Historic Drop In Giving To Higher Education
Charitable giving to colleges and universities dipped by historic percentages during 2009, declining 11.9 percent to $27.85 billion, according to the Voluntary Support of Education survey released by the Council for Aid to Education. Endowments took the greatest hit, dropping by 22.3 percent for the year.
In 1975, however, the inflation-adjusted decline (11.6 percent) was slightly larger than in 2009 (11.5 percent). During the past 10 years, contributions to higher education institutions have increased an average of 4.1 percent per year.
The survey also found that:
- The top 20 institutions that raised the most in 2009 received $7.28 billion. This is $1.13 billion less than the top 20 institutions of 2008 raised. (The top 20 of ’09 and ’08 and not exactly the same.)
- Two-thirds of the institutions that replied to the survey in both 2008 and 2009 reported declines in support.
- Giving earmarked for current operations fell less than one percent between the second quarter of 2008 and the second quarter of 2009. It accounted for 60.9 percent of the contributions in the fiscal year ending June 30, 2009.
- The greatest amount of voluntary support for 2009 came from foundations, which contributed $8.24 billion, followed by alumni with $7.13 billion and non-alumni individuals, who contributed $5 billion. Corporations contributed $4.62 billion, and other organizations contributed $2.55 billion.
- The market value of university endowments declined in 2009, based on a matched group of 973 institutions that provided information in 2008 and 2009. The market value of endowments decreased by 22.3 percent.
CAE started the survey in 1957 and began providing national estimates in 1969. Ann Kaplan, survey director, said the sharp decline in alumni giving, at 10 percent, the steepest in the survey’s history, whereas giving from foundations has remained more stable.
“The foundations make gifts based on their assets from the previous year,” Kaplan said. “They made a good effort to make the payments they were scheduled to make. Personal giving tends to be more in the moment.”
The top 20 fundraising institutions, led by Stanford, Harvard and Cornell Universities, tend to be larger schools with more programs to support, Kaplan said. The survey found that private liberal arts colleges, as a group, reported the largest decline in charitable giving at 18.3 percent.
“Larger institutions with a lot of programs always require more support,” she said. “They need different types of gifts.”
Tom Gaffny, a fundraising consultant and principal at Tom Gaffny Consulting in Wellesley, Mass., said colleges have benefitted in better times from their unique branding and reliance on annualized giving, a formula that just doesn’t cut it in today’s economy.
“Colleges are among the strongest brands in America,” Gaffny said. “People are more concerned with the economy, and have found it easy to skip giving this year. This niche has been dramatically affected, and that shows that acquisitions (of donors) will continue to be a challenge for all of the organizations in the fundraising community.”
Donors often operate in a hierarchy of causes, Gaffny said, with favorite charities in the center, worthy causes next, and outside causes last. Giving to colleges and institutions is “lower priority” for donors today, he said. “Many donors right now are circling the wagons, and are tending to give to the favorite charities, and not expanding beyond that,” Gaffny said.
Cornell University in Ithaca, N.Y., which ranked third on the top 20 list, tweaked its fundraising tactics to stay afloat last year, said Charlie Phlegar, vice president for Alumni Affairs and Development. Instead of focusing its solicitation efforts on capital building projects, it pushed its financial aid and scholarship programs.
The university also asked donors who were unable to make a large contribution to instead pay what would be the interest on a larger gift, such as giving $5,000 instead of $100,000, a concept that resonated well with donors, Phlegar said.
“People make tough and personal decisions in these times,” he said. “People often get more localized in tough times, and make sure their local charities are taken care of.”
Gifts for capital purposes, to endowments and for property, buildings and equipment, saw a steep decline, according to the survey results. These gifts typically follow a similar rise and fall pattern to that of the stock market. The decline is attributed to these gifts being from donor assets, rather than only income.
Schools should not be deterred by the economic climate, Kaplan said, and should continue to push for support despite the recession. “The economy determines people’s capacity to give, but asking behavior determines the inclination to give,” she said. “Gifts to higher education are responses to the ask, so keep making your cases for support so that when the capacity is there, people will be able to give.”
Although no data is available as of yet, Kaplan predicted that giving will begin to improve. “I don’t think in one year it can rebound to ’08 levels,” she said. “But, giving does tend to rebound when the economy rebounds.”
Phlegar said he is hopeful and optimistic that donations will pick up in the future, especially with the baby boomer generation coming into its prime years of charitable giving.
“Higher education is one of the things this country does so well,” he said. “I think people will always be there to support it. Nonprofits and charitable donations have been the bedrock of this country for years and will be for years to come.”
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