ERIC Identifier: ED308799
Publication Date: 1988-00-00
Author: Leslie, Larry L.
Source: ERIC Clearinghouse on
Higher Education Washington DC.
Enhancing a College's Fund-Raising Ability. ERIC Digest.
Research in higher education fund-raising has increased substantially for
several years. In the early 1980s only a few empirical works were available,
spread sporadically over more than 20 years. Most pertinent, up-to-date research
concerning U.S. fund raising came from the Filer Commission of the 1970s, and
its research applied to voluntary support overall, not to higher education
specifically. Today there is a fairly good, though not overabundant, literature
concerning donor behavior. More is on the way.
WHO ARE THE EXEMPLARY PERFORMERS AND WHY?
What can higher
education institutions do to increase fund-raising ability? Who is successful at
it? One approach is to examine the relationship between amounts raised and
strategies employed. However, variations in strategies often are small;
essentially, everybody does everything. A survey of 575 institutions found that
75% of respondents employed all 11 fund-raising strategies listed (Loessin,
Duronio and Borton 1988).
The more fruitful approach is to build a model to "predict" fund-raising
effectiveness and then insert an institution's variable values. The model can
help to determine whether an institution is collecting more, or less, than the
For instance, John Dunn, Jr., and Associates selected the Top 50 institutions
in terms of total voluntary support and "leverage". They determined that the
size of endowment and operating budget were the major factors in raising funds,
but that leverage was not explained at all well by the variables.
The strong power of prediction endowment size has suggested that successful
fund-raisers build fund-raising traditions through tried and true strategies.
The explanatory power of high educational and general budgets was taken to
reflect the relations between large budgets and institutional prestige. During
the seven years examined by Dunn and Associates, the largest amounts were
raised, in order, by Harvard, Stanford, Yale, Cornell, Columbia, Minnesota, the
Massachusetts Institute of Technology, the University of Southern California,
Princeton and Pennsylvania. Rates of increase were greatest at Washington
University, Cal Tech, Penn State, Ohio State, Virginia, Carnegie-Mellon, and
Washington, Georgia, Illinois, and Stanford universities. Leverage was greatest
at small, mostly church related colleges.
WHAT WORKS IN FUND-RAISING--AND WHAT DOESN'T?
Leslie and Ramey (1988) tried to infer donor behavior from institutional and
regional characteristics and from institutional actions. They composed separate
models for the various donor groups and for individual donors, and suggested
marketing strategies from the results. The conclusion was that an institution's
public visibility is important to fund raising, and that a "poverty strategy" is
not, except for alumni. Most donors like to give to thriving institutions that
already are targets of public largess, although alumni respond to a perception
of institutional need. Longstanding ties between institutions and organizational
contributors are important. Businesses seek financial associations with
institutions in prospering areas. Overall, organizations tend to respond in
rational economic fashion, whereas the behaviors of individuals involve a human
dimension as well.
DO SUCCESSFUL ATHLETIC PROGRAMS ENHANCE SUPPORT?
of recent origin is whether intercollegiate athletics increase, or diminish,
support of regular university programs. One argument is that athletics
contribute to institutional prestige, or to institutional visibility. The
counter claim is that athletic programs channel resources away from academic
enterprises. Coughlin and Erekson (1984, 1985, 1986) based the prestige-quality
thesis in utilitarian terms: Institutions seek to get the most out of prestige
or quality, much as business firms seek to get maximum profits.
Coughlin and Erekson (1986) selected 52 universities from major athletic
conferences, plus certain independents, and related both state aid and voluntary
support to four measures of athletic success: winning football and basketball
percentages, and National Collegiate Athletic Association and television
appearances. The authors found that the amount of state aid per student
associated positively with athletic variables, particularly basketball success.
They showed that athletic success resulted in larger contributions to athletic
programs (1984, 1985). They also demonstrated spillovers to academic programs,
showing that corporate and alumni donations to both current and capital funds
associated positively with athletic success (1986).
HOW DO TAX LAWS AFFECT VOLUNTARY SUPPORT?
Recent tax code
revisions raised serious concern that the levels of voluntary support of higher
education might decline. The year the changes were passed saw an unusual
increase in private giving, an increase attributed largely to taxpayers hurrying
to take advantage of a closing window of opportunity for deductions.
Nonetheless, for 1989 some indications suggest that the decline may not be as
serious as forecast.
Because good data for higher education is lacking, it is necessary to borrow
estimates of tax code effects upon giving from the public sector overall, and
then try to predict what the effect on higher education might be. This is
important because the voluntary support of the wealthy is crucial to higher
education. The top one percent of taxpayers was responsible for 68 percent of
all giving to education in 1962 (the only year of available IRS data). There are
no strong reasons to believe, however, that behaviors for overall giving are
similar to those for higher education. Donors probably view donations to
churches and hospitals, for example, as taking precedence over giving to
colleges and universities.
While the tax law revisions were under discussion, Auten and Rudney (1986)
used overall "elasticities" (comparing how a percentage change in one factor
might affect a percentage change in another factor) to estimate the effects of
proposed tax law changes on higher education giving. They concluded that
donations from the most wealthy could decline by as much as 61% overall. They
estimated general declines of 23 to 39%. They observed, however, that
corresponding declines did not occur after the tax law changes of 1982.
WHAT'S NEW IN NONPROFIT RESEARCH?
Another study (Weisbrod
1988) established the role of nonprofits in the national economy, and compared
the advantages and constraints of nonprofits with those of nonprofit private and
government sectors. The connections between incentives and performance were also
examined, as well as how nonprofits succeed and prosper without the profit
motive; revenues that nonprofits generate from sales and their use of volunteer
labor were also considered. Tackling the question of whether nonprofits really
are different, the author made recommendations for public policy.
Of particular interest is Weisbrod's approach to factors influencing
voluntary giving. He dispelled the notion that donors will stop contributing if
the opportunity for a "free ride" (others will pay) exists. After studying 16
econometric (economic-statistical) studies, he concluded that a tax increase of
10 percent may result in philanthropic declines of as little as .1 percent, or
as much as 2.54 percent. Comparing the effects of donor knowledge of
fund-raising costs with donor willingness to give, he further concluded that the
effects can be quite negative.
Additionally, Weisbrod's examination of the fundamental motives or goals of
nonprofits found that they seek primarily to generate as large a budget as
possible. Regarding whether governmental spending can "crowd out" private
donations, he answered that cash transfers to the poor crowd out private giving,
whereas spending on social services such as health and housing have the opposite
WHERE DO WE GO FROM HERE?
Much remains to be learned about
donor behavior. Aside from a few, mostly cursory, analyses of donors to single
institutions and the limited generalizations inferred from the
institutionally-based data of the Council for Aid to Education, research is very
limited. What is needed is a broad, national database of higher education
donors, one that could provide the sorts of information social scientists
require to test their propositions.
About two years ago, the research committee of the Council for Advancement
and Support of Education (CASE) appropriated $10,000 to begin preliminary work
on building such a data base. The Center for Philanthropy followed with an equal
contribution. The initial effort studied the nature of data colleges and
universities maintain in files. It was hoped that existing files could be added
to, or improved, to yield a broad sample of donors to many institutions.
Unfortunately institutions' files are severely lacking. Indeed, if the
institutions are representative--and there are good reasons to believe they
are--U.S. higher education institutions know almost nothing about their donors.
In short, the utility of existing data sources nearly is depleted. Before
additional advances in knowledge can be made, a national donor database must be
built and maintained.
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Auten, Gerald E., and Rudney, Gabriel. 1986. "Tax Reform and Individual Giving to Higher Education." Economics of Education Review 5:167-78.
Coughlin, C.C., and Erekson, O.H. 1986. "Determinants of State Aid and Voluntary Support of Higher Education." Economics of Education Review 5:179-90.
Coughlin, C.C., and Erekson, O.H. 1985. "Contributions to Intercollegiate Athletic Programs: Further Evidence." Social Science Q. 66:194-202.
Coughlin, C.C., and Erekson, O.H. 1984. "An Examination of Contributions to Support Intercollegiate Athletics." 5th Economic Journal 51:180-95.
Dunn, John A., Jr.; Terkla, Dawn Geronimo; and Secakusuma, Peter. 1988. "Fund Raising in U.S. Colleges and Universities: TheFifty Best Performances, 1979-80 through 1985-86." Tufts University. Paper prepared for the Twenty-Third Annual Conference of the Society for College and University Planning.
Duronio, Margaret, et al. April 1988. "A Survey of Fund-Raising Methods: Implications for Management." Paper prepared for the Annual Meeting of the American Educational Research Association. ED 296 651.
Leslie, Larry L., et al. Fall 1983. "Factors Accounting for Variations Over Time in Voluntary Support for Colleges and Universities." Journal of Educational Finance 9:213-25.
Leslie, Larry L. and Ramey, Garey. 1988. "Donor Behavior and Voluntary Support for Higher Education Institutions." Journal of Higher Education 59:117-32.
Loessin, Bruce A.; Duronio, Margaret A.; and Borton, Georgina L. 1988. "Understanding Fund-Raising Effectiveness in Higher
Education: Laying a Foundation." Final report prepared for Exxon Education Foundation.
Weisbrod, Burton A. 1988. The Non-Profit Economy. Cambridge, Massachusetts: Harvard University Press.