Colleges and universities continued to ride a hot stock market last year, with gifts by individuals, particularly donated securities, driving donation levels to another new record.
Giving to colleges and universities jumped 6.3 percent last year to $43.6 billion. It’s the highest amount reported since the Council for Aid to Education (CAE) began the Voluntary Support of Education (VSE) survey in 1957. It’s the fifth consecutive year that overall giving has reached a new record.
Contributions to colleges and universities have increased every year since 2009, which saw a nearly 12 percent drop after the recession struck. The smallest increases in the past decade occurred in 2010 (0.5 percent) and 2016 (1.7 percent).
The top 20 institutions accounted for 28.1 percent of all gifts last year, raising $12.23 billion. Gifts to these institutions, representing less than 1 percent of the nation’s colleges, were up 10.5 percent from $11.07 billion. Philanthropic support represented about 10 percent of respondent universities’ expenditures, according to the survey. The highest recorded percentage was 15.7 percent in 2000.
Two universities eclipsed $1 billion in fundraising last year: Harvard University, $1.28 billion, and Stanford University $1.13 billion. They were among 13 institutions that raised at least $500 million last year, compared with 11 in 2016.
Contributions by source were up in virtually every category:
Gifts from individuals and gifts from non-alumni individuals had decreased in 2016, by 8.5 percent and 6 percent, respectively.
Alumni support for capital purposes, e.g., endowments and buildings, increased 16.7 percent in a sample of 663 institutions that provided data. Those same respondents reported alumni contributions for current operations increased 8.7 percent.
Foundations were the largest source of support, accounting for almost one-third of contributions:
Contributions from corporations, foundations and other organizations, which includes donor-advised funds, are based on commitments made the previous year, according to the survey. Those commitments are affected by the previous year’s financial environment and since the stock market was weaker in 2016, that’s reflected in the smaller increase in gifts from organizations than from individuals.
Gifts in the form of donated securities increased 26.6 percent for 434 institutions that responded to the optional question in the survey. The number of securities contributions increased 16.9 percent.
Stock markets were up by double-digit percentages in the 2017 fiscal year, which ended in June. Values continued rising by as much as 6 to 10 percent in the second half of 2017.
Charitable support for colleges and universities is likely to increase in 2018 if the stock market continues to gain ground through the end of the fiscal year, June 30, said Ann E. Kaplan, vice president at CAE and executive director of the VSE survey. Some people may have pre-paid intentions and pledges in December to take advantage of elements of tax reform that were more favorable for certain donors and certain types of gifts, she said.
Tax reform passed late in 2017 likely will impact VSE survey results in coming years. Next year’s survey will include the fiscal year that ends 2018, which began July 2017. The full impact of tax reform may not be seen until the first full fiscal year under the new regulations, ending June 2019. That VSE survey will release in early 2020.
In 2017, 80 percent of the value of contributions that were counted toward preferred seating at athletic events was tax-deductible. Tax reform (H.R. 1) eliminated the deduction completely for those types of gifts and will not be counted on the VSE survey starting this year. Donors may have pushed those donations into 2017. “The effect of this provision will be more salient in FY2019 than in FY2018.”
The excise tax on university endowments may affect about 3 percent of survey respondents. Endowment values increased 9.1 percent at institutions that provided endowment data at the time of the release for the 2016 and 2017 VSE surveys.
As we celebrate our 36th year, NPT remains dedicated to supplying breaking news, in-depth reporting, and special issue coverage to help nonprofit executives run their organizations more effectively.