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As state dollars for the Challenge Fund have dwindled, North Dakota higher education officials say the program that raises money for student scholarships is important and should be funded as Gov. Doug Burgum proposed late last year.

The Challenge Fund program was started during the 2013-15 biennium. The program leverages private dollars by promising a partial state match. The state provides $1 of state money for every $2 of private donations within a per-campus limit.

The fund has “laser focus on anything that would support students,” said Sen. Nick Hacker, who sits on a committee for the program. Hacker also is the vice chairman of the State Board of Higher Education.

Money can go to student-focused areas, including scholarships, endowed chairs for a unique department, educational infrastructure -- such as updated library resources, specialized software, STEM equipment and smartboards, among other items -- or research and technology.

The program has received renewed interest following Burgum’s December budget address, during which he proposed investing $40 million of Legacy Fund earnings into the fund. The Challenge Fund saw a dip in appropriations last biennium amid budget cuts in the state. Burgum, however, said the program has still been successful at raising money that has a direct impact on students.

“The North Dakota Higher Education Challenge Fund was created in 2013 to ignite a philanthropic spirit to support North Dakota’s public colleges and universities, primarily with scholarships,” Burgum said during his budget address. “And it worked.”

He said a $40 million investment into the Challenge Fund would “enable a total influx of $120 million” into North Dakota’s higher education system.

Now, lawmakers are debating exactly how to use Legacy Fund earnings -- if at all -- and the potential of the Challenge Fund is among those arguments. The Legacy Fund is now approaching $6 billion, and its earnings for the current biennium are likely to reach $300 million.

The Legislature is considering multiple requests for Legacy Fund earnings.

Supporters of the Challenge Fund say the program helps students on different levels.

The Challenge Fund program is chaired by the lieutenant governor and the committee is further composed of two state senators, two state representatives, two SBHE members and two members at large, appointed by the governor.

Funding applications, having met several specific criteria, are brought before the committee for approval. Once approved, the North Dakota University System Office disburses the funds awarded to the campuses for use at the respective foundations.

Hacker said the program helps reduce costs for students attending school in North Dakota.

“The biggest benefit is student support for scholarships,” Hacker said. “We’re in a nationwide battle for students just like the state is in a battle to fill jobs, so a program like this can help support students that come to our state.”

The applications are approved by the committee based on when they come in. Hacker said the committee has found that when the “state has a little bit of skin in the game” the foundations, at both big and small campuses, are able to hit fundraising goals.

Dwindling funds

Since 2013, the Challenge Fund has raised $90 million in student scholarships and $70 million in combined educational infrastructure, research and technology for North Dakota campuses.

During the first biennium the program was available, the state awarded $29 million to the state’s 11 higher education institutions, including $10 million each to North Dakota State University and UND. The nine other universities/colleges received approximately $1 million each.

Of that $29 million appropriated to the Challenge Fund, more than $12.3 million went to scholarships, while another $2.2 million was given to endowed chairs at NDSU, UND, North Dakota State College of Sciences and Minot State University. Another large chunk of money, around $13.3 million, was used for educational infrastructure. The final $1 million went to research and technology at various campuses.

While another $23.5 million went to the Challenge Fund in the 2015-17 biennium, with $21 million coming from the general fund and another $2.5 million coming from the Student Loan Trust Fund, funding for the program dropped significantly in the last biennium.

Just $2 million was appropriated to the fund in the 2017-19 biennium, with each school awarded around $200,000. Nearly all of the money went to student scholarships.

The North Dakota Student Association "adamantly supports" the Challenge Fund Grant program, NDSA President Jared Melville previously said.

UND numbers

According to numbers from the UND Alumni Association and Foundation, the Foundation received more than $33 million in private support that was matched with Challenge Grant funding over the last three bienniums. The Challenge Fund increased the impact of 326 gifts.

The donor dollars went to the following areas:

  • $15.1 million went to four capital projects
  • $13.9 million went to 140 scholarship funds
  • $2.9 million went to 17 educator funds
  • $1.6 million went to 17 program and education infrastructure funds

Nearly 70 percent of donors were from out-of-state; donations came from 33 states and the District of Columbia.

DeAnna Carlson Zink, CEO of the Foundation, said the program is a great way to capitalize on public-private partnerships, noting that donors are looking for ways to maximize the benefits they can give to students.

“The Challenge Fund really increases the impact of donations,” she said. “It really has helped motivate donors and I would say it’s even been a tipping point for donors to give.”

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