Banner fundraising year for wealthy colleges
Wednesday, February 15, 2012
For the 99 percent of colleges, it was a pretty good fundraising year.
For the 1 percent of super-wealthy elite, it was a much better one that catapulted them even farther ahead of the pack.
The latest annual college fundraising figures out Wednesday show donations to colleges and universities rose 8.2 percent in fiscal 2011, crossing back over the $30 billion mark for just the second time ever, and improving many schools’ financial footing after several lean years due to the economic downturn.
But the very richest universities accounted for nearly half the growth: Of the $30.3 billion collected by colleges and universities nationwide, $8.2 billion — or 27 percent — was raised by just the top 20 institutions. At those universities, fundraising was 15.3 percent higher than the year before, widening an already yawning wealth gap at the top of higher education.
Stanford University, which recently broke an all-time record by completing a 5-year, $6.2 billion fundraising campaign, led with $709.4 million collected in fiscal 2011, followed by Harvard ($639.2 million) and Yale ($580.3 million). Rounding out the list were private universities such as Columbia and Johns Hopkins, as well as elite public universities such as UCLA and the Universities of Texas, Wisconsin and North Carolina. Most campuses on the list have major medical schools and affiliated research centers, though No. 4 MIT ($534 million) is an exception.
In fact, the top 20 schools account for 2 percent of the 1,009 respondents to the annual Voluntary Support of Education survey by Council for Aid to Education. But they highlight a fundraising distribution that calls to mind last year’s Occupy protests against U.S. income inequality. In fact, the fundraising distribution in higher education is more skewed than income: The top 25 percent of universities account for 86 percent of all private dollars raised for higher education, and the bottom quarter just 1 percent.
For colleges, the rich-get-richer trend feeds on itself in multiple ways. Already-wealthy universities can afford more staff to raise funds, and they have a disproportionate share of wealthy alumni. But they’re also able to attract the most promising researchers, which helps them win the competition for dollars from philanthropists who want their money to have the best chance of creating new knowledge.
“The institutions that raise the most, they raise the most because they have a case to make for needing that much support,” said survey director Ann Kaplan.
The fundraising numbers come a few weeks after another report showed that college endowments — the investments universities hold to generate income in support of their mission — have also nearly recovered from a hit that began with 2008 stock market crash and forced many schools to make painful budget cuts. The average college endowment returned 19.2 percent in fiscal 2011, according to data from the National Association of College and University Business Officers and Commonfund. There were 73 institutions with endowments over $1 billion, led by Harvard with $31.7 billion — though that’s still off its peak of about $37 billion at the end of 2008.
The billionaire schools account for $285 billion — or 70 percent — of the $408 billion in endowment money held by all colleges and universities.
The Top 20 institutions rely heavily on fundraising and endowments. At Stanford, for instance, endowment spending accounts for 20 percent of the university’s $4.1 billion operating budget — more than it gets from students (18 percent). The 99 percent schools typically get much more of their revenue from tuition, with endowments more akin to an emergency financial cushion.
Last year’s fundraising total nationally remains $1.3 billion below the 2008 peak of $31.6 billion, and while some non-elite schools had good years, many were still struggling as the economy sputtered last year. Roughly two-thirds outside the Top 20 saw fundraising rise by less than the 8.2 percent national average.
Even some well-known institutions have had a hard slog. The University of Virginia, for instance, which fell just outside the latest Top 20 for 2011, came up about $400 million short on a planned eight-year, $3 billion campaign had been scheduled to wrap up last year.
Another challenge: Colleges typically have little flexibility on how endowment dollars are spent, Kaplan noted. Completely unrestricted gifts amounted to just 7.9 percent of donations; the rest are given for specific purposes, such as research, scholarships or endowed professorships. Roughly 14 percent was donated for buildings, property and equipment.
Alumni giving rose 9.9 percent nationally, and accounted for about 26 percent of the donations colleges receive. Corporate donations rose 6.6 percent. Donations from foundations, which remain the largest source of support at about 29 percent, rose 3.3 percent.
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