• April 23, 2014

Gifts to U.S. Colleges Rose 2.3% in 2012, Narrowly Outpacing Inflation

America's colleges and universities took in $31-billion in donations in the 2012 fiscal year, a 2.3-percent increase over 2011's total of $30.3-billion, according to a report released on Wednesday by the Council for Aid to Education.

Although the growth in gifts was well below last year's 8.2-percent rise and amounted to just a 0.2-percent increase when adjusted for inflation, analysts who spoke to The Chronicle said they were largely encouraged by the report, which is based on the council's annual Voluntary Support of Education survey of more than 1,000 institutions.

Donald M. Fellows, president and chief executive of the philanthropic-consulting firm of Marts & Lundy, said the results suggest a gradual return to better times. The best year ever for charitable contributions to colleges was in 2008, when donors gave $31.6-billion.

"The sense we're getting from our clients is that the confidence is coming back," Mr. Fellows said. "I would anticipate that 2013 will be a stronger year than 2012, but we're still thinking that it's going to take several more years to get back to prerecessionary levels of giving."

Ann E. Kaplan, director of the survey, agreed that "the signs are positive for 2013," but she noted that the make-or-break month will be June, when most colleges wrap up the fiscal year with final appeals to donors.

According to the report, nearly 53 percent of the institutions surveyed raised at least as much in 2012 as they did in 2011, and slightly more than 47 percent reported a drop in donations. Largely because of the volatility in the economy and in the markets, the average endowment did not change from 2011 to 2012, after posting a gain of 16.7 percent a year earlier.

Amid what was essentially a flat year for giving, Stanford University became the first institution to surpass the $1-billion threshold in a single year's fund raising, bringing in $1.03-billion in 2012. Martin Shell, vice president for development, said the achievement had been a matter of coincidence: Stanford concluded a capital campaign in April that raised $6.2-billion, then began a separate fund-raising effort for its hospital and medical school the very next month.

"We saw a lot of concluding momentum around the Stanford Challenge," he said, "and a lot of launch momentum around the Campaign for Stanford Medicine."

The council's report said Stanford had raised $55,745 per student, placing it at No. 5 among institutions in per-student giving. Ahead of Stanford on the list was the University of Texas' M.D. Anderson Cancer Center ($590,719 per student), followed by the University of Texas Health Center at Tyler ($163,225), the University of California at San Francisco ($69,864), and tiny Deep Springs College ($67,334).

Growing Role of Foundations

The modest increase in overall donations was driven by a 6.2-percent rise in contributions for current operations, money that can be used to cover same-year expenditures. The New York Stock Exchange lost 7.4 percent of its value over the 2012 fiscal year, a factor that contributed to a 3.2-percent drop in donations for capital purposes, the report said.

"That tends to happen in down cycles of the economy," said Mr. Fellows of Marts & Lundy. "People give less to endowments and facilities. They want to give more to help people in real time."

Foundations were the biggest donors in 2012, giving $9.15-billion to colleges, an increase of 5.5 percent over 2011. Alumni gave $7.7-billion, a decrease of 1.3 percent. Nonalumni individuals donated $5.8-billion, and corporations $5.25-billion. Gifts from religious organizations were $275-million, a drop of nearly 10 percent from 2011.

Robert F. Hartsook, chairman of the board of Hartsook Companies Inc., which consults with colleges and nonprofit groups on fund raising, said the rise in foundation giving illustrated the growing importance of community foundations, whose members pool money to coordinate their investments.

"The funds now, instead of being given directly to the university by the alums, are being given to the community foundation, which then gives the money to the institution," he said.

Ms. Kaplan agreed that community foundations, family foundations, and donor-advised funds allow philanthropists to better manage their charitable giving. "When you have a particularly good year," she said, "you can make a gift to a donor-advised fund and not disburse it to a charity right away, and it evens out your giving and allows you to be a stable supporter of institutions."

Bruce W. Flessner, a fund-raising consultant with Bentz Whaley Flessner, said the single biggest concern among his firm's higher-education clients was the steady drop in "alumni participation," the percentage of alumni who make gifts. That figure, which is calculated by dividing the number of actual donors by the number of alumni of record, fell from 9.5 percent in 2011 to 9.2 percent in 2012.

"Today's graduation classes are huge," he said, "and those who graduated 50, 60, 70 years ago, who are statistically more likely to give—they're dying off." Making matters worse, Mr. Flessner said, today's students are more likely to graduate with significant debt.

But Ms. Kaplan said the downward slope of alumni participation had been exaggerated by technology. "The number of alumni of record, those for whom the institution has a good address or means of contact, is going up geometrically," she said. With the Internet, colleges have no trouble reconnecting with their alumni. Persuading them to give, Ms. Kaplan said, is another matter entirely.

The full report on the Voluntary Support of Education survey will be published in the spring and can be ordered in advance from the council's Web site.

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