A Gift of Good News (USA)

By Kevin Kiley
For the past two years, February was the time university fund-raisers, investment officers, and government relations officials got together to read a slew of reports about the past fiscal year, lament the sad state of the industry, and question whether the university finance world would ever return to the way it was. Not everybody is in the same boat this year.
A few weeks ago, endowment officers got a bit of good news: after decreases in the 2009 fiscal year and stagnant growth in 2010, endowment returns for the 2011 fiscal year were close to pre-recession levels.
And today, many fund-raising offices get their own pick-me-up: the Council for Aid to Education is releasing a survey showing that colleges and universities received $30.3 billion in charitable contributions in the 2011 fiscal year, an 8.2 percent increase over the 2010 fiscal year. The total is only $1.3 billion shy of the sector’s high of $31.6 billion in 2008.

The growth is good news for the fund-raisers, who had not seen significant increases since the economic downturn began. Colleges and universities saw a drop in total giving of about 12 percent in 2009 — the largest drop since the council started the survey in 1969 — followed by a gain of only 0.5 percent in 2011. “We’re getting there, but we’re not quite back at 2008 levels yet,” said Ann E. Kaplan, director of the survey for the council.
Wednesday’s survey results are the latest in a string of signs that optimism has returned to higher education fund-raising. In August, the University of Southern California announced that it was launching a $6 billion campaign, the largest goal in history. A few months later, other universities launched campaigns of at least $1 billion after holding off during the recession. And last week Stanford announced that it had wrapped up its latest campaign — which originally had a goal of $4.3 billion — having raised a total of $6.2 billion in five years, the largest such drive in history.
The slew of reports released in the past few weeks show how the recovery is hitting different corners of higher education. Institutions that rely on endowment returns and fund-raising — typically elite private institutions — are returning to where they were before the recession. But state funding continues to decrease in many places, causing budget problems for public universities and colleges. Tuition-driven institutions, a much more diverse group that includes non-elite privates and, increasingly, many state institutions, have had a different set of issues to worry about, including student demand and questions about whether students will continue to pay increasing prices.
Most of the growth in fund-raising this year was fueled by donations for capital purposes, which increased 13.6 percent, while giving for ongoing operations increased 4.7 percent. Capital giving, which tends to go toward endowments and construction projects and tend to be larger gifts, tracks closely with the stock market, Kaplan said. Endowing scholarships has been a big draw for donors, fund-raisers said, though the survey does not go into detail about exactly what the money is used for.

 The breakdown of where gifts came from was similar to previous years, with the two largest sources being alumni (25.7 percent of gifts) and foundations (28.6 percent). Non-alumni giving made up 18.6 percent of all gifts, followed by corporations (16.6 percent), other organizations (9.4 percent), and religious organizations (1 percent). Total amounts given in each category increased, with particularly large increases coming from individuals, both alumni and non-alumni.
Research and doctoral universities brought in the most money — about 75 percent of all dollars raised — but private baccalaureate institutions and specialized institutions saw the largest percentage increases.
Stanford topped the list of the largest recipients, raising $709.42 million last year. The top 20 recipients, a group consisting mostly of private research universities and public flagships, raised a combined $8.24 billion, or about 27 percent of all that was raised.

Gifts were even more concentrated among a handful of institutions this year than they have been in the past. The top quartile of colleges and universities raised 11.3 percent more in fiscal year 2011 than they did in 2010, while the bottom three quartiles raised 9.6 percent less. The top 25 percent of institutions raised 86 percent of all the money given.

Despite the sluggish economy, a handful of institutions made significant gains over the past five years. The University of California at San Francisco more than doubled the value of the annual giving it received five years ago and increased more than $140 million over last year’s total. Much of that was due to the construction of a new hospital complex, for which the university was able to raise $85 million.
The University of Texas at Austin, which in 2006 raised $176.5 million — not enough to make the top 20 list that year — more than doubled that in the 2011 fiscal year, bringing in $354.34 in charitable contributions and placing it 11th on this year’s list.
David Onion, the university’s senior associate vice president for development, said much of the gain is attributable to the university’s current capital campaign, which started in 2004 and aims to raise $3 billion by 2014. Texas, like many state universities, did not have the type of fund-raising office seen at large private universities until the mid-1990s. Putting such structures in place has allowed the university to scale up fund-raising quickly. The university’s last campaign and its current effort are designed to expand the university’s pool of donors and encourage a more philanthropic mindset among alumni and students.
Onion said that during times of economic constraint, people tend to concentrate their giving on a handful of institutions. “I like to use the analogy of picking stocks,” Onion said. “Anybody can pick a stock in a healthy market, but those people who are good at what they do will really become clear when the market place is in a difficult spot.”
While the gains for the 2011 fiscal year seem like a good sign, investment officers stressed that the world is not the same as it was three years ago. Wild economic swings in September, which happened after the close of the 2011 fiscal year, might have given some donors pause and could affect totals for next year. Onion and Kaplan both said they were cautious about the future.
“While I’m optimistic about where we’re going, I’m still very reserved about how optimistic I am,” Onion said. “The economy has improved, but it is still unstable. Any time you have an unstable economy, it causes donors to pause and delays the process. I don’t see anything on the horizon that’s going to change the economy radically. We’re going to see the pattern we’ve had continue over the next two or three years.”

Source: Inside HigherEd http://www.insidehighered.com/news/2012/02/15/giving-colleges-grew-82-percent-2011