In late February, the Council for the Advancement of Education (CASE) released the key results of its annual Educational Voluntary Support Survey. These findings are based on fundraising data for the 2022-23 academic year (FY), which typically runs from July 1st to June 30th.
The biggest news is that philanthropic giving to higher education totaled $58 billion during the same period, $1.5 billion less than the previous year. The $59.5 billion contribution for the 2021-22 fiscal year is the highest ever. The rate of decline from 2022 to 2023 is 2.5% (5% after adjusting for inflation).
A quick look at the sources of donations to universities shows that while “institutional” giving increased slightly, individual giving from alumni and non-alumni alike led the decline, down more than 10% (adjusted for inflation). (12%). However, these statistics don't tell the whole story. CASE includes a wide range of organizational categories: corporations, foundations, and donor-advised funds (DAFs). Sue Cunningham, President and CEO of CASE, said: It's certainly a vehicle that we've seen grow. ”
Cunningham said even more donations could be hidden under the heading of “institutions” because individual donors also give to higher education through personal and family foundations and closely-linked corporations. added. The actual breakdown for this category was a 2.7% increase in FY22-23 (0.1% adjusted for inflation), with corporate giving increasing 3.2%, foundation giving decreasing 1.8%, and foundation giving increasing 4.4%. Donations from other organizations, including DAF. Last year's report was the first to require reporting on donations from DAFs. Individual higher education institutions and CASE are currently considering how to account for DAF gifts.
CASE Insights Solutions Senior Director Jenny Cooke Smith and Vice President/Strategic Partnerships Brian Flahaven recently graciously agreed to talk with me about the latest numbers. When asked if CASE saw a decline in donations after the standard deduction was expanded in 2017 under the Tax Cuts and Jobs Act, Flahaven said no such decline occurred.
In fact, according to the CASE report, endowments increased significantly from $43.6 billion in 2016-2017 to $46.7 billion in 2017-2018. This is not as surprising as the reader might imagine. While wealthy donors will likely continue to qualify for charitable deductions, smaller donors, particularly alumni, will continue to express their historic loyalty to the institutions they have attended.
Flahaven also said that, with the exception of the 2020-2022 period, university giving generally correlates with stock market fluctuations, an observation that echoes Cunningham's comments in the latest report. Match. “Universities typically operate on fiscal years that begin July 1 and June 30, but donors plan their gifts based on the calendar year,” she said. The major market indexes were certainly down on December 31, 2022, with the S&P 500 alone showing a loss of nearly 20% in a year when total charitable giving also declined.
If the correlation with calendar-end market performance continues in FY23-24, higher funding should produce a strong year. Performance has reversed markedly since 2022, with the S&P 500 up 24% through December 31, 2023, the Dow Jones Industrial Average up nearly 14%, and the Nasdaq up 43%.
CASE representatives and higher education stakeholders remain positive about future philanthropy in public conversations. But it is certainly reasonable to expect an impact from the “donor revolt” that followed Hamas's attack on Israel in October and the many anti-Semitic campus demonstrations that continued into this spring.
As evidenced by the recent $25 million donation toward a $60 million, six-story cylindrical tower that will serve as the University of California, San Diego's alumni and welcome center, alumni gifts, large and small, There is no doubt that it will continue with different types of projects. . But will the nature of gifts begin to change in response to increased donor dissatisfaction, and if so, how?
Will the number and size of gifts above $100 million continue to increase, as we saw in 2022-23, or will wealthy donors scale back or stop their support? Will higher education institutions receive fewer donations for general operational support, and will donations be limited to ensure compliance with donor intent? and choose to replace it with short-term donations that are easier to evaluate?
Will next year's CASE report show a decline in giving to elite universities as donors seek other options in post-secondary education? Anticipated philanthropy among women and Gen X How will the increase affect gifts to higher education?
In light of these and other questions about trust and support for our nation's universities, we will be following CASE, Giving USA, and other organizations tracking philanthropy in this space throughout 2024.
