Where's the Money? Wealthy, Diverse Donors Are Increasingly Becoming Prime Fundraising Targets for Colleges and Universities

By Morris, Catherine | Diverse Issues in Higher Education, June 30, 2016 | Go to article overview

Where's the Money? Wealthy, Diverse Donors Are Increasingly Becoming Prime Fundraising Targets for Colleges and Universities


Morris, Catherine, Diverse Issues in Higher Education


When Draymond Green, an NBA All-Star, signed an $82 million, five-year contract with the Golden State Warriors in July 2015, he could have done anything with that money. What he did was surprising.

A few months after signing his new contract with the Warriors, Green made a $3.1 million donation to Michigan State University to renovate and build a new athletics facility and provide money for scholarships. It is the largest donation from an athlete in the history of the university and the second-largest known gift by an athlete to a university.

"Michigan State means everything to me," Green told Forbes in September. "I grew up in Saginaw and was lucky enough to attend Michigan State University where Coach Izzo believed in me and gave me the chance to succeed. I wouldn't be the person I am today without my Spartan experience and this donation reflects my deep appreciation to the university. This donation isn't just about me. I want more kids to have the opportunities I had thanks to Michigan State and want to use this to stimulate all Spartans to give back to the best university in the world."

Green is one of many diverse donors making an impact at colleges and universities across the United States. Endowments and alumni donations are a critical part of how universities keep themselves going, supporting new initiatives, building campaigns, financial aid and more. In lean times, they can help keep a university afloat.

Attracting donors

Collectively, colleges and universities receive a staggering annual sum from alumni and other donors. Colleges and universities raised a record $40.30 billion in 2015, according to the Council for Aid to Education (CAE). That number includes donations from individuals, as well as foundations, corporations and other organizations. CAE has conducted the Voluntary Support of Education (VSE) survey every year since 1957. To put that number in perspective, the U.S. Department of Education was funded at $68 billion in 2015-16.

"Institutions today rely on private support," says Robert Henry, vice president of education at the Council for Advancement and Support of Education (CASE). "With the cuts that public institutions are getting from the states, and at our private institutions, considering what it costs to really give a student an amazing or an exceptional college experience, those costs can't be solely covered by tuition."

A substantial percentage of total funds raised each year typically go to a tiny subsection of colleges and universities. In 2015, less than 1 percent of the nation's colleges raised 28.7 percent of all gifts, according to the VSE survey. Stanford University alone pulled in $1.63 billion and Harvard University was not far behind in second place with a haul of $1.05 billion.

Smaller schools and those without the resources to build up their development team miss out on the large gifts that prestigious research universities receive. It is a paradox: the schools that already have vast endowments seem to only get richer, while other schools suffer year after year for the lack of a robust endowment.

Part of the reason that wealthy colleges have no trouble fundraising is that they offer high-net-worth donors the reassurance that they will be able to carry out their goals, and they already have the infrastructure in place to manage large gifts, says Dr. Una Osili, a professor of economics and director of research at the Lilly Family School of Philanthropy at Indiana University-Purdue University Indianapolis.

"It might be a little misleading just to assume that universities are getting those gifts simply because they're already wealthy," Osili says. "It's because they have the infrastructure to cultivate those donors, to engage those donors and then to deliver on that mission."

Giving to a university is also an attractive proposition for some donors because institutions of higher education have the power to impact broad segments of society, Osili adds. …

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