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Giving to Higher Education Was Flat in 2020 Fiscal Year, New Report Says

Posted: 2/15/2021

Click here to read on Chronicle of Philanthropy.

The end of the calendar year and the fiscal year tend to be the most important fundraising periods for colleges and universities. And in the 2019-20 academic and fiscal years, those periods landed in wildly different economic and social climates.

The result was that after 10 years of increases, overall giving to colleges and universities was essentially flat during those times. Support declined by two-tenths of a percent to $49.5 billion from July 2019 to June 2020. The decrease was 1.1 percent in inflation-adjusted dollars. Still, nearly half of institutions reported increases.

The data comes from the annual "Voluntary Support of Education" report, released by the Council for Advancement and Support of Education. It's based on results from 873 institutions. The respondents represent a little more than a quarter of all colleges and universities in the United States, and they receive 78 percent of all private support to higher education, according to the report. CASE extrapolates from the results of the survey to arrive at national estimates.

The moderate overall picture was not a surprise for Ann Kaplan, senior director of the VSE survey. "The aggregate is made up of a lot of noise," she says.

Even institutions that posted decreases may have had strong fundraising years. A single gift in a previous year can have a big impact on aggregate results. Case in point: Michael Bloomberg's $1.8 billion contribution to Johns Hopkins University was captured in last year's survey. Excluding that contribution, overall giving in this year's survey would have increased by 3.6 percent.

DAFs Overtake Corporate Support

The survey tracks the sources from which colleges and universities receive donations. This year "other organizations," a category primarily made up of donor-advised funds, saw the most growth.

While this category represents just 13.6 percent of higher-education funding over all, 2020 marked the first year it surpassed corporations in total dollars.

Contributions from "other organizations" grew 7 percent in the last fiscal year. This category has also grown the most in the last decade — an increase of 53 percent since 2011.

"We are absolutely seeing more and more each year of donor-advised-fund gifts," says Fritz Schroeder, vice president for development and alumni relations at Johns Hopkins.

Kaplan expects the 2022 edition of the VSE survey to break out donor-advised funds as a separate category. "It's time we start counting it in its own column," she says.

Foundations, alumni, and nonalumni individuals still contributed the most, at 33 percent, 22 percent, and 17 percent of support, respectively.

Pandemic Effects

This year's survey captures just four months of the Covid-19 pandemic and did not isolate fundraising data during that time.

Other recent surveys have tried to take the pulse of higher education giving during the pandemic. One survey of development officials at 104 U.S. and Canadian colleges conducted by researchers with the consulting firm EAB found that by the end of the 2020 calendar year, roughly 65 percent of colleges had raised less than they had the previous year.

While the VSE survey did not ask about changes in donor behavior during the pandemic, anecdotal evidence suggests that the pandemic may have led some supporters to shift their philanthropy toward causes like human services.

Still, some institutions made the case that they were providing human services to their students. The University of Maryland Global Campus, for example, received a $16 million endowment gift — the largest in its history — to support its emergency relief fund for students suffering economic hardship.

Other colleges and universities also raised large Covid-19 relief funds to support both students and their surrounding communities. While those funds didn't necessarily draw in the largest gifts, many colleges and universities say those relief funds attracted more small-dollar supporters and new donors in the last year.

In addition, the Black Lives Matter movement and increased donor interest in racial equity likely played a positive role in giving to some U.S. colleges.

Netflix co-founder Reed Hastings and his wife, Patty Quillin, gave a total of $120 million to two historically Black colleges and the UNCF at the end of the 2020 fiscal year, for example. MacKenzie Scott's gifts to more than a dozen historically Black colleges and universities will be recorded on next year's survey.

Making the Case

Economic uncertainty and stock-market volatility at the end of 2019 likely contributed to the decline in funding for capital purposes, which include gifts to endowments or those for buildings or land. That type of support — often made as gifts of securities — declined by nearly 11 percent.

"We would expect it to rebound when the economy is more solid and there's more confidence," Kaplan says.

The specific targets of types of gifts did not change much. Student financial aid remains the largest purpose to which donors restrict endowment gifts.

Support for current operations increased by 6 percent. Those gifts tend to be restricted to research more than other categories.

During the Great Recession, support for public higher education fared pretty well. "I'm hopeful that that same trend will continue during this period of economic uncertainty," says Dan Peterson, vice president for development at the University of Washington. "The challenge for us during periods of economic uncertainty is to continue to demonstrate the value proposition of giving to higher education."

Public institutions fared slightly better over all, but there was variability depending on the type of institution. Public baccalaureate institutions saw the largest increase, with the 31 institutions seeing overall growth of 17.1 percent. That growth was driven largely by strong fundraising years at the Army, Naval, and Air Force academies, Kaplan says.

"Those three are in that category, and they raise a lot of money so they can actually drive the number up," she says.

Support for private research or doctoral institutions, of which 104 were represented in the survey, dipped 8.4 percent over all. Again, major gifts can skew these figures.

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