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Not So Full Recovery

February 2, 2011

Charitable contributions to colleges and universities hit $28 billion in 2010, an increase of 0.5 percent from 2009, according to a study being released today by the Council for Aid to Education.

Adjusted for inflation, the contributions fell by 0.6 percent in the year, and by 8 percent compared to 2006. While such figures might have discouraged fund raisers in years past, any gain at all is viewed as positive for 2010, following the 2009 decline of 11.9 percent. That was the steepest drop recorded since the council started tracking giving to colleges, in 1969.

"Up is good," said John Lippincott, president of the Council for Advancement and Support of Education. "Granted we're talking half a percentage point, but I hope this is the beginning of a trend line that points in a different direction. If you look at it simply against last year, it's a pretty remarkable bounceback."

Amid the overall figures are several other trends -- some of which will be of concern to colleges that rely on private giving and others that may cheer those in some sectors.

Total giving is up is because of increases in corporation and foundation giving, which make up 17 and 30 percent, respectively, of total giving to colleges. Corporate giving was up by 2.4 percent and foundation giving by 2 percent in 2010.

In contrast, alumni giving was down by 0.4 percent, as was the size of the average alumni gift. In a figure that development officials have been watching and worrying about for several years, the alumni participation rate also fell -- from 10 percent in 2009 to 9.8 percent in 2010. That drop followed dips the two previous years as well: in 2007, the rate was 11.7 percent.

Even though colleges depend disproportionately on wealthier donors who make large gifts, fund raisers also watch overall giving rates, given that many donors follow patterns of giving throughout their lives, such that someone who becomes wealthy, but wasn't giving modest donations earlier, may be unlikely to give upon having the potential to do so in a significant way.

One sector that performed better than others in 2010 was liberal arts colleges, which collectively saw an increase of 2.9 percent in 2010 -- compared to a particularly large drop of 18.3 percent the year before.

Mark Kronholm, a fund-raising consultant to liberal arts colleges, said he thought it was not any one strategy that was helping the institutions, but "the level of connections that smaller liberal arts colleges are able to sustain with their alumni."

Lippincott speculated that liberal arts colleges may be doing better than other institutions because of the relative impact of gifts, compared to donations to larger institutions. "Certainly what we're hearing is that there are donors stepping forward who understand that right now their gift truly may make a difference," he said. "That sense may be greater at a smaller institution that is raising lesser amounts of money, but for which that money represents a larger portion of the budget. People think 'I can really make a difference.' "

Of course, even with the healthier increases at liberal arts colleges, the totals they bring in are a small fraction of what research universities can obtain. In Connecticut, for example, the most successful liberal arts college at fund raising in 2010 was Wesleyan University ($33.9 million), while Yale University led the state ($380.9 million). In Minnesota, the top liberal arts college was Carleton College ($34.9 million), while the University of Minnesota led the state ($245.0 million).

The 20 institutions that raised the most money in 2010 were all research universities, and their donations represent a hugely disproportionate share of all giving to higher education. They represent 2 percent of the 996 colleges and universities in the Council for Aid to Education study, but received 25.5 percent of the giving. Still, unlike the liberal arts colleges, their totals were down. These 20 raised $7.15 billion in 2010, $130 million less than they raised the year before. There was, however, some movement on which colleges were in the top 20. Comparing the 2010 top 20 to that of 2009, the decline in giving was $110 million.

The relative rankings among the top 20, and the changes from year to year, always attract considerable interest. But fund raisers caution that -- particularly at this level of giving -- one or two very large gifts can boost a college one year, and if similar gifts don't come in the next year, there is an apparent drop. Given the time frame for building relationships for mega-gifts, they say, it is important to look beyond any one single year.

For instance, Indiana University (represented on the list by its foundation, which raises money for the entire Indiana system) saw a 38.4 percent increase this year, the largest gain among the top 20. And Indiana moved from the 21st slot in 2009 to 10th in 2010, the highest of any public university. Eugene R. Tempel, president of the foundation, said that much of the gain came from a $60 million grant for medical education from the Lilly Endowment. While giving would still be up without the $60 million, a major gift changes the totals in a dramatic way. "Our goal is to keep that happening as much as we can," he said.

Cornell University shows the largest decline (down 31 percent) among the top 20, falling from 3rd to 13th. But the great year in 2009 was largely due to about $200 million from a single donor, Sanford I. Weill. Take that away from the 2009 total, and giving to Cornell would be up in 2010.

Here are the totals for the most successful colleges at fund-raising in 2010:

Universities That Raised the Most in 2010

Institution 2010 Total (in Millions) 1-Year Change 5-Year Change 2010 Rank 2009 Rank 2005 Rank
Stanford U. $598.9 -6.4% -0.8% 1 1 1
Harvard U. $597.0 -0.8% +1.2% 2 2 3
Johns Hopkins U. $427.6 -1.3% +32.3% 3 5 8
U. of Southern California $426.0 +15.5% +28.4% 4 7 7
Columbia U. $402.4 -2.7% +17.9% 5 6 6
U. of Pennsylvania $381.6 -13.2% -3.2% 6 4 4
Yale U. $380.9 +6.4% +33.3% 7 8 11
New York U. $349.2 +4.3% +41.3% 8 11 17
Duke U. $345.5 +14.5% +25.3% 9 14 13
Indiana U. $342.8 +38.4% +13.9% 10 21 9
UCLA $340.4 -3.2% +20.9% 11 9 12
U. of Wisconsin at Madison $311.9 -8.8% -47.6% 12 10 2
Cornell U. $308.2 -31.0% -12.9% 13 3 5
U. of California at Berkeley $307.5 +20.5% +54.6% 14 19 20
MIT $307.2 -3.7% +49.1% 15 13 18
U. of Washington $285.2 -11.8% +10.1% 16 12 15
U. of California at San Francisco $268.9 -10.5% -8.2% 17 15 10
U. of North Carolina at Chapel Hill $266.9 -1.2% +48.8% 18 17 23
U. of Michigan $252.1 -4.3% +0.3% 19 18 16
U. of Chicago $251.2 +1.0% +39.2% 20 20 22

In looking at trends by sector, many of the expected patterns are evident, with doctoral universities raising more than baccalaureate institutions, which in turn raise more than community colleges. But even though private institutions raise more, on average, than publics, public institutions saw larger percentage gains in several categories.

Average Fund-Raising Total by Institutions, by Sector, 2010

Sector Average Per Institution 1-Year Change
Research/doctoral    
--Private $115,287,000 +1.5%
--Public $68,467,000 +5.1%
Master's    
--Private $7,511,000 -4.8%
--Public $5,169,000 +0.3%
Baccalaureate    
--Private $9,962,000 +4.6%
--Public $3,765,000 -8.1%
Community colleges $1,192,000 -3.3%

Taken in total, Lippincott said, the figures suggest that a recovery has started, but it will be a slow one. "Folks are still going to be skittish about large gifts," he said. Even as many wealthy individuals have regained much or all of the wealth they lost in the fall of 2008, when Wall Street nosedived, their confidence is not fully restored.

This is a reality that college fund raisers will face "for the foreseeable future," Lippincott said. "I think institutions have to take into account that people were scarred by what happened."

Further, people are more aware that a sudden crisis can unsettle the financial markets. "I think we'll see incremental growth in confidence, barring another trauma," he said, but "another trauma is not necessarily a crisis in mortgage-backed securities" but could be the result of an international or social crisis.

"The 'new normal' in fund raising" is actually "a lot like the old normal, just harder," he added.

 

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