The Sources and Uses of Annual Giving at Private Research Universities
Ehrenberg, Ronald G.; Smith, Christopher L.
[Excerpt] In 1998-99, Cornell University and Duke University were ranked second and third in the nation, respectively, in terms of the volume of giving each received from external donors. That year Cornell reported receiving $341.3 million in annual giving and Duke reported receiving $331.0 million. The similarity in the total volume of giving that the two institutions received is actually very misleading. Fifty-four percent of Cornell’s gift total came from alumni, while only 15.3% of Duke’s gift total came from alumni. Similarly, 79.7% of Cornell’s gift total came from individuals (alumni plus other individuals) while only 26.2% of Duke’s gifts came from individual donors. Cornell’s giving is clearly much more dependent on individuals than is Duke’s and Duke’s is much more dependent in turn on corporations and foundations. Institutions differ not only in the sources of their annual giving but also in their uses of such funds. For example, during the 1993-94 to 1997-98 period, the average percentages across 78 private research universities of annual giving devoted to current expenditures, building and equipment, and enhancing the endowment were 53.5%, 14.5% and 31.5%, respectively. However, there was wide variation across the institutions in each of these percentages, with the standard deviations of these percentages being 16.9, 12.1 and 15.5, respectively. Our paper addresses why private research universities differ in the sources and uses of their annual giving. The next section provides some background data on the trends and variations in the shares of annual giving coming from and going to different uses. We then use data from a panel of private research universities for the 1968-69 to 1998-99 period to estimate models that provide explanations for why the levels and shares of giving coming from different sources and going to different uses vary across institutions and over time. Our explanations focus both on differences in characteristics of the institutions and differences in macroeconomic variables, such as changes in federal estate, corporate, and capital gains tax rates.
private research universities; alumni; donors; revenue; higher education; resource allocation
Required Publisher Statement: Published by the Cornell Higher Education Research Institute, Cornell University.