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Donations Are Up, But Not From Alumni

February 20, 2008

Private giving to colleges grew by 6.3 percent -- to $29.5 billion -- in 2007, setting a new record, according to a report being released today by the Council for Aid to Education.

The report documents the continued success of colleges in attracting support from alumni, other individuals, businesses and foundations, with Stanford University topping the institutional list, bringing in more than $832 million during the year. The fund raising totals reflect the increasing reality of the rich getting richer, with the top 20 institutions -- representing 2 percent of survey respondents -- raising 25.8 percent of all the private funds that went to higher education, and 29.6 percent of the increase in 2007. (Lists of the top 20, and of the top community college fund raisers appear with the tables at the end of this article.)

Amid all of the big gains, the “Voluntary Support of Education” reports some trends that could concern colleges -- especially with an economic downturn taking hold in 2008. First, alumni giving declined by 1.5 percent. Because of an unusually large increase last year of 18.3 percent, experts played down the significance of that figure, although they are watching it for the long run.

The statistic getting more discussion is the percentage of alumni making a donation, which fell to 11.7 percent, from 11.9 percent. This is the second straight decline, since the rate was 12.4 percent in 2005. The study offers several explanations for the decline, a number of which are based on demographics and technology, not changing attitudes among alumni. But other explanations, which are being taken seriously by some fund raisers, suggest a more serious challenge for colleges at raising money in the years ahead.

The technology shift is straightforward: Colleges are using various databases to collect and keep current lists of alumni, so a disaffected alumnus of a few years ago probably wouldn’t have been counted at all, but may now be counted as someone not giving. The demographic shift is that colleges have significantly increased enrollments in the last 10 years, such that the overall alumni base is younger than in the past. Young alumni have generally been less likely to give, or to give large gifts, as they are just starting their careers, and may be spending their limited incomes on starting families, repaying student loans or graduate school.

If that’s the explanation, alumni giving rates may continue to decline for a bit, but they should rise over time, as those in the current cohort of young alumni win the promotions and find the financial stability that may turn them into regular donors and – in a few cases –- major donors. The problem is that while most experts believe that part of the explanation for falling alumni-giving rates is in simple demographics, others see characteristics of this new generation of young alumni that may not bode well for long-term giving rates. Further, if young alumni don’t establish giving patterns that include colleges, higher education could be hurt down the road – since today’s $25 donor can become a major donor in the future

Ann E. Kaplan, who directs the study, said she thinks the primary issue is just that younger alumni have never been “as dominant” a share of the overall alumni population. But she said that she is concerned about the impact of more students attending multiple institutions to finish an undergraduate degree, transferring or simply taking courses at multiple institutions. Alumni give in part because they view their college experience as “transformative,” Kaplan said. But what if their connection to any one of the institutions they attended is weaker than those created by attending one for four years? She said this worried her.

Eugene R. Tempel, executive director of the Indiana University Center on Philanthropy, noted another shift among young alumni. They are more likely than previous generations to take jobs that are geographically far from alma mater. While nationally competitive colleges and universities have long recruited students nationally and seen them dispersed that way upon graduation, many other colleges -- public and private -- have more typically attracted students from defined geographic areas to which students returned upon graduation. The shift away from that pattern is significant, Tempel says, for a number of reasons.

Proximity in the past encouraged alumni to stay involved and to take pride in what was going on at their alma maters. But perhaps more important, Tempel said, many studies of young people find that they have an increasingly strong preference for local, grassroots organizations when they decide on their volunteer or philanthropic activities. That means colleges can lose out, he said. While many colleges are compensating for this in part by organizing their far-flung alumni to help local schools or clean up a park -- as an alumni club event -- that doesn’t change the fact that in the past many more alumni viewed support for their colleges as supporting their local community or state as well.

Some experts believe colleges haven’t done a good job of providing young alumni with different ways to be connected to or give to the institutions they attended.

Writing last year as a guest at the blog Tactical Philanthropy, Sam Huleatt, co-founder of a company that builds social networks for private schools, wrote that many colleges “instantaneously lose their relevance upon a student’s graduation.” New graduates have little interest in the alumni magazines, he wrote, that are a major way colleges communicate with alumni. “Why wait four months for ‘class notes’ when you could simply check Facebook to see what a friend is up to?” Further, while many colleges have online giving programs, many also still communicate with alumni as if writing a check is the normal way to give. “It likely shocks most development officers as to the percentage of young alumni who don’t write checks, or own stamps,” he wrote.

Huleatt also suggested that colleges need to think about ways to engage alumni who may not want or have the ability to make a financial gift. “Schools need to reevaluate what constitutes ‘giving.’ A recent graduate may not be able to afford an annual gift of $200, but if they help a rising senior find a job, isn’t that worth something? When was the last time a school published a list of alumni who helped find other alumni or students jobs over a given year? Don’t these people deserve credit?”

John Lippincott, president of the Council for Advancement and Support of Education, said that the young alumni issue also related to another issue of concern to fund raisers and other educators: the impact of megacampaigns and megagifts -- and all their attendant publicity on those who will never be big givers.

Put another way: When a college boasts about gifts of $10 million or $100 million, why should an alumnus give $50 there, when the local library or soup kitchen can point to an immediate need (and no million-dollar donors)? This issue isn’t unique to young alumni, but is important to that group as it doesn’t include as many large donors, Lippincott said.

Lippincott said that there isn’t enough research about what motivates a young alumnus not to give, but that it’s “certainly a possibility” that the scale of giving may put them off. “We as fund raisers and schools as well need to be concerned about this,” Lippincott said. “Ultimately, it's up to us to explain to a young alum why a $25 gift does matter.” At the same time, Lippincott said he there was a conflict for colleges, especially those in large campaigns, as “you don’t raise a billion dollars on $25 gifts.”

For those who are raising billions, one of the big questions for the year ahead will be the economy. John H. Zeller, vice president for development and alumni relations at the University of Pennsylvania, said that “uncertainty always creates a challenge,” but he has yet to see a negative impact of the recent drops in the stock market or other signs of economic malaise.

The key to riding out economic downturns, Zeller said, is to have relationships that have been built over a period of time. Fund raisers need to be more flexible about timing during an economic downturn, he said, but that doesn’t mean the ambitions need to be ratcheted down. “Timing more than the commitment itself” may change with gifts, Zeller said. But good donor-college relations outlast a recession, he added.

The following are the tables showing the sources and uses of private giving to colleges in 2006-7, the top colleges in fund raising totals and the top community colleges. In examining the institutional rankings, it is important to note that single large gifts, or the start or end of a campaign, can move an institution up or down on the tables. In addition, only a minority of community colleges are represented in this study, so some other community colleges may have raised more money than those in the report.

Sources of Private Giving to Higher Education, 2006 and 2007

Category 2006 Share of 2006 Total 2007 Share of 2007 Total
Alumni $8,400,000,000 30.0% $8,270,000,000 27.8%
Non-alumni individuals $5,700,000,000 20.4% $5,650,000,000 19.0%
Corporations $4,600,000,000 16.4% $4,800,000,000 16.1%
Foundations $7,100,000,000 25.4% $8,500,000,000 28.6%
Religious organizations $375,000,000 1.3% $380,000,000 1.3%
Other organizations $1,825,000,000 6.5% $2,150,000,000 7.2%
Total $28,000,000,000 100% $29,750,000,000 100%

Uses of Private Giving to Higher Education, 2006 and 2007

Category 2006 Share of 2006 Total 2007 Share of 2007 Total
Current operations $15,000,000,000 53.6% $16,100,000,000 54.1%
Capital purposes $13,000,000,000 46.4% $13,650,000,000 45.9%

Top 20 Colleges and Universities in Fund Raising, 2007

Institution Rank in 2007 Rank in 2006 Total Raised in 2007 1-Year % Change
Stanford U. 1 1 $832,340,000 -8.7%
Harvard U. 2 2 $613,990,000 +3.2%
U. of Southern California 3 6 $469,650,000 +15.7%
Johns Hopkins U. 4 7 $430,460,000 +14.1%
Columbia U. 5 8 $423,850,000 +12.3%
Cornell U. 6 5 $406,930,000 +0.2%
U. of Pennsylvania 7 4 $392,420,000 -4.2%
Yale U. 8 3 $391,320,000 -9.7%
Duke U. 9 9 $372,330,000 +12.1%
UCLA 10 11 $364,780,000 +14.1%
MIT 11 21 $329,160,000 +39.7%
U. of Chicago 12 19 $328,330,000 +38.5%
U. of Wisconsin at Madison 13 10 $325,340,000 -0.2%
U. of Washington 14 12 $300,200,000 -5.1%
U. of Michigan 15 16 $293,400,000 +16.7%
U. of Minnesota 16 14 $288,750,000 +8.1
New York U. 17 13 $287,590,000 +2.7%
U. of Virginia 18 22 $282,610,000 +30.6%
Indiana U. 19 17 $278,550,000 +12.5%
U. of California at San Francisco 20 26 $251,950,000 +25.2%

Community Colleges With Private Fund Raising Over $5 Million in 2007

Salt Lake Community College $26,359,143
Okaloosa-Walton Community College $17,296,327
Kentucky Community and Technical College System $15,815,533
Indian River Community College $13,569,162
Maricopa Community College District $12,571,184
Ivy Tech Community College $10,964,795
Cuyahoga Community College $9,956,883
Santa Rosa Junior College $6,600,000

 

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