Giving to Colleges Rises by 12%

Biggest increase in past decade; larger gains for private schools

Colleges and universities received $16-billion in private donations last year, a 12.3-per-cent jump from 1996, says a report to be released this week by the Council for Aid to Education.

The council, a private research organization in New York that publishes an annual report with fund-raising data from more than 1,000 colleges and universities, says last year’s rise in higher-education giving is the largest in more than a decade. The jump slightly outpaced the previous year’s 11.8-per-cent rise.

Contributions to private elementary and secondary schools climbed significantly last year, too, according to the council’s report. Donations to 285 schools grew by 18 per cent from 1996 to 1997, according to the report, which did not include any overall estimates of donations to boarding and day schools.

The report covers giving to educational institutions for the 12-month period from June to July. The figures include donations from private sources only and do not include money that has been promised but not paid. Adjusted for inflation, which was 2.9 per cent in the 1997 fiscal year, giving to colleges and universities grew by 9.2 per cent.

Giving to higher education appears to be significantly outpacing donations to other types of institutions. Donations to all kinds of charities rose by 7.5 per cent last year, according to Giving USA, an annual report that measures the state of American philanthropy (The Chronicle, June 4). The report estimated that donations to educational institutions totaled about $21-billion last year, an increase of 12.3 per cent.

In the council’s report, Harvard University regained its position as the institution that raised the most money. Harvard, the perennial fund-raising leader, was replaced in 1996 by Stanford University, which brought in nearly $313-million to Harvard’s $309-million. In 1997, Harvard raised nearly $428-million to second-place Stanford’s $312-million.

One reason for Harvard’s exceptional fund-raising year: It received nearly $56-million of a $75-million bequest from the estate of John L. and Frances Lehman Loeb. The university is also in the midst of a five-year, $2.1-billion capital campaign that concludes at the end of next year. It has raised about $1.8-billion so far.

The Hotchkiss School, in Lakeville, Conn., was the fund-raising leader among private elementary and secondary schools in the council’s survey. The school raised $21.2-million in 1997, nearly as much as it had raised in the previous three years combined.

Like at Harvard, one big gift contributed to the good fortune at Hotchkiss. It received more than $8-million in 1997 from the trust of a donor who died the year before.

Beyond such bequests, however, the council and educational fund raisers gave credit to the thriving stock market and national economy for the rise in donations.

But the giving news was not rosy for everybody. The council’s report said that while donations to higher education rose in the aggregate by an estimated 25 per cent over the two-year period from 1995 to 1997, more than one out of every four institutions saw a decline in contributions during that time. Out of the 923 colleges and universities that responded to the survey in both 1995 and 1997, 261 registered a decrease in giving.

The declines at some colleges demonstrate the differences between the fund-raising capabilities — and aspirations — of different institutions. The dips may also be due to the vagaries of fund raising at individual institutions, which occasionally receive big gifts or conduct capital campaigns.

At the beginning of last year, for example, the University of Arkansas in Fayetteville ended a six-year, $182-million fund-raising campaign. Giving for 1997 totaled $20.4-million, down from $31.2-million two years earlier. The reason for the dip was not only that the university was running a capital campaign in 1995, but also that the institution received an especially large gift that year. A donor pledged $23-million to start a Middle Eastern studies program and gave $7-million of the promised donation on the spot.

In this year’s survey, the Council for Aid to Education developed its estimates based on data from 1,061 institutions, which, the council’s report said, accounted for about 85 per cent of gifts to all colleges and universities. Comparisons to the previous year were based on responses from 985 institutions that provided figures for both years.

The council did not estimate how much the nation’s private schools received overall because it was unable to get data from enough institutions to come up with a reliable figure. David R. Morgan, the council’s vice-president for research, said that the schools that answer his organization’s survey tend to be among the most successful fund raisers, so the average giving figures are probably higher than they would be if more schools participated.

Among the 341 schools in the council’s survey, the average amount of money raised at each school in 1997 had climbed by 17.2 per cent, to $2.23-million. A separate survey conducted by the National Association of Independent Schools, an organization of about 1,000 private boarding and day schools, said schools raised an average of less than $400,000 in 1996, the latest year for which figures are available. Unlike the council, the schools’ association includes pledges but does not include capital support or deferred gifts in its contributions totals.

In higher education, the council’s report says that the average amount raised last year per institution was $13-million. That average ranged widely among different types of institutions — from $1.1-million at public liberal-arts colleges to $65-million at private institutions that sponsor research and offer doctorate degrees.

Among the colleges and universities that provided figures for both 1996 and 1997, private institutions that offer master’s degrees recorded the largest gain in average giving per institution, the report said — jumping by about 20 per cent, to $5.9-million each.

Gifts declined at three types of institutions — public and private two-year colleges and private specialized institutions, such as theological seminaries.

Among the report’s other higher-education findings:

* Alumni gave colleges and universities an estimated $4.7-billion, which represents 29 per cent of all gifts to higher education; adjusted for inflation, that was 11.9 per cent more than what alumni gave in 1996. Adjusted for inflation, foundations gave 10.5 per cent more, individuals other than alumni donated 10.1 per cent more, and corporations 5.9 per cent more than in 1996. Religious organizations gave less to higher education in 1997 than in 1996, contributing $250-million — a 2-per-cent drop.

* Gifts made in 1997 for current operations rose 5.3 per cent in inflation-adjusted dollars from the prior year. Such gifts totaled $8.5-billion, accounting for 53 per cent of all contributions. All other gifts — totaling $7.5-billion — were made for capital purposes — such as paying off debts, adding to endowments, and building new facilities. That was an increase of 13.9 per cent from 1996.

* The value of deferred gifts in 1997 totaled $1.2-billion, a 27-per- cent rise over 1996. Deferred gifts — which include the face value of annuities, trusts, and other funds that have been promised to an institution — accounted for 16.5 per cent of all gifts from individuals, up from 15.1 per cent in the pervious year.

Deferred giving has been on the upswing for more than a decade, according to the report. In 1988, deferred gifts totaled $261-million and represented 8 per cent of all gifts from individuals.

The council’s Mr. Morgan and other giving experts say that the number and amount of deferred gifts have grown as development offices at educational institutions become more sophisticated and learn how to solicit and handle such contributions.

Development offices, they say, are not only growing more sophisticated but also are becoming more aggressive in how they ask for gifts and more ambitious in their fund-raising goals.

The University of Southern California, for example, decided recently to raise the goal of its capital campaign by $500-million after reaching its original $1-billion goal more than two years short of the campaign’s end.

Something else is driving up gifts, too, fund raisers say — what they call the copycat phenomenon. When big gifts make big news, they say, more giving follows. Last year, $100-million gifts to the Universities of Pennsylvania and Southern California and Washington University captured national attention.

“When someone successful is seen making a huge gift, it sends the message that a successful, intelligent person has chosen to do this, it must be a good thing to do,” says Robert R. Lindgren, vice-president for development and alumni relations at the Johns Hopkins Institutions, which includes the university and the hospital.

Mr. Lindgren says that Johns Hopkins, which raised $165-million in 1997, depends on big gifts more than ever before. He says that 60 per cent of the $900-million the institution has raised so far in its $1.2-billion capital campaign has come in gifts of at least $1-million.

“Big gifts are the thing now,” Mr. Lindgren says, adding: “With the stock market run-up, more people than before have the resources to do it.”

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The council’s complete report, “Voluntary Support of Education 1997,” can be ordered from the Council for Aid to Education, 342 Madison Avenue, Suite 1532, New York 10173; (212) 661-5800. Copies of the report, which will be available in late July, cost $55 for colleges and schools that participated in the survey and $85 for others. Orders must be prepaid.

For more information on the figures collected by the National Association of Independent Schools, write or call the organization at 1620 L Street, N.W., Washington 20036-5605; (202) 973-9700.