Gains on Wall Street Help Strengthen Giving to Colleges, Private Schools

The booming stock market and a rise in personal wealth among many Americans helped raise private gifts

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1998 Figures from Giving USA

1998 Figures on Giving to Colleges

1998 Figures on Giving to Private Schools

to colleges and universities by 15 per cent last year, according to a survey to be released this week.

Private contributions totaled an estimated $18.4-billion in the 1998 academic year, up from $16-billion in 1997, according to the Council for Aid to Education, in New York. Total gifts rose at the fastest pace since 1986, the council said.

Giving to private independent elementary and secondary schools also increased substantially in 1998, the council said. Among 254 schools that participated in the council’s surveys in 1997 and 1998, contributions grew by 31.2 per cent, a sharply higher increase than the 18-per-cent rise recorded in 1997. Gifts for capital purposes — endowment, property, buildings, equipment, and loan funds — increased 41 per cent, while those for current operations were up 9.6 per cent.

Among colleges, alumni continued to be the biggest source of gifts in 1998, giving 30 per cent of the total dollars. They donated $5.5-billion, up 18.3 per cent from 1997.

Gifts from other people and institutions, including corporations, foundations, and religious organizations, also rose significantly. Donations by foundations, whose gifts made up about one-fifth of the total, grew by nearly 19 percent.

Harvard University, in Cambridge, Mass., took in more dollars than any other institution in the study, receiving $463-million from all sources. Duke University, in Durham, N.C., posted the highest total for corporate contributions, at $94.7-million.

Private support to higher education has risen steadily throughout the decade, according to the council. Total contributions in 1998 were $7.2-billion more than in 1993, an increase of 64 per cent, the organization said.

What’s more, the ratio of private gifts to expenditures among colleges is the highest in at least 20 years, the council said. Gifts equaled 7.9 per cent of higher-education expenditures in 1998, compared with 5.8 per cent in 1979.

Private contributions per student also have risen to the highest level in at least two decades. Gifts totaled $1,307 per student in 1998, up 46 per cent from $894 five years earlier, adjusting for inflation.

The council cited several reasons for the increases in private donations to higher education:

* The boom on Wall Street. Trends in gifts for capital spending usually closely follow changes in stock prices, the council noted. Capital gifts rose 25.3 per cent in the 1998 academic year. That compares with a a 20.5-per-cent increase in the New York Stock Exchange Composite Index during calendar 1998 and 27.5 per cent in calendar 1997.

Capital gifts often are in the form of securities whose market price has risen sharply in recent years, the council noted. By giving such stock to a non-profit group such as a college, donors avoid paying income taxes on the gain.

A bull market on Wall Street fueled a similar increase in giving to colleges in 1986, the council noted. But back then, the rise in giving had an added impetus, it said: Expected tax-code changes that would have raised the after-tax cost of a charitable gift.

* Confidence in the U.S. economy. Gifts for current operations, such as student financial aid, research, and academic programs, traditionally move in tandem with growth in the gross domestic product, a measure of U.S. productivity, the council said. Gifts for current operations rose 5.9 per cent in 1998, while gross domestic product went up 6.2 per cent in 1997 and 4.9 per cent in 1998, it said.

* The aging population. As a growing proportion of Americans head toward middle age or retirement, they not only have more assets to donate, but they also are paying closer attention to estate planning, the council noted. Meanwhile, growth in the availability of tax-deferred giving methods also has helped to spur the rise in gifts.

The face value of deferred gifts to colleges that were reported in 1998 totaled $1.57-billion, up 30 per cent from 1997, the council said. Deferred gifts represented 19 per cent of all gifts from individuals, up from 17 per cent in 1997 and only 3.8 per cent in 1984.

* Improvements in fund-raising methods among colleges. “The institutions themselves continue to refine and enhance their fund-raising activities, which are increasingly sophisticated and aggressive,” the council said.

Among the 254 private schools surveyed in 1997 and 1998, contributions by alumni rose 31.3 per cent, while gifts from parents and grandparents were up 34.2 per cent. Giving by religious groups was up 79 per cent. Corporate giving was up 12.6 per cent, and foundation gifts rose nearly 39 per cent.

The complete report, “Voluntary Support of Education 1998,” is expected to be available in July from the council. The report includes a review of voluntary support of higher education and private elementary and secondary schools over several decades, plus information on the amount and forms of support received by each participating institution. The prepaid cost of the report is $85, or $55 for survey participants.

More information can be obtained from the council at 342 Madison Avenue, Suite 1532, New York 10173; (212) 661-5800; World-Wide Web http://www.cae.org.