Why We
Need You

Plain Talk on Morehead-Cain
Finances and Giving

Q: For a long time, the Morehead-Cain Foundation made a point of not asking alumni for financial support. What’s changed?

Keith Cowan, Chair of the Morehead-Cain Scholarship Fund

At the time Mr. Morehead established the scholarship in 1945, he believed his contribution of $36 million would sustain the program forever.

Lucy Hanes Chatham, Chair of the Morehead-Cain Trustees

For a long time it did. But when he endowed the program, it cost only a few hundred dollars a year to attend UNC—about what it costs to buy books today. Neither he nor any of the original trustees could ever have imagined tuition and fees reaching their current levels.

Chuck Lovelace, Executive Director of the Morehead-Cain Foundation

We were incredibly fortunate to operate for nearly fifty years without raising money in any significant way. For many years, because costs were low and investment returns were strong, we were able to grow the program along with the endowment.

But with the past decade’s volatile market, coupled with its ever-rising tuition, we now face the plain reality that—far from growing the program— we won’t be able to maintain it at its current level without support from alumni and friends.

Q: Has the endowment faltered?


No. We actually experienced fantastic growth in the endowment, reaching $100 million around 2001. For fifty years, our cost increases were low and our returns were high—an ideal situation for any foundation.

But our business model began to shift at the beginning of the last decade. Like many investors, we saw our returns stay essentially flat at a time when the University began a sustained shift toward higher tuition.

With costs rising faster than returns, we face a challenging long-term situation for the endowment.

Q: Talk about tuition for a minute. Why has there been such a sharp rise in costs?

Holden Thorp, Chancellor of the University of North Carolina at Chapel Hill

The cost of higher education has been rising across the country, and UNC isn’t immune to that pressure. In particular, state governments have been forced to cut back their investments in higher education, and that means a greater portion of the cost has to be shouldered by tuition.

Steve Farmer, Associate Provost and Director of Admissions for the University of North Carolina at Chapel Hill

Everyone is understandably concerned about costs going up, but the truth is that the University really doesn’t have any choice except to lean more heavily on tuition revenue. We can’t count on state support being as generous as it has been in the past. Policymakers would love to help us, I think, but they simply can’t. And just as it’s a challenge for many families with a child in college, we know it’s an especially big challenge for the Morehead-Cain.


Yes, with our 240 scholars in college...


Exactly! But we need the additional revenue from tuition to sustain the quality of the University. I believe we’ve reached the limit of what we can do in cutting costs, and if we don’t act now, we’ll pay the price five or ten years down the line..

Q: Where does the Cain grant factor into all of this? Didn’t it significantly increase the endowment?


It absolutely did. The Cain family’s gift was remarkably generous, and doubled our endowment to $200 million. The most immediate impact was enabling us to bring more scholars to campus; our class size had shrunk to as few as forty in some classes. Thanks to the Cain family, we were able to raise that number to 65.


Maintaining that impact, however, is going to require further investment by alumni and friends of the program. The Cain gift came in 2007 and, like all investments, took a significant hit in 2008. While we’ve enjoyed some growth since then, we remain $20 million short of where the endowment was before the 2008 crash.

So long as the rising cost of college continues to outpace even the healthiest endowment returns, our ability to maintain class size continues to slip. That is especially worrisome when you consider that UNC’s student body has grown much faster than our class of scholars.

Q: Would curtailing or ending the summer program help anything?


The summer program is a surprisingly small portion of our overall costs. If we cut the program entirely, ending all of the internships and research opportunities that have become a hallmark of the Morehead-Cain, we would free up less than twelve percent of our annual budget.

Chancellor Thorp

Maintaining that impact, however, is going to require further investment by alumni and friends of the program. The Cain gift came in 2007 and, like all investments, took a significant hit in 2008. While we’ve enjoyed some growth since then, we remain $20 million short of where the endowment was before the 2008 crash.

It’s also important to remember that the top-tier students recruited by the Morehead-Cain tend to look at college in a very holistic way. These students receive offers from some of the best colleges in the world, and they think very carefully about the experiences they’ll have during the summer and those they might have overseas—the opportunities they will have beyond the confines of campus.

I think the fact that the Morehead-Cain Foundation was thinking of that decades ago, and now it has become a key part of higher education, is extraordinary. It’s part of what has set the scholarship apart, and to lose that would mean losing not only many of the best and brightest students at Carolina, but a program that was visionary in its scope and remains unrivaled in its influence.

Q: Why the focus on class size? How would a decrease
impact Carolina?


All of the evidence we have shows that the quality of the student body is the single most important factor in recruiting the best students. It is crucial for us that we’re able to say we have students here who rival the best students anywhere.

That's a big part of what the Morehead-Cain does for the University. These are students who leaven a class. The more of them you’re able to bring to the University, the easier it is for us to attract other great kids to Carolina. The success builds on itself, and so would any slippage. We've got to be careful there.


That was exactly Uncle Mot’s intention in creating the scholarship— that it would help attract the best to Carolina to lead it and to continually improve it. Decreasing class size obviously diminishes our capacity to do that.


And just look at what we’ve been able to accomplish these past few years with 40 to 50 scholars in each class. The impact for UNC in terms of scholastic achievement and campus leadership has been incredible. That impact only grows with more scholars.

Q: Why should the Morehead-Cain factor into the philanthropic plans of our alums and their gifts to Carolina?

Chancellor Thorp

If you make a list of the great UNC graduates, the ones people know about, a large number of them are Morehead-Cains.

If you assess the University by selecting powerful student stories, you’re going to select a lot of Morehead-Cain Scholars. They’re the leaders of student government, the founders of new organizations—they’re the ones pushing the institution to be better. They’re the ones who are excelling in the classroom.

The Morehead-Cain is an inseparable part of what makes the University of North Carolina a world-class institution.


There is arguably no better way to invest in UNC than through the Morehead-Cain. In terms of impact on the University, our scholars are unmatched. The Morehead program was the greatest opportunity that was ever provided to me, and I feel a deep, personal commitment to make sure that opportunity is available to others.

We were all beneficiaries, and now it’s our turn to make all of this possible for a new generation of scholars. It’s our turn—it’s our privilege—to take ownership of the program.