$150 million IU Foundation gift offset pandemic losses for athletics, other campus services

BLOOMINGTON – A nine-figure gift from the IU Foundation given in the 2022 fiscal year helped several key auxiliaries within the university cover substantial financial shortfalls related to the COVID-19 pandemic.

In total, the Foundation gifted $150 million to the university in mid-October 2021. Designed to backfill a variety of specific holes, the Foundation funded the gift by taking on a loan it will pay back over 30 years.

Marshaled by the university, funds from the gift targeted entities across the Bloomington campus hit hardest, including the university athletic department and IU’s Residential Programs and Services (RPS).

“That’s what provided the motivation for the Foundation, the idea of trying to reduce any additional costs for students and preserve of education, quality of housing, quality of athletics, and ensure the high standards we’re used to didn’t have to be cut,” IU Foundation Executive Vice President for Finance and Operations Jeffrey Stumpf told IndyStar. “The Foundation was in the unique position to be able to borrow and provide a gift of $150 million to the university.”

More:IU Athletics' $25 million deficit is its largest ever. The university will help dig it out.

The gift was unrestricted, except for the qualification that it had to be used to cover costs and could not be saved or reinvested elsewhere.

Of that $150 million, approximately $38 million was transferred to the athletic department, per IU general counsel. That gift was reflected in the department’s most-recent NCAA financial report, obtained via a records request by IndyStar.

“That enabled us to basically stay afloat,” IU Athletic Director Scott Dolson told IndyStar, “to be able to maintain support for our student-athletes.”

Athletics departments across the country were among the many arms of universities that struggled financially through the worst of the COVID-19 pandemic.

In its first days, emptied campuses cut swathes of lost revenue across college campuses. Sending students home meant issuing refunds for housing and food. Canceling athletic events equaled lost ticket revenue, and the opportunity to engage with donors.

Even as IU shuffled cautiously through reopening, residence halls operated at 60-70% of capacity. Fans excepting family were shut out of Big Ten sporting events, cutting deep holes into athletics budgets. Bringing students (and athletes) back to campuses meant major investments in regular testing and personal protective equipment.

As early as summer 2020, recognizing the financial challenges approaching from a variety of angles, universities began exploring possible solutions to the deficits COVID would create.

Conferences offered assistance in some cases. The Pac-12 set up a program that would allow its athletics departments to borrow against future media rights earnings. The SEC followed a similar path, distributing $23 million to each of its member schools financed by borrowing against future television rights earnings.

IU Athletics considered several options

Indiana considered a variety of options, including discussions with the Big Ten and, in particular, internal loans. But the university had concerns about taking on debt that would eventually raise costs.

“Those costs were going to come back either to our students or, in athletics’ case, alumni and people who pay for tickets, or we would need to cut services to pay those funds back,” IU Treasurer Donald Lukes told IndyStar.

That’s when the Foundation stepped in with the idea of a loan. It could borrow against its considerable resources, and manage the debt in a structure similar to a home mortgage loan. IU would be free of debt obligation, with the loan converted into a gift and spread across various units throughout campus.

“The pandemic hit in March,” Lukes said. “We started having some more significant conversations about this concept in summer 2020.”

As discussions developed, the hardest-hit areas firmed up projected shortfalls to give the Foundation a better idea of total needed assistance.

For IU Athletics, that hole turned out to be roughly $25 million, less than the worst-case scenario but still enough to prompt furloughs, cutbacks, layoffs and job eliminations. In the fiscal year 2021, the department reported revenues slightly more than $78 million, its lowest single-year total since 2013.

Fundraising campaigns and aggressive restoration of game-day revenues, once allowed, helped fill the hole at the front end of the following fiscal year 2022.

“IU fans and IU supporters, they’re just incredible how they care, how they answer the bell,” Dolson said. “They want to support our student-athletes and support our mission. It was never more evident than going through the challenges we faced, people just stepping up to help where we needed.”

Still, the department needed assistance in covering its shortfall without cutting sports or athlete-facing services. Its need figured prominently into calculations around the size of the gift.

How much was needed?

Dolson said chunk of the Foundation’s contribution ultimately pushed closer to $39 million, numbers reflected in the Hoosiers’ FY22 NCAA financial report.

From 2017-20, donor contributions logged in the annual report came in somewhere between $23 million-$29 million. In the department’s latest report, that line item totaled $61,229,670, more than double any single-year contributions total dating to the start of USA Today’s college athletics finances database in 2005.

Indiana was able to recover numerous key revenue streams, and in some cases surpass previous performance. The department reported ticket sales, for example, in excess of $21.2 million, roughly $3.5 million more than in FY20 and nearly $3 million more than in FY19, the last year of normal operations pre-pandemic.

And, after media rights distributions — primarily the Big Ten’s lucrative TV deal — dipped in FY21 due to diminished inventory (fewer games), it shot back up again last year, from $34.67 million to more than $47 million.

But after grappling with that substantial shortfall in FY21, the department was able to break even last fiscal year — and remains on track, per Dolson, to do the same in the ongoing fiscal year — in large part because of the support received from the Foundation’s gift to the university at large.

“No student fees, no state tax appropriations,” Dolson said. “It really came from the Foundation as a gift. I’m really thankful for that as a part of the university committee.”

Follow IndyStar reporter Zach Osterman on Twitter: @ZachOsterman.