fact, and a figure, worth noting. Just two years after the official launch of the $1.5-billion Campaign for Duke, set to end in December 2003, the university is looking to a $2-billion Campaign for Duke.

Early in her presidency, President Nannerl O. Keohane put her mark on a 1994 planning document called "Shaping Our Future." The document imagined a drying up of federal funding for higher education. It used terms like "growth by substitution." That is, the sparking of a new program would hinge on shutting down an old one.

 

Work in progress: the West-Edens Link, a dorm complex opening in the fall of 2003.

 

"Looking back, it's clear that we were too pessimistic, given the way the climate worked out for funding in Washington, and given the incredible success of the campaign," Keohane says. "We also found that the tuition contribution was not perhaps as crucial as we had thought as a piece of the whole pie. It's clearly crucial, but it doesn't have to go up dramatically in order to fund new choices."

The elevated fund-raising goal coincides with the completion of a university strategic plan-which envisions investments even beyond what's to be raised in the campaign. In the words of Wilhelmina Reuben-Cooke '67, J.D. '73, who chairs the trustee Academic Affairs Committee, the plan "does what Duke does very well, which is to realistically assess our resources and strengths." She points to engineering and the sciences-both being given new emphasis-as areas where Duke has "not been so attentive in terms of resources," and to the planned genomics institute as illustrating an institutional strength, a willingness to straddle disciplinary boundaries. In financial terms, Duke has long suffered by comparison with its peers. The margin by which Harvard's endowment grew last year, for example, exceeded Duke's total endowment. Princeton's endowment per student is more than a million dollars; Duke's is less than $160,000. And the competition is hardly standing still. Duke is the fourth U.S. university to attempt to raise $2 billion or more.

Just over a year ago, Harvard completed its own campaign. Harvard president Neil Rudenstine notes that "there hadn't ever been a university-wide campaign in modern Harvard history," and that it some cases Harvard's schools hadn't organized their own campaigns since the Sixties. Clearly, the novelty of the effort wasn't a hindrance for Harvard: The total of $2.6 billion exceeded the original $2.1-billion goal. According to Rudenstine, the case for Harvard was helped by its financial circumstances a decade or so ago: The endowment hadn't yet achieved "awesome" proportions, as he puts it, and the university was just climbing out of a period of operating deficits. He says the Harvard campaign did "lots and lots of good things" in underpinning program endowments, supporting regional and international studies centers, and energizing interdisciplinary programs, for example. But fund raising lagged in certain areas, notably the libraries, endowed professorships, and graduate student aid.

In early December, Columbia, nearing the end of a decade-long campaign, announced that it had raised $2.74 billion-more than double the initial goal. The University of Southern California's "Building on Excellence" campaign had been driving toward $1 billion by the year 2000. When USC exceeded the original amount early in 1998, it raised its goal to $1.5 billion. When fund raising crossed that threshold at the end of 2000, the goal went up again-to $2 billion-and the campaign was extended to 2002. "Those we've canvassed for financial support have generally viewed very favorably our ability to rise to the ranks of real leadership among our peers without comparable resources," says Peter Nicholas '64. Nicholas is vice chairman of the board of trustees and co-chair (with his wife Ginny Nicholas '64) of the Campaign for Duke. The university's robustness reflects "good planning, good execution, and good results," he says. "It probably is the case, however, that our reputation somewhat overstates the reality of the place. It's hard to know. What we do know is that our position is fragile because we do not have a finance base comparable to those with which we compete."

A convergence of circumstances-a far-reaching plan and the resources in-hand or anticipated to realize it-makes this a rare moment in the life of this university, and really in the life of any university. By the time of Duke's December decision to go for $2 billion, the Pratt School of Engineering, the divinity school, and athletics had far exceeded their starting goals: $50 million, $35 million, and $65 million, respectively. The library and the Fuqua School of Business were close to achieving their $30-million and $60-million starting goals. What former president Terry Sanford famously called Duke's "outrageous" ambitions now don't seem all that outrageous.

 

 

 


Provost Peter Lange has led the current planning effort. He says that by applying resources carefully and moving into "some new dynamic intellectual areas," Duke should elevate its position among the strongest research universities. That doesn't mean that over the next decade, Duke should see itself working its way into the Harvard-Yale-Princeton elite. But "Duke will look different, feel different, and be viewed externally as different," he told the faculty's Academic Council this fall. And in the longer term, he added, it's not unfeasible to imagine Duke among higher education's older, richer, and august elite.

"I think this is a great time of opportunity for Duke," Lange says in a later conversation. "That doesn't mean we shouldn't look at the downside and be careful that we're not being over-optimistic in projections. Even in the downside scenario, even if the economy were to flatten out, we have confidence about our flow of resources."

The strategic plan foresees a "deepening" of the faculty; it supports, for example, the "retooling" of research orientations, innovation in teaching and curriculum development, and enhancing information technology. In three schools, the size of the faculty will grow: the Fuqua School of Business, the Pratt School of Engineering, and, to a lesser extent, the law school. University officials are also weighing the possibility of expanding Pratt's enrollment by as many as 200 students.

Although the plan doesn't conspicuously target the humanities and social sciences, Lange says, "We are going to sustain our excellence in the areas where we have already attained excellence. And we're probably going to build some new ones." The library is one key beneficiary. The new John Hope Franklin Center figures in the plan as a launching pad for seminars that will allow faculty a year of experimentation, collaboration, and research outside the normal university structures. And the arts-an area that historically hasn't garnered a lot of university attention-are pegged by the plan as a means to "add to the overall intellectual atmosphere of the campus and also contribute to our goal of a more diverse student body." The most tangible sign of an arts interest is to be a new museum named for Ray

The plan promotes efforts in such areas as child health and policy, environmental solutions, global change, information sciences, and neural analysis and engineering. As a sign of elevated expectations, the provost and deans can now nurture academic initiatives through a pool of "strategic funds." According to Lange, "All of these new initiatives have review procedures and benchmarking. They have sunset clauses built in. So we're going to be systematically asking, within a reasonable period of time, 'Is this working? Is this accomplishing what we want?' We didn't used to have a means to ask these questions."

There is a strong focus on two areas that cross the disciplinary lines. One is genomics, including how the revolution in unraveling genetic mechanisms interacts with ethical, legal, and policy issues. The other is photonics, an area that has drawn major gifts from computer manufacturer Compaq and from high-tech entrepreneur Michael Fitzpatrick '70 and his wife, Patty Wyngaarden Fitzpatrick '69. An optics revolution, the plan notes, "will entirely change the way we live, improve our health and well-being, and give us a much deeper understanding of the world around us." Both of those areas relate to what the plan describes as a new paradigm of "use-inspired" research. What that involves is "greater engagement of the disciplines and university teaching and research with problems defined outside their borders, by societal needs, and by increased collaboration among disciplines and partnerships with other institutions, inside and outside the academy, in the public, non-profit, and private sectors."

"The sorts of things that researchers on campus find fascinating also turn out to be things that have significant material interest to potential developers," Keohane says. "In an area like photonics, people are fascinated by what it promises for better understanding the science of light. At the same time, there are a lot of people out there who look at this in terms of potential commercialization. But the fundamental fueling of the effort at the university level has to be the search for truth and an eagerness to explore the intellectually exciting frontiers."

Lange draws parallels between current-day industry partnerships and past government partnerships. A set of fundamental physics-related problems "basically drove the intellectual direction" of the sciences in the 1920s and 1930s, he says. "Changes as profound as these always have a major interaction with society. The difference is that the work of physics profoundly interacted with government. The work of genomics and photonics is interacting much more with the market."

That market tie-in has some positive and some negative impacts, he says. "In fact, part of the intellectual agenda that I personally would like to drive through our genomics center involves what it means to have such interactions with the market. What does it mean in terms of the biases created in how the science is done, in terms of how the science is applied? >From my standpoint, without this deeper intellectual content, we wouldn't be doing these things."

The plan suggests an evolution in the role of academic administrators; the low-key dean of the past is evolving into today's entrepreneurial thinker with connections beyond the campus. Duke's relatively new engineering dean, Kristina Johnson, for example, is quick to observe that North Carolina enjoys "the same kinds of advantages that historically gave rise to the Silicon Valley in California." And she talks about forging "close ties with many of the state's 300 telecommunications and optical fiber companies, to help provide them technology, training, and expert consultation." She envisions, in fact, a "photon forest" spurring the region's technological advance and economic growth-a forest growing from the planned $100-million Fitzpatrick Center for Advanced Photonics and Communications Systems at the Pratt School of Engineering.

And Duke's dean-to-be, Douglas Breeden, faces a huge building challenge at the Fuqua School of Business. Fuqua is seeing some bricks-and-mortar growth, and it is due to undergo an equally dramatic growth in faculty numbers. The school plans to increase the size of its sixty-nine-member faculty to ninety-two in the next five years, and subsequently to 105. Faculty recruitment can be a grinding business, even for a business school, but Breeden says the existing faculty are stretched thin and will welcome the eventual relief. "Right now, we're tackling so many new programs with too small a faculty." Business schools from Chicago to Stanford envision growth in facilities and in faculty numbers, though not at the rate of Fuqua's increases. "It seems that almost everyone is growing, which is why it's such a competitive market for business-school faculty."

Breeden speaks candidly about the toll that academic administration exerts in an accelerated-growth environment. "This is just an enormous challenge. In fact, it's so large that it almost stopped me from taking the position. What made me feel that I should take it is that I have a good background in both the academic and business sides, and so I think I can tackle it as well as most people can.

"As I went through the process of interviewing, I really tried to get a sense of the personal side, of whether I could have a life outside the university. I finally concluded that this is your life when you're in a leadership position such as a dean or a provost or a president. It is pretty all-consuming. But actually I'm energized by that."


As a political economist, Lange has the perspective of a scholar-as well as, now, an expediter-of institutional planning. He says he was able to apply his insights into "how institutions structure debate, the importance of agenda-setting, the importance of looking at and setting incentives effectively. I also think I probably have a certain tolerance for a sustained period of what might seem to be slightly chaotic processes: We ran the process from top-down and bottom-up at the same time. But actually, that was very important, because it got a lot more ideas into the process, and it got a lot more people engaged in the process."

In thinking about allocating resources, Lange says, the university wanted both to support already strong areas and to build up areas that would provide strength across-the-board. "You shouldn't let areas of real outstanding excellence stagnate or decline. So you have to make sure that you are continuing to deliver resources there, assuming that those are still very vibrant areas. You then have to look at the rest and ask where it is important to build excellence in order to have overall excellence as an institution, and what are the areas where, on the other hand, maintenance or even some decline would be appropriate. And that's what

 

"Our push in sciences and engineering is a strategic decision. Those are very dynamic areas of intellectual development. They're very central to the mission of the university and the society over the next couple of decades. They're areas where there's going to be great demand from students. Therefore, our relative weakness outside the biological sciences-really, a historical weakness-could not be sustained. The danger is that we would, over a couple of decades, become a university that would be almost a niche university. If you have dramatic weaknesses in areas that are highly intellectually dynamic, eventually that's going to be felt across the

 

Decisions about resources are also a response to obvious deficiencies. Duke's science and engineering facilities are "deeply inadequate," according to Lange. "On the engineering side, we have faculty now who are inhibited from fully realizing their desired research potential and research grant potential by the fact that they don't have the space to do the research. We had an external review that was very, very critical of our facilities in chemistry and basically said, you will not be able to hire a chemistry faculty of the quality that Duke University should be hiring with the facilities you have in place."

In Lange's view, Duke's ability to be strong in the sciences has financial implications as well as intellectual implications. "If we have weak science departments, we still have to service them. If we have strong science departments, they get more grant activity, they cover more overhead costs of the university, and they bring more funds to the university, which in the long run spill over to other areas."

Keohane says that "one of the most distinctive things about this planning exercise was that there was a very clear sense that this needed to be a strategic plan, in the sense of making real choices, being able to defend those c hoices as a subset of other possible choices, and then finding the resources to make it happen." There is precedent for "disinvestment" at Duke: In the early Eighties, Duke eliminated the degree-granting education program and the undergraduate nursing program. This time, the planning process didn't reveal any obvious candidates, even as some areas will be "streamlined or refocused."

But those "real choices" are evident wherever resources flow, she says. "Engineering is an excellent example. It is in some ways the boldest plan of all. But it is based on two or three intellectual bets, like photonics and nanofabrication efforts. That leaves out a whole range of things that are exciting in engineering right now that we're not going to concentrate on. For a dean who likes to do everything and who is really visionary, that's a choice. But it's a strategic choice; it was a question of, all right, what will the engineering school need to do to improve its quality and its impact nationally, to be most effective as a major area of research and teaching?"


All of that planning energy is going to result not just in program growth, but in a campus building boom. In the next five years, Duke will be spending $500 million in construction and renovation. Some of the biggest projects will be directed to engineering and genomics; there's also a new student center for the Fuqua School, an addition to the divinity school, Perkins Library renovations, a Sanford Institute expansion, a new art museum, a new football building, and the West-Edens Link residence-hall complex. Duke recently completed new athletic and recreational facilities.

 

 

 

Those physical changes fall in Tallman Trask III's sphere of operation. Trask, Duke's executive vice president, commissioned a new "Campus Master Plan." He says, "You can make a good argument that in the late Twenties and early Thirties, Duke had probably the best or one of the best master plans of any university in the country. Then after World War II, I think we began to struggle somewhat in terms of the location, architecture, and 'Duke-ness' of our buildings. And that was really the underlying intent of this master plan-to sort of step back and say, how can we restore something to the community that had been lost over the years?"

Trask acknowledges that managing all the construction activity will be a massive job. "We have built over the last four or five years a pretty solid infrastructure on how to do these things," he says. "All of our building projects have essentially come in on budget and on schedule. So I think we know how to do this."

With the passage of a massive bond issue in November, the University of North Carolina at Chapel Hill itself is about to embark on hundreds of millions of dollars in construction. Trask says supply-and-demand realities may drive up construction costs: "Construction costs in the Triangle have been going up faster than average for the last couple of years." But he's not too concerned about giving local construction contractors more than they can handle. "We've already had some conversations with a number of national contractors who have not been particularly active around here. And given the fact that there's a lot of construction money, they'll find their way into this region. It's not unlike Atlanta, pre-Olympics: There were a lot of people who had not done work in Atlanta, and who have not done work since then in Atlanta, but who were quite active during the years leading up to the Olympics."

Managing the construction is one challenge; managing the financing is another. Not all of the construction money will come from fund raising. Some will come from debt financing. That's "the cheapest source of capital," as Trask describes it, "but we have to have a pretty good understanding of where the income flow to support the repayment is going to come from." Duke is one of a small number of universities with a double-A credit rating, which means that it can borrow money at particularly favorable rates.Aside from showing a certain architectural harmony, the new buildings are being designed with flexibility in mind. "We are trying to make them as generic as possible inside, though if you make it 100 percent generic for all purposes for all times, it's unbelievably expensive. Where we think there is an add-on possibility, we are having that built into the original design. And we're recognizing that in many cases we're designing spaces for people who aren't yet here; I don't think we want to get seventy-five professors in a room and say, let's individually design your laboratory. In five years, somebody else will be in that laboratory."

So the architects being employed by the university "have experience with particular issues that the building responds to," says Trask. The new residence-hall complex was designed by a firm that is doing major dormitory additions at both Yale and Princeton. The library renovations are being handled by "the library firm right now," while the designer of a new engineering building planned a three-quarter-of-a million-square-foot addition to the National Institutes of Health. And the divinity school addition is being handled by, in Trask's words, "probably the premier people in adding things on to make it look like they've been there for 150

Observers of higher education note that a virtue of ambitious fund raising is the discipline it imposes on planning. Harvard's Neil Rudenstine says, "There was no way we could go out and raise funds without thinking in considerable detail-in our case, through a process that went on for eighteen months-about the institutional and academic mission. The deans and other heads of units had to think about common themes, common goals for the university as a whole, in order to make an intelligent and coherent case. It was an intensely interactive process. We were able to think about where we wanted to go at least for the next decade. And that process is what drove the fund raising.

"When we started the planning, we had an extremely rough order of magnitude in our minds. Most expected us to come in a little below $2 billion. As it turned out, we came out a little above it. But the institutional self-scrutiny made the case persuasive and gave lots of people a share in the venture."

Rudenstine sees these planning exercises, and their attendant fund-raising imperatives, as the essence of institutional self-renewal. "Universities try to build inevitably off their own strengths. And they have to make sure their choices are still pertinent." Genomics is one area that any group of smart scientists would peg "as an important idea and an important direction," he says. "Given the pace of change in society, in research and technology, given the rate at which knowledge and information are being distributed more massively and more rapidly, it's impossible to think that you could somehow sit still, not reassess, not constantly reevaluate

 

From the Duke perspective, Keohane says that institutional ambition is also part of the planning environment. Unlike Harvard, Duke is moving to strengthen areas that are relatively weak and where it has invested relatively few resources. Then again, institutions that have been around for four centuries and whose endowment base is ten times the amount of Duke's campaign target have had time and resources to strengthen every area.

"Many of the things that drive us and that are perceived as essential to our success are expensive and becoming more so," says Keohane. "And there is a dynamic of increasing quality and excellence which is fueled in part by competition, by ambitions for doing more in research and teaching. So if it is common among our peers for science facilities to be state-of-the-art, and if Duke's are not, we're not going to be able to recruit the best faculty members and students. They're going to go somewhere else, where the facilities are better. And similarly with student expectations about the types of support they will have for technology, or the libraries, or the social spaces on campus.

"So it's a highly competitive industry in that sense. But it's also an industry where people are motivated by wanting to provide the best possible services and the best possible education, to do the most sophisticated research. We're under pressures to be bold and visionary and ambitious. And those things take money."