Reliving the Wonder Year

One national championship, three runners-up and seven other top-10 finishes made last year the greatest in recent memory for Duke sports.

The Blue Devils finished the 2004-2005 academic year in a school-best fifth place in the annual Directors’ Cup competition, which evaluates schools’ overall athletic programs based on NCAA championship finishes.

While the athletic department enjoyed unprecedented success this year, however, Director of Athletics Joe Alleva said the department is focusing its resources on fully endowing athletic scholarships in an effort to ensure prosperity for the future.

“The University is in the very early stages of planning for the financial aid initiative that will be announced late this fall or early next year, and, as a result, that is a very high priority of ours—the financial aid initiative and scholarships,” said Tom Coffman, director of athletics development. “[Once endowed,] what you’re really talking about is being in a position to raise money to provide for the margin of excellence, and that’s the difference between being in the top five sometimes and being there every year.”

Athletic programs nationwide are securing their long-term financial stability with their endowments, which provide a source of income from the interest they accrue each year.

The 235 scholarships that Duke currently offers to its student-athletes cost more than $11 million each year to fund. The athletic program’s current endowment—the fifth largest in the country according to a 2003 Bloomberg News study—generates approximately $2.7 million annually in endowment income. The money is devoted solely to athletes’ financial aid.

But an additional $9 million is necessary to cover the cost of scholarships each year, placing a tremendous burden on the Iron Dukes, the organization responsible for collecting gifts for scholarships.

“Part of the risk is that if you can’t cover [financial aid] through annual gifts, or if for some reason your annual gifts dip for a year—for whatever reason—you have to cover it out of your operating budget,” Associate Athletic Director Mitch Moser said of relying on donors to finance scholarships. “The endowment income is not going to take a dip. It’s like having an insurance policy.”

“Stanford has all their scholarships fully endowed and that gives them so much leeway to do things with their money in other areas,” Alleva said. “We have to spend so much of our time and effort raising annual fund dollars to pay for our scholarships. If we had that all covered through endowment, it would free up so much money that we could do a lot of other things.”

Although full endowment would create numerous benefits, achieving it will be a difficult and lengthy task, Alleva admitted. But he is confident it can be accomplished.

The cost of endowing a full scholarship at Duke recently increased to $1 million, as tuition rose to more than $43,000 per year. Since Duke has just 60 of its scholarships endowed, it would take an additional $180 million to close the funding gap—with that figure increasing as the cost of a Duke education rises.

Many donors are also reluctant to give for endowment, preferring to make donations that will produce immediate tangible or visible effects.

“Endowment is not sexy for people to give to,” Alleva said. “It’s just not something that people totally understand and totally feel like you need it. People love to give money for buildings, people understand the need to give money to pay scholarships on an annual basis. It just seems like its been harder to convince them to give money for endowment.”

Nevertheless, seven of the 13 men’s basketball scholarships have been endowed by the Duke Basketball Legacy Fund, an organization that was formed in 1999. One of its primary goals is the endowment of player scholarships, coaching salaries and operating expenses for the men’s basketball program.

As the most visible entity of the Duke athletic department, the men’s basketball team was a natural place to start to endow scholarships, Alleva said.

Fully endowing the basketball program—including the nearly $5 million in operating expenses—is the Legacy Fund’s ultimate goal, said Mike Cragg, the director of the organization. And if it meets its lofty goal, the Legacy Fund will be responsible for the nation’s first completely endowed program.

The Legacy Fund’s objective is an integral part of the athletic department’s overall success because it would free up money that could be used by other programs, men’s basketball head coach Mike Krzyzewski added.

“If Duke puts a sport out there, we should try to have full scholarships for it, and we should try and endow all those scholarships—forget that there is even a Directors’ Cup—just because we want to be good in all of them,” Krzyzewski said. “Duke should be able to give maximum support to any initiative it starts whether it be in the academic world, the athletic world or the medical world.”

Alleva said he shares Krzyzewski’s vision and hopes to increase the number of scholarships Duke offers in its Olympic sports to the maximum NCAA allotment. But he realizes his goals are financially infeasible without endowment.

“This is long term, but I would love to fully scholarship all of our sports,” Alleva said. “But we can’t do that until we take care of the ones we have now.”

The increased priority placed on scholarship endowment comes on the heels of a successful decade-long capital improvement campaign. Nearly all of Duke’s 26 varsity sports have benefited from facility upgrades, including the construction of the Yoh Football Center and improvements to Cameron Indoor Stadium and Koskinen Stadium, where the soccer and lacrosse teams play.

Duke’s Board of Trustees also approved the construction of a basketball practice facility that will house the athletic department’s academic service offices and a multipurpose event room. The project—for which Duke is still securing funding—is the last major capital project in the works, but other facilities will continue to receive minor upgrades, Alleva said.

“In the past few years, our number one focus was trying to improve the facilities, so now [we’re] focused on endowment,” Alleva said. “I think the facilities that we’ve been able to put into place have helped us to recruit the kind of kids that you need to win championships and go to Final Fours.”