Activity Vouchers: The Market-Oriented Alternative to Special Fees

The Special Fees system is broken. The budgeting, petition, and election processes take up enormous amounts of time that student group leaders could better spend contributing to campus life. The arbitrary and difficult-to-predict nature of the election means groups have to guess what voters will approve, and if they’re wrong, they lose everything. The main problem, though, is that the biggest determinant of a group’s funding is not how well it serves students; it’s how well it knows the Special Fees process. There’s a solution to this, but first let’s see where Special Fees went wrong.

Here’s how student group funding works now. Each year, groups can easily receive up to $6,000 in General Fee funding from the Undergraduate Senate. If they want more, they have many options: the Stanford Fund, member dues, alumni or outside donations, ad revenue, ticket revenue, or offering services (like Model U.N.’s boot camp for high school students). Or they can get Special Fees.

Last year, 43 student groups did just this, receiving a total of almost two million dollars in Special Fees. It didn’t used to be that way. When they were introduced in the 1990s, Special Fees were intended for groups that provide non-excludable public goods. Just as society benefits from a lighthouse yet no individual would pay for it (because you couldn’t exclude non-payers from benefiting), the whole campus benefits from the Band, but nobody would pay for it individually.

At first, only a handful of student groups (including those two) received Special Fees. Now, the Special Fees system is a free-for-all. The only accountability comes from students voting on budgets once a year. But busy students have little incentive to inspect groups’ budgets, much less vote no, since it’s probably their parents or scholarship paying anyway. In fact, voting yes just means they can receive an even greater refund next year!

With a better allocation scheme for activities funds, we could spend the same amount but get a much more vibrant campus activities scene. I propose we scrap Special Fees for all but a handful of groups and introduce Activity Vouchers. Students would pay the same fee as before, but each quarter they would go online and anonymously choose how much to allocate to each group (anything between zero and the full $120 quarterly fee). Because students would directly benefit from this, I believe the vast majority of students would make allocations; for those who didn’t, we could choose a reasonable default.

A group with just 30 committed members could receive around $10,000 per year under this scheme, just by appealing to those students. There’d be no annoying petitioning and much less bureaucracy and paperwork. Members themselves would provide accountability, since it’s their money being spent, and they’d be more committed to the success of their group. All student groups would benefit from this, as member engagement is one of their greatest challenges.

For most current groups, the Activity Vouchers from their own members would more than suffice to maintain their current funding and operations. Starting a group would be just as easy as it is now; the group’s founders’ own Activity Vouchers would bankroll it initially.

For groups with a small membership that put on campus-wide events, like performing arts groups, it may not be clear how Activity Fees would keep them afloat. Here’s how. They would still receive funding from their own members, but they could also charge ticket fees to the Activity Vouchers of student attendees. Unlike the current block grants these groups receive from the ASSU, this scheme would give them a greater incentive to put on shows with broad appeal and advertise them widely. But by letting them charge students’ vouchers instead of requiring cash payment at the door, more students would be able to attend their shows.

Often, groups need to plan events far in advance, and vendors don’t generally advance credit to Stanford student groups. Here, groups could tap their reserve account, and when they hold the event, replenish it with ticket revenues and subsequent quarters’ voucher funds. A new group with no reserves probably isn’t ready to make large, long-term expenditures, and a mismanaged group that depleted its reserves ought to build it back up before it risks student money again. To build its reserve, the group will be collecting money from each of its members’ vouchers every quarter.

Groups like Mock Trial that spend more than $400 per member could ask alumni to donate or members to pay dues (in addition to their voucher). Soliciting alumni would establish institutional memory and would be good networking. Plus, we know Stanford alumni already donate to Stanford activities indirectly, by giving hundreds of millions to the University to allocate. Alumni could certainly be persuaded to direct a fraction of their donations to the groups they have fond memories of. But in the end, if the group’s own members, alumni, and outside donors don’t value the group, then why should other students be taxed for a worthless-yet-expensive hobby?

Some groups probably wouldn’t survive on Activity Vouchers alone. Big-name charity groups, like Stanford Dance Marathon, should be able to get full corporate sponsorship. Less flashy charity groups, like Volunteers in Latin America and SPOON, would benefit from the oversight and advice that foundations give their grantees. If no foundations would fund them, then we should be glad that the money is going to other, more efficient charities. The few groups that provide true non-excludable public goods to Stanford students—the Daily, the Band, and the Bridge—should continue to receive Special Fees.

Implementing Activity Vouchers is a revenue-neutral reform that would reward the groups that we students value. More details need to be worked out, to be sure, but let’s work them out.

Quinn Slack ‘11 is a computer science major and was the 2009-2010 ASSU Elections Commissioner.

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