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OHSU taps lawmakers in fund search

Request could ignite giving for Knight's $1 billion cancer challenge


If you’re looking for a way to raise a couple hundred million dollars to finance a new building or two, Oregon Health & Science University has a novel approach. First, get Nike founder Phil Knight to announce a matching gift — if you raise $500 million in two years, Knight will match it with $500 million. You fail, you get nothing.

Next, announce to philanthropists locally and nationwide the start of the new campaign to raise your half of the money as part of a major offensive to fight cancer. Then, go to the state Legislature and say the Knight offer is too good a deal to turn down, but private philanthropy alone might not make that match in time. Finally, hope legislators in Salem agree, and you get $200 million in taxpayer funding for bonds to finance two new buildings, and that Knight agrees that public money counts toward his match.

Two steps forward

The ongoing drama surrounding Knight’s late September matching grant offered up a surprise last week as the OHSU Foundation took two giant steps toward raising the $500 million — an accomplishment about which some experts in philanthropy have been skeptical from the start.

First, OHSU officials announced plans to ask the Legislature for up to $200 million in bonding authority to construct a new research facility and a portion of a separate new patient care building at the university’s South Waterfront campus. State taxpayer money already is heavily invested in a 500,000-square-foot OHSU/Oregon University System Collaborative Life Sciences Building at South Waterfront that is currently under construction.

Second, last week the Oregon Community Foundation pledged $1 million toward the Knight match. The foundation is a sort of aggregator for philanthropy, accepting gifts from individual donors and foundations and then awarding grants to nonprofits around the state. The entire $1 million pledge will count toward the two-year match, despite the fact that it will come in the form of four annual $250,000 awards. The $1 million promised to OHSU represents the foundation’s all-time largest discretionary grant.

The proposed state Legislature request casts the Knight challenge in a whole new light. From the start, OHSU Foundation officials have said the focus of the new initiative would be luring 20 to 30 star cancer researchers to the university in an effort to position OHSU as one of the top cancer centers in the country. In addition, OHSU officials have spoken about the tremendous impact $1 billion could have on the Portland and Oregon economy. But that impact will be lessened, experts say, if a significant portion comes from tax money that would have been spent in the state anyway, instead of funds donated by philanthropists.

Priming the pump

Philanthropy experts say the OHSU request makes complete sense and may be necessary if the university is going to meet Knight’s challenge. In fact, they say making it known so early in the fundraising campaign might be a brilliant move on OHSU’s part as it tries to persuade private philanthropists to step forward.

“If I were Phil Knight and leaders of the health sciences university I would view getting more public dollars as something I actively wanted done,” says Michael Montgomery, a Michigan-based fundraising consultant.

Public money bolstering a philanthropic campaign has increasingly become the norm, according to Montgomery. “In terms of how fundraising works, money’s just money,” he says. “Fundraisers and organization leaders are advocating for their institutions. It makes perfect sense for them to be working on this. Whether or not taxpayers should play along is a different question.”

The looming presence of the Knight challenge grant changes the equation facing legislators considering OHSU’s request, Montgomery says. “It will be hard to be the elected official who potentially makes the half-billion-dollar challenge fail,” he explains. “At the same time, if they came in and said, ‘Would you give us $200 million to build a facility?’ that might be another question. The challenge changes the politics of the decision.”

Build in contingency

Of course it does, says state Rep. Mitch Greenlick, D-Portland, who is all for the state subsidy with one proviso. His qualifier? Make sure that the state money is contingent on the entire match being met. If OHSU doesn’t raise its full $500 million and Knight doesn’t match with his $500 million, the state doesn’t have to contribute its $200 million in bonding authority toward the two new buildings.

“That’s the way I would write it,” says Greenlick, a professor emeritus at OHSU and chairman of the Legislature’s health care committee.

Greenlick says if OHSU came to the Legislature with a request for the two new buildings, but without the promise of Knight’s grant, he wouldn’t give the request much consideration. But the Knight money, with the promise of scientists paid for by philanthropic dollars, matters.

“They (the buildings) are not worth it in their own right. They are worth it if they’re filling them with star scientists,” Greenlick says.

Greenlick says he is not concerned that $200 million of state bonding money might replace private philanthropy that OHSU would have had to raise. In his eyes, $800 million in philanthropy may not be $1 billion, but it’s still a windfall.

“If we invest $200 million in bonding in order to get $800 million into the state, that would be a great deal,” he says.

But Greenlick is skeptical that OHSU can get approval for the two new buildings in the upcoming 2014 legislative session. “It’s too fast,” he says. Instead, he thinks OHSU is more likely to get its bonding approval in 2015.

State Senate President Peter Courtney says he was visited by top OHSU officials and scientists last week with their proposal for the two new buildings and he immediately decided to support it. A cancer survivor himself, Courtney says he was convinced by the argument that the new buildings, as part of the larger Knight Cancer Institute campaign, could lead to major breakthroughs in the battle against cancer.

“I’m told this facility, if they do what they want to do there, they will be able to attract national, if not worldwide, people like no other facility of its type,” Courtney says. “That’s what they’re telling me.”

Part of Knight’s plan?

Brian Crimmins, chief executive officer of New York-based philanthropic consulting firm Changing Our World, says from the time he first heard about Knight’s incredibly difficult challenge to OHSU he wondered if something like a request for public money might be part of the package.

“Maybe it was Knight’s vision all along,” he says. “Something struck me about the way he spoke of the original $500 million, maybe in the back of his mind he knew all these kinds of things would come into play in order to get to that $500 million.”

Steven Lawrence, director of research at the Foundation Center in New York, says he’s pretty sure that OHSU wouldn’t have made its announcement if Knight hadn’t given approval to public funds as part of the match, and that appears to be the case.

“We know this would be acceptable to Mr. Knight,” says OHSU Foundation spokesman Tim Kringen.

Kringen says OHSU’s request for state money was a natural outgrowth of Knight’s offer.

“Given the magnitude of coming up with $500 million in two years, we’ve said everything is on the table,” Kringen says. “We can’t afford at this early stage to rule anything out.”

Also, Kringen says, the proposed two new OHSU buildings at South Waterfront have been part of OHSU’s long-term vision for South Waterfront but the Knight grant has provided an opportunity to potentially speed up their construction. Though university officials at the time of the Knight offer insisted the $1 billion would be spent on researchers, Kringen says the hope is that the total final investment will now add up to $1.2 billion. Regardless, the new buildings are a necessary part of that vision, he says.

“We simply don’t have the space to put up people like that right now,” he says.

The Foundation Center’s Lawrence says even if the Legislature agrees to issue the $200 million in bonds OHSU has requested, the final chapter of the Knight matching grant is far from written.

“$299 million still to go,” he says. “That is going to be no small task.”