Fund Raising

Donations to Colleges Rose, if Only Slightly, in 2010

February 02, 2011

In a clear signal that the economic recovery has not yet arrived on most campuses, private giving to American colleges last year barely improved after a precipitous drop the year before.

Donations to higher education rose 0.5 percent during the 2010 fiscal year, according to findings of the annual Voluntary Support of Education Survey, which were released by the Council for Aid to Education on Wednesday. Adjusted for inflation, giving declined 0.6 percent.

Over all, American colleges and universities raised $28-billion in 2010, the same amount they brought in during 2006. While that finding is most likely a sobering one for institutions whose expenses and ambitions have grown since then, college leaders may take solace in the fact that fund raising did not decline further. Last year's flat giving followed a year that showed an 11.9-percent drop, the steepest in the survey's 50-year history.

The survey, which counts cash gifts to colleges and included about 1,000 institutions, found that the percentage of alumni who give continued to decline, dropping to a record low of 9.8 percent. The average alumni gift was also down.

Ann E. Kaplan, the survey's director, said the findings reflected the economy's sluggish recovery. "Giving isn't going to get there until circumstances get there," she said.

Some philanthropy experts see the lackluster results as a lingering effect from the recession, when donors were too nervous to make big commitments, and colleges hesitated to ask. As a result the pipeline of major gifts, which typically take years to cultivate and close, dried up and is just now starting to refill.

"The Great Recession lasted a lot longer than anybody thought," said Bruce Flessner, a fund-raising consultant with Bentz Whaley Flessner. "It wasn't just a few down quarters. I suspect in 2011 we'll see more big gifts return."

Mixed Results

About half of the survey's respondents probably share Mr. Flessner's optimism. Almost 52 percent of institutions reported that their giving went up in 2010. Doctoral-granting research universities and baccalaureate institutions fared the best. The average amount raised per institution for both baccalaureate colleges and doctoral-research universities grew 3.9 percent.

The top three fund-raising institutions in the 2010 fiscal year were Stanford University ($598.9-million), Harvard University ($597-million), and the Johns Hopkins University ($427.6-million). All three raised less in 2010 than the year before.

Duke University, whose private support went up 14.5 percent to $345.5-million last year, saw a slight increase in its number of donors but attributes its success more to the return of confidence among its supporters, said Michael J. Schoenfeld, vice president for public affairs and government relations. In 2010, Duke, which had the fourth-largest increase among the top-20 institutions, was ninth in amount of money raised.

"People who a year ago were reluctant to make commitments even for the next year had a much better feeling about the economy in general and their personal circumstances," Mr. Schoenfeld said.

The University of Southern California showed similar growth, increasing its donations 15.5 percent to $426-million, earning the institution the No. 4 spot. The university is doing even better this fiscal year, thanks to two $50-million gifts it announced in October.

Albert R. Checcio, senior vice president for university advancement, said the recent big gifts are early lead gifts for a fund-raising campaign the university is planning to announce this fall. The university has also benefited from reacquiring ownership of its two hospitals and an enthusiastic new president, C.L. Max Nikias, who spends more than half his time raising money.

The university's donor base—and Southern California's industries—is more economically diverse than that of many East Coast institutions, which depend more heavily on Wall Street money, said Mr. Checcio, who was the head of fund raising at Fordham University in New York before moving to Los Angeles in August. (Other West Coast institutions have also flourished of late: The University of California at Los Angeles announced a $100-million gift last week.)

But many of the leading fund raisers fared worse in 2010 than the year before. Out of the top 20 institutions—which represent 25.5 percent of all gifts to higher education—13 raised less money in 2010, including the University of Washington, Cornell University, and the University of Pennsylvania.

Cornell, which was a bright spot in last year's survey because it increased its donations during the recession by asking for early pledge payoffs and other types of gifts, was down 31 percent, to about $308.2-million.

Building Up Staff

While overall giving may have stalled last year, fund raisers and consultants are optimistic. Many universities are beefing up their staffs in order to go after new donors or pay more attention to existing ones who can make mid-sized gifts.

"We haven't seen a college or university that's fully matched its capacity," said Donald M. Fellows, a fund-raising consultant with Marts & Lundy.

One of the bigger challenges for many institutions looking to hire is finding the money to pay for new people. At the University of Tennessee at Knoxville, Chancellor Jimmy G. Cheek used federal stimulus money to hire several front-line fund raisers to place in different cities. He says the investment is already paying off, as the new employees have identified prospects the university was not aware of.

Those institutions that have the money to expand their development staffs are being aggressive about it, said Mr. Flessner. "The demand is going to return for really big talent."

Tulane University, for one, is spending $10-million over four years to hire 70 to 75 new people, says Yvette Jones, executive vice president for university relations and development. The university, which slashed its development staff in half after Hurricane Katrina, is now focused on enlarging its operation. Last year, the first year of the plan, Tulane hired 36 fund raisers and support staff.

Tulane's development-department growth comes with equally big expectations. College leaders believe the university will at least double its private support in five years, Ms. Jones says.

Alumni-Giving Woes

Colleges continue to monitor the alumni-giving rate, which showed a smaller decline than in years past but continues its downward trend. The rate—the percentage of undergraduate alumni who give to an institution—is significant because alumni gifts make up a quarter of all giving to higher education (only foundations, which represent 30 percent of donations, are a larger segment).

Ohio State University, which is in the silent phase of a $2.5-billion campaign, is looking for ways to make alumni feel a part of the university beyond connecting them with football tickets, said Floyd Akins, senior associate vice president of development. Though Ohio State has passionate fans, especially for its sports, that hasn't translated to high rates of alumni giving.

"We have to take that passion and transform that into gifts," Mr. Akins said. The university recently hired new top development staff members (including Mr. Akins), is centralizing its advancement operations, and has moved its alumni association under the control of the university. It is also looking for new donors, having recently started a parent-giving program, and is seeking new ideas to attract alumni who have not given in the past.

The State University of New York system also has its eye set on alumni without a record of giving. In her state of the university address, Nancy L. Zimpher said SUNY would double its fund raising, with the help of reluctant alumni. "We pledge to find each and every one of you," she said. (The system needs to make up for what could be a 10-percent drop in the state's appropriation.)

Much smaller institutions have a similar desire to reach those who aren't giving. At Pepperdine University, President Andrew K. Benton says he's very worried about the level of alumni support, which hovers around 13 percent, a rate he calls "abysmal."

The university has started a program designed to get alumni involved without asking them for money. The program asks alumni to give of their time for volunteer projects, with the hope that they will eventually be inspired to give financially, too.

"We're trying to make sure the first communication from us isn't a request," Mr. Benton says.

Though the program has been going for two years, any fund-raising effect has yet to materialize. "I'm not seeing the giving," Mr. Benton says, "but I'm seeing the activity and engagement."

The full survey report can be ordered through the Council for Aid to Education's Web site.