British universities are waking up to the idea of US-style fundraising

One evening in May this year, 200 arty types met for cocktails in the roof garden of the Gramercy Park Hotel in New York City. The choice of venue was deliberate. The Gramercy Park used to have a bohemian reputation. Humphrey Bogart lived there with his first wife, Helen Menken, just after marrying her. The Kennedy family also took up residence there, and during the Great Depression Babe Ruth hung out in the bar.

The revellers had not come to admire the Andy Warhols and Damien Hirsts that decorate the updated building, but to take part in the first-ever alumni cocktail reception of the University of the Arts London to be held in New York. The following night there was an even bigger party for former students of art colleges such as Chelsea College of Art and Design, Central Saint Martins and the London College of Fashion, three of the six institutions that make up the University of the Arts London.

"They really got it," says Lynette Brooks, the university's head of development. "They were so excited. The warmth in the room was unbelievable."

Although money was not mentioned at the receptions, and London's art colleges did not ask for donations, a number of alumni came up to ask who they could make cheques out to.

"There was an expectation that you support your university, and that just doesn't happen in Britain," says Sir Michael Bichard, the outgoing rector of the University of the Arts London, who was at the party.

The University of the Arts London is the latest in a list of British institutions to have woken up to the idea of US-style fundraising: tapping alumni, former staff or, indeed, anyone, for money. Oxford and Cambridge have been doing it for a while. Indeed, in May, Oxford announced the biggest (£1.25bn) fundraising campaign of a European university ever.

Cambridge already have a campaign to coincide with its 800th birthday in 2009, which has been promoted worldwide, and other top universities such as the University of Edinburgh and Imperial College London are busy with similar initiatives.

Now more universities are joining the bandwagon, helped by the £200m matched-funding scheme, whereby money invested by individual universities will be matched by the Government. This aims to encourage people, both the rich philanthropist and small donors who can spare only a few pounds, to give to higher education.

"I hope it will change the sector and those who might support us," says Sir Michael. "Higher education will need to ensure that its fundraising activities are as professional as possible."

Until now, we British have looked askance at the notion that we should support our higher-education institutions with hard cash. That was because we believed that university education should be free. But now that students pay fees – at least in England – the received wisdom is that universities need to raise as much outside money as possible to get the best research, campus facilities and students. Those that don't will fall behind the international competition, the argument goes.

"Our mindset has got to change if we're going to be world-class and competitive," says Sir Michael. "There is a social cachet attached to supporting the arts, but we don't have a tradition of supporting the learning institutions. Yet at London's art colleges, we are developing the talent that will fuel our creative industries in the future."

At the University of the Arts London, two big donors have contributed so far. One is the entrepreneur Harold Tillman, an alumnus of the London College of Fashion and chairman of Jaeger, who has given £1m for scholarships; the other is the Rootstein Hopkins Foundation, set up by two alumni who have made their names in the fashion business. The latter gave £1.5m to upgrade the old parade ground at Chelsea College of Art and turn it into an outdoor sculpture gallery.

But the university has received nothing from most alumni, and nothing from big names such as John Galliano, Stella McCartney and Alexander McQueen (all alumni of Central Saint Martins), although Jimmy Choo, a graduate of the London College of Fashion, has run masterclasses and helped to recruit students in the Far East.

The university has begun to invest in fundraising in a big way, to the tune of about £1m. Lynette Brooks, the head of development, was hired from America. "We started by compiling a database, getting in touch with alumni, and helping them to see that there is value in staying connected," she explains.

This past academic year, it launched a telephone fundraising campaign involving students, which it plans to repeat in future years. That brought in 350 new supporters and raised £60,000 in pledges over the next three years, and the hope is that over time this income will increase. It is also anticipating that the stunning £180m Granary building at King's Cross being developed to house Central Saint Martins will inspire more donors to give.

The University of the Arts London is new to the game, having only gone into fundraising about five years ago, and it takes time to see results. Another institution in a similar position is the University of Loughborough, which six months ago poached Ron Gray, another American, from the University of Warwick to be its head of development. He believes that universities have to have the courage and foresight to make fundraising work.

"Loughborough is at an early stage of this business," he says. "About one in four people whom alumni talk to on the phone end up giving. And if we find someone who gives more than £500, they should receive a visit from a member of staff to thank them. When you develop a personal relationship with them, you may find that they are able to help out more."

At an even earlier stage is the University of Bournemouth, which has recruited Ian McMullan, formerly of UMIST, to be in charge of development. As a new university with a database that contains few alumni over the age of 40, Bournemouth will struggle to raise money for a while, but McMullan is optimistic.

"We have said that we want to raise £1m by Christmas to prove that it can be done," he says. "Within five years, we should be bringing in £1m a year."

The University of Bristol has been raising money seriously, and for longer. In 2009, it celebrates its centenary with the launch of a major fundraising campaign. And its vice-chancellor, Professor Eric Thomas, the author of an important report on university fundraising, is a major donor. He and his wife have pledged £100,000 of their own money to the centenary campaign.

Tania Jane Rawlinson, Bristol's director of campaigns and alumni relations – another American – says that Oxford's campaign launch in May has paved the way and made things easier for all universities seeking to raise money.

Bristol raises £650,000 in cash through its annual giving programme, which entails asking all alumni every year. This sum has tripled in four years. As many as 4.5 per cent of alumni make a gift, which puts the university in the top four in the UK. A decent US university will net gifts from 12 to 15 per cent of alumni, and an outstanding US university will be successful with 20 per cent.

"I feel things are changing here," she says. "The best institutions in Britain are now where the US was 30 years ago. The Oxford campaign happened at a critical time when the Government's matched-funding programme was about to be launched. We believe that matched funding will make a massive impact. It will encourage people to give because they will know that their gift will be leveraging more money."

Eric Thomas agrees. Matched funding could take philanthropic giving to universities to a new level, he says. "The evidence from the US is if you ask, you will get money given to you."

Joanna Motion, the vice-president for international operations of the Council for the Advancement and Support of Education in Europe, thinks that virtually all universities will get in on the fundraising act and encourage their alumni to get into the habit of giving.

The Donor

Linda Brockbank is the creative director of the design company Crescent Lodge.

"I was a student at the London College of Communication, Central Saint Martins and Chelsea at a time when we didn't pay fees. A couple of years ago, my daughter graduated with a first from Central Saint Martins. I was able to support her but I am aware that some students have to stop after a first degree and can't go on to do a Masters. Whatever anyone says, it really helps to have an MA in art and design.

"Ethnic minorities in Britain don't seem to get a look-in, so I thought I could help to pay for one £6,000 scholarship for a home ethnic-minority student. Haroon got it."

The Recipient

Haroon Mirza is studying for a Masters in fine art at Chelsea College of Art and Design.

"I applied to do an MA in fine art at Chelsea and got a place, but I wasn't sure whether I could take it up because of my finances. The fees are £3,500, plus expenses and living costs.

"I received something in the post saying that I was eligible for a scholarship that would pay my fees and maintenance. It made all the difference. I couldn't have done the course otherwise."