Even as workers assemble millions of pounds of steel, concrete and glass to build the School of Management’s new campus, SOM has not yet covered the hefty price tag of the construction.
SOM Dean Edward Snyder told the News that the school has raised all but $20 to $40 million of the roughly $230 million needed to finance the construction. Though the school has begun to shift its fundraising priorities to areas such as scholarships, efforts to acquire the outstanding balance for the construction are still underway. The construction has not incurred any debt so far, and Snyder said SOM will be able to borrow from the University to pay off remaining costs if necessary.
“Obviously, we would prefer not to have any debt, but this is within a reasonable range,” Snyder said. “What we need to do is try to continue to work on getting support for the building.”
Snyder said he would like SOM to raise roughly $40 million in order to establish an endowment to keep the building up to date after it opens in late 2013, though only roughly $20 million is needed to complete the construction. Any debt the school could incur would be relatively minor, he added, given that its endowment is valued at more than $500 million.
While SOM is refocusing its fundraising goals, Joel Getz, senior associate dean for development and alumni relations, said these new efforts are not detracting from construction-related development. Several “significant gifts” have come in for the construction in recent weeks, Getz said, in addition to gifts toward the school’s other fundraising priorities.
“It’s going to be gift by gift, and you never know what people are going to prioritize,” he said. “We have a lot of priorities and we have to balance all the priorities. We’re hopeful that people will keep staying interested.”
Getz said SOM would “ideally” raise the remaining balance prior to the scheduled completion of the construction, expressing concern that the school may have a more difficult time acquiring gifts after the project finishes. Still, Vice President for Development Inge Reichenbach said her office has not previously had trouble fundraising for remaining costs in the wake of other large projects.
Construction of the new SOM campus was one of few major projects that moved forward during the recession, Getz said. He added that several significant gifts, including $50 million donated by Edward Evans ’64 in December 2010, were “transformative in our confidence” that borrowing for lingering costs would be manageable.
University President Richard Levin said in an email Tuesday that since donors pledge money throughout construction campaigns, the amount of debt incurred by a project changes over the course of the construction. He cited the Yale University Art Gallery renovation as an example, which he said will have enough donor pledges to cover the full costs of construction, but will be completed before all of those contributions have been received.
“Debt is added as a construction proceeds, and paid down as gift funding is received,” Levin said.
Levin said it is common for large construction and renovation projects at the University to be financed through a combination of donations and borrowed funds. He noted that several of Yale’s recent construction projects — including the construction of Kroon Hall and Rosenkranz Hall, and the Yale University Art Gallery renovation — were financed in this manner.
Vice President for Finance and Business Operations Shauna King said in an email Wednesday that the University occasionally borrows money through the Connecticut Higher Education Funding Authority, but that doing so is “highly prescriptive regarding what it can be used for and how financing is handled.” SOM could potentially receive debt financing to supplement its construction fundraising, King said, though that has not yet been determined.
Construction of the new SOM campus began in April 2011.