Contributions to Colleges and Universities Up By 3.4 Percent

Contributions to colleges and universities in the United States increased by 3.4 percent in 2004, buoyed by a spike in gifts made by individuals, according to an annual survey released today by the Council for Aid to Education (CAE) at the RAND Corporation.

Nearly half of the $24.4 billion raised in 2004 came directly from individuals, a 9.7 percent increase over the year before, according to the survey. Though alumni giving is the traditional base of higher education giving, representing between a quarter to almost a third of all voluntary support, alumni giving only grew by 2 percent in 2004. Individuals other than alumni drove personal giving up. Gifts from nonalumni supporters increased by 21.5 percent.

“The results indicate that giving to higher education is recovering from the weak performance of the past two years,” said Ann E. Kaplan, director of the survey. “This year’s survey results also underscore the significance of personal giving in higher education fundraising.”

For the second consecutive year, Harvard University raised more money from private donors than any other university. The nation’s 10 top fundraising universities, in the order of dollars received, are:

• Harvard University ($540.3 million)
• Stanford University ($524.2 million)
• Cornell University ($385.9 million)
• University of Pennsylvania ($332.8 million)
• University of Southern California ($322.1 million)
• Johns Hopkins University ($311.6 million)
• Columbia University ($290.6 million)
• Massachusetts Institute of Technology ($289.8 million)
• Yale University ($264.8 million)
• University of California, Los Angeles ($262.1 million)

The findings are from the annual Voluntary Support of Education (VSE) survey, which has tracked giving to higher education and private K-12 schools for more than 50 years.

The 971 institutions that participated in the 2004 survey represent more than half the nation’s four-year institutions, including 79.3 percent of research and doctoral institutions. Respondents generally account for about 85 percent of the voluntary support raised by all colleges and universities.

In addition to an increase in personal giving, the survey found that corporate giving rose by 3.5 percent, reflecting moderate recovery in the stock market. However, giving by foundations declined by 6.1 percent.

Historically, alumni and foundations are the biggest sources of voluntary support to higher education. In 2003, each source represented equal shares of total support, but the decline in foundation giving in 2004 lowered the foundation share to 25.4 percent. Alumni giving now represents 27.5 percent of support. Foundations supplied $6.2 billion of the total, and alumni accounted for $6.7 billion.

While the total amount of alumni giving increased, the percentage of alumni making gifts declined to 12.8 percent, according to the survey results. The rate has declined each year since 2001, when the percentage stood at 13.8 percent. Total giving by alumni increased in 2004 because of a rise in the value of the average gift, not because more alumni gave to their alma maters.

Kaplan said there are several plausible explanations for the decline in participation. These include better software and methods to clean and maintain address records in university data bases. Since the number of alumni of record is defined as the number of living alumni for which the institution has a good address, such improvements would render the number of alumni of record higher, without necessarily increasing the number of donors.

Also, if an institution focuses less on the number of gifts it receives and more toward larger gifts, this may decrease participation while increasing alumni giving, Kaplan said. It is also possible that fewer alumni were inclined to make contributions. However, the CAE survey does not supply any details about the cause of the shift.

Gifts from religious organizations to higher education dropped slightly, to $350 million, and gifts from “other organizations,” including some donor-advised funds, United Ways, and other federated funding entities, increased by just over a half a percentage point, barely reversing the decline of the previous year, according to survey results.

Gifts for capital purposes, such as endowments, buildings, and equipment, declined in 2002 and 2003 but increased by almost 1 percent in 2004. Giving for current operations fared much better. Such contributions, which have increased every year over the past three decades, increased by 5.4 percent, compared with 4 percent the previous year.

Voluntary support is an important component of higher education funding, but it has accounted for under 8 percent of expenditures over each of the past three years. In 2003 and 2004, giving brought in 7.1 percent of institutional expenditures, down slightly from 7.6 percent in 2002 and 8.2 percent in 2001, which was the highest recorded level in at least three decades.

“While some types of institutions, notably private liberal arts institutions, rely much more on voluntary support than do institutions overall, results from our survey suggest that voluntary support is not likely to offset declines in other funding sources,” Kaplan said.

Endowment income is another source of funding for higher education institutions. In 2004, the market value of the endowments at institutions included in the VSE survey increased by an average of 18.7 percent. This is a much better performance than last year’s, when respondents’ endowments grew by only 4.3 percent on average, conforming to a national pattern of stagnant or declining endowment values. The assets of individual and institutional donors also impact university receipts because large gifts often are made from assets. In 2003, gifts of securities continued to decline in both number and value, though the rate of decline diminished. The number of such gifts declined by 17.3 percent in 2003 and 20 percent in 2002. Their value declined by 21.2 percent in 2003 and 35 percent in 2002. However, the trend finally reversed in 2004. The average number of gifts reported was up 15.7 percent, and the value of those gifts was up 25 percent.

These gifts are important because they tend to be among the larger gifts an institution receives. In 2004, the average gift of stock reported on the survey was $36,660. In 2000, the average value of reported securities gifts reached a high point of $42,066.

“The increase in personal giving, in gifts of stock, and in corporate giving all represent positive signs in the higher education fundraising environment,” Kaplan said.

The Council for Aid to Education conducts research on higher education policy, develops assessment and planning tools for colleges and universities, collects and disseminates data on private giving to education, and promotes effective corporate support of education.