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Forecast Adjusted ... Downward

January 16, 2009

What a difference a global financial crisis makes.

While it’s not surprising that college fund raisers expect giving to decline this calendar year, a new report shows just how dramatically development officers’ outlooks have changed in the last few months.

When the Council for Advancement and Support of Education (CASE) polled its membership in July, fund raisers expected giving to increase by 5.3 percent over the course of the 2008-9 fiscal year. After wrapping up the 2008 calendar year, however, those same members expect that giving increased by just 0.3 percent, a significant drop from the average annual growth of 7 percent over the last 20 years.

The two surveys highlight just how historic, and scary, the last six months have been. Much of the evidence of the global financial crisis didn’t even emerge until September, two months after the previous CASE survey.

“At that point we had not begun to see what was going to happen to the economy, and what was going to happen to the stock market,” said John Lippincott, president of CASE.

“It’s the problem with any forecast,” he added. “You can [only] do it based on what you know at that moment.”

As for the outlook, respondents to the CASE survey expect giving to decline 1.7 percent in the 2009 calendar year.

“I’m terrible at predicting things, but this is pretty close to what I would have predicted for folks to say,” Lippincott said. “If anything fund raisers are by nature a pretty optimistic lot, so it's a little hard to know how much that affects these numbers.”

In the last two decades, annual giving to colleges and universities has only declined twice, according to the Council for Aid to Education's s Voluntary Support of Education survey. Giving decreased by 3.5 percent in 1987-88, and 1.2 percent in 2001-02, the survey found.

Of the approximately 2,320 U.S. institutions with membership in CASE, 242 responded. Lippincott said he thought the response rate of about 10 percent was enough to legitimize the survey, but added that there would not be much useful information derived by breaking the data down into subsets of different types of institutions.

The survey did not assess where fund raisers expect giving to decline most, but numerous higher education officials, including Lippincott, predict mid-level donors to have the most trouble making pledges.

“If you’re unemployed you’re not going to make your annual gift probably, but for those that continue to be employed they’ll continue to make the annual gift,” he said. “And the high wealth individuals …. may in fact respond positively to the fact that their gift is going to be more important than ever to the institution.”

 

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