Saturday, January 31, 2015

Donations to Colleges and Universities: A Widening Inequality among Schools

For the fiscal year ending June 30, 2014, colleges and universities in the American States received a record $37.5 billion in donations, which represent a 10.8% increase from the prior year.[1] Alumni giving increased 9.4% to $9.85 billion, with the average graduate gift up more than 25% to $1,535.[2] The top ten universities by amounts raised snagged 18% of the total ($37.5 billion), thus doing disproportionately better than even the schools in the middle stratum. What is behind this growing economic inequality, and can anything be done to reverse the trend?

Ann Kaplan, at the Council for Aid to Education, explains that the colleges and universities in the middle of the pack are less likely to have as active, wealthy, or well-connected alumni.[3] I suspect, however, that the level activity takes a nosedive at the level of local universities, which tend to operate as commuter schools. Also, while the propensity to do well financially years or even decades after graduation is likely enriched from having received an excellent education, the top ten universities by donation level in 2014 do not match up with the rankings based on quality of the education. To be sure, Harvard and Stanford came in first ($1.16 billion) and second ($927.5 million), respectively, but they are followed by non-Ivies including the University of Southern California, Northwestern, and John Hopkins. Princeton, Yale, Brown, and Dartmouth did not make the cut, whereas the University of Washington did.

Surely, the performance depends at least in part on the quality of the university’s development office, and schools in the middle of the donations-ranking can certainly invest in that. In fact, improvement may not hinge on increasing budgets. For example, “(a)s schools get better at tracking down alums due to the growth of social networks such as Facebook and LinkedIn, they’re able to tap those graduates for targeted gifts to support student scholarships and new buildings, among other things.”[4] Encouraged by the financial bonus system, I made a habit while working part-time at Yale’s development office while I was a student at the university of asking the alumni whom I called what they liked about their experience at Yale. I would then casually mention that I could target a donation to a particular residential college, or group such as the Glee Club. Even a small donation would make a difference if narrowly targeted, and I did well on the bonus contests.

Beyond improving fundraising skills and tapping into the great opportunities available through social media, university administrations bent on increasing donations could do the unthinkable: get the staff to actually be nice to students, as they stand a good chance of being alumni one day. This incredible insight is not as easy as it might seem. At the University of California at Davis, for example, university police decided to use pepper-spray on students sitting on a campus sidewalk to protest a tuition hike in late 2012. For the university administrators at Davis, a heads-up: spraying pepper spray in students’ eyes at close range is not the best way to get them to donate years later. Just saying.

[1] Melissa Korn, “Harvard Tops Record Year for College Gifts,” The Wall Street Journal, January 28, 2015.
[2] Ibid.
[3] Ibid.
[4] Ibid.