Alumni Giving Is Down, But Does It Matter?
Donations to educational institutions are at an all time high, but the rate of alumni giving has begun to fall. Should institutions care if they are already raking in huge donations?
Giving to educational institutions, particularly universities, represents a growing piece of the American philanthropic pie. However, fewer alumni are giving to their alma maters than in the past.
Can both of these statements be true? And if they are, what do they mean for giving to education and for American philanthropy in general?
I’ll answer the easy question first: Yes, both of my opening statements are indeed true, according to recent research.
In 2013, Americans contributed a whopping $52.7 billion to educational institutions, a figure that accounted for 16 percent of all charitable giving, according to the Giving USA Annual Survey. For most of the past 40 years, education’s share of the philanthropic pie had been less, hovering between 8 and 13 percent.
Keep in mind that, in 2013, only giving to religious organizations (31 percent) represented a higher percentage of total giving than education (16 percent.) Think about this: As recently as the 1980s, giving to religion represented more than half of all philanthropy in America. Clearly, religion’s losses have partially been education’s gains.
But you don’t need reports or long-term statistics to know that universities are raking in stratospheric donations. It seems that nearly every day, The Chronicle of Philanthropy is reporting a $100 million gift or bequest to a large university. In this case, the perception really does match the reality.
Yet, starting around a decade ago, institutions began to see a smaller percentage of their alumni giving on an annual basis. A 2013 report by the Council for Aid to Education (CASE) found that the percentage of alumni giving to participating institutions fell from 12.6 percent in 2004 to 8.7 percent in 2013. Interestingly, the decline started right around the time college graduates of the late 1960s and early 1970s hit their prime giving years.
To be sure, that doesn’t mean colleges and independent or parochial schools saw their total donations decrease. The fact that fewer alumni have been giving has been offset by the reality that those who are donating are contributing larger sums. Between 2004 and 2013, the average size of alumni gifts to reporting institutions grew from $919 to $1,429, according to a CASE report.
Why is Alumni Giving Down?
The authors of “The Next Generation of Alumni Giving,” a recently released landmark report, have an interesting theory of what might be behind the drop-off. (The study was published by the Giving Institute, researched by the Indiana University Lilly School of Philanthropy and sponsored by the Council of Alumni Association Executives. I served on the study’s editorial review board.)
“Many of these alumni experienced significant turbulence on their college campus and a diminished respect for institutional authority,” the report states. “There is some anecdotal evidence that these factors are at least partially responsible for diminished participation rates.”
Dr. Una Osili, director of research at the Lilly School recently told me that “your college experience is really one of the most important drivers of giving to your alma mater. Trust is a big predictor and a big determinant of giving. There is a declining trust in institutions.”
There are other possible reasons why the percentage of alumni who give annually has slid, according to Osili. One is that reporting and record keeping is so much more complete than in the past, so we may just have more accurate figures now. Another possible explanation, one which is supported by anecdotal but not statistical evidence, is that donors, especially wealthy donors, are giving to institutions in the big cities where they work and live, and not necessarily where they went to school. One more factor to consider is the long-term increase in the number of people earning advanced degrees. Osili said that individuals are far more likely to donate to the institution where they earned a bachelor’s degree as opposed to where they earned a master’s degree.
Why Does the Rate of Alumni Giving Matter?
In the near-term, decreases in alumni participation rates will likely not drastically cut down fundraising totals. Still, drops in participation rates are troubling for institutions that are seeking to engage, build community, and enlarge their group of stakeholders. Perhaps the biggest worry for educational institutions is that when the current generation of mega-givers dies off there won’t be enough younger donors to replace them. Institutions may be awash in donations today, but there is no guarantee that this will always be the case.
This issue extends beyond schools and impacts and other alumni-focused entities. Across the philanthropic world, nonprofits have seen their donor bases shrink and have had to depend, even more than in the past, on the wealthiest donors. As a greater nonprofit community, we want to encourage participation in philanthropy at all levels. Don’t get me wrong, mega-donors are hugely important. But grassroots engagement and support are key ingredients in the health of our educational institutions, our nonprofit culture, and our civic society.
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