Higher Numbers for Higher Education

Private donations to colleges and universities rose by 4.9 percent in 2005; Stanford U. raised the most

Colleges and universities raised $25.6-billion in private donations last year, a 4.9-percent increase from

2004. While it was the second consecutive year that giving grew, following weak performances in 2002 and 2003, the wealth was far from evenly distributed, according to preliminary results of an annual survey by the Council for Aid to Education.

The increase in giving to the 10 colleges that raised the most accounted for half of the total growth in higher-education donations in the 2005 fiscal year. Over all, contributions grew by 1.6 percent when adjusted for inflation, which was 3.3 percent last year.

Of the 1,005 institutions in the survey, Stanford University raised the most, nearly $603.6-million. But the University of Wisconsin at Madison received the biggest gift, a $296-million donation from Blue Cross Blue Shield of Wisconsin, a result of the organization’s conversion from nonprofit to for-profit status.

When the insurance company made the switch, the state government required it to distribute a percentage of its holdings to charities; half of the money went to medical programs at the university and the other half to the Medical College of Wisconsin, in Milwaukee.

With a total of $592.2-million, the University of Wisconsin at Madison raised the most money after Stanford, and was ahead of Harvard University, which raised $589.9-million. The University of Pennsylvania was fourth, with $394.2-million, and Cornell University was fifth, raising $353.9-million.

John Feldt, senior vice president of finance at the University of Wisconsin, said the Blue Cross donation resulted from discussions with the company, the state government, and the governor — all parties involved in the conversion of the insurance company. A committee was formed to monitor the university’s use of the funds for five years.

“There was a lot of politics involved,” Mr. Feldt said. “It took a great deal of work to secure the gift.”

If that gift, which was counted as a contribution from a foundation, were removed from the survey, the overall increase in giving to higher education would have been smaller, said Ann E. Kaplan, director of the survey. “Foundation giving from this point may very well go down,” she added, “unless there is a similar transfer of wealth in fiscal year 2006.”

Tied to Economy

Fund-raising success typically mirrors the strength of the economy and the stock market, both of which were relatively strong in fiscal 2005, which ended on June 30 for most institutions in the survey.

The average number of stock gifts received by colleges remained unchanged from 2004, but the average value of securities contributed by individuals increased to $45,000, the highest since institutions began reporting stock gifts in 1993.

Stock gifts have fluctuated along with the economy, growing from an average of $23,000 in 1993 to $43,000 in 2000 and declining to $34,000 in 2003, before rising again over the last two years.

The market value of endowments for institutions in the survey also rose last year by an average of 9 percent, not adjusted for inflation, compared with an 18.7-percent increase in 2004 and a 4.3-percent increase in 2003.

Nearly half of all higher-education gifts came from individuals last year. Gifts from alumni accounted for 27.7 percent of the total raised, and alumni donated 2.6 percent more than they did in 2004. People who did not graduate from the institutions they supported contributed 19.5 percent of the total, giving 6.9 percent less than they did in 2004.

At the University of Wisconsin’s Madison campus, which has raised $1.65-billion for a capital campaign it plans to complete next year, the number of individuals who provided gifts has increased since 2004, said Mr. Feldt.

“We are very encouraged,” he said. “As state support continues to be less, we’re becoming a private public institution. Our staffing in development operates like a private college.”

The University of Pennsylvania also had an unprecedented year of giving by alumni and other individuals, said John Zeller, vice president of development. With more than $394-million raised in 2005, he said, Penn never had a better year, except for 2003 when it received a $100-million foundation gift.

While the total amount of alumni giving increased last year, the percentage of alumni who contributed declined for the fourth consecutive year to 12.4 percent. According to the survey, even when two-year institutions, which have lower participation rates than four-year colleges, are eliminated from the calculations, there was still a decline in the number of alumni donors in 2005.

Alumni Gifts

There are some possible reasons why fewer alumni are giving to colleges. As institutions invest in better software and technology to maintain correct contact information for former students, the number of alumni on record increases, but the number of donors does not necessarily go up (in the survey, colleges report the percentage of alumni who give). And among survey respondents, a third of foundation giving is from family foundations, and some gifts that would otherwise be counted as alumni donations instead are tallied as foundation gifts.

“It is also possible,” the report said, “that fewer alumni were inclined to make contributions.

Martin Shell, vice president for development at Stanford University, which completed a $1-billion campaign for undergraduate-education programs last year, said that Stanford’s annual fund has remained flat, as has the percentage of individuals who give. He said the university is looking for new ways to engage alumni by marketing appropriate giving opportunities to different segments of the alumni base. Like many colleges, Stanford has also used young-alumni programs to encourage recent graduates to start the habit of giving early.

Stanford has also tried to encourage alumni to give to fund-raising drives that offer matching incentives. Mr. Shell says that such donations, which typically double the value of a gift, are appealing to alumni. In the end, however, many fund raisers must choose between securing large gifts or increasing the number of donors, but they can’t do both.

“There’s always a trade-off between focusing on participation and dollars,” Mr. Shell said, adding that institutions often have to use their resources for one or the other.

Foundations, Corporations

Gifts from foundations rose by 9.3 percent, accounting for 27.3 percent of the total. The growth in foundation giving follows several years of decreases, as those organizations continued recovering from market declines that caused their endowments to shrink.

Corporations also gave less than they did in 2004, contributing 17.2 percent of all higher-education gifts last year, a decrease of 3.2 percent.

The smaller share coming from corporations in 2005 is puzzling, perhaps the result of an increase in other types of payments to colleges that are not counted as private donations, said John Lippincott, president of the Council for Advancement and Support of Education.

“It’s still an important part of giving, and I don’t know that the survey results represent a major shift,” he said. “Corporations do contribute to universities in other ways, such as clinical trials and contracts.”

In the survey, gifts for capital purposes, such as endowments, buildings, and equipment, increased by 2.2 percent in 2005, while giving for current operations increased by 1.1 percent. Over all, contributions accounted for less than 10 percent of a college’s expenditures for the past three years and have never represented much more than that.

“Results suggest that voluntary support could never grow sufficiently to become the primary solution to budgeting challenges,” Ms. Kaplan said.

The complete survey, Voluntary Support of Education, and an analysis of trends uncovered by the research will be published in May.

Copies can be ordered by downloading an online order form at http://www.cae.org or by calling (212) 217-0875. The cost of each copy is $100, or $65 for survey respondents, plus $6 for shipping and handling.

Erin Strout is a reporter for The Chronicle of Higher Education. Holly Hall contributed to this article.