Gifts to higher education reached $41 billion in fiscal year 2016, according to the latest Voluntary Support of Education (VSE) survey. This is only a 1.7 percent increase from the $40.3 billion in 2015, and almost no growth when adjusted for inflation.

Harvard University raised the most money, $1.19 billion in fiscal year 2016. The top 20 higher education institutions raised a total of $11.12 billion, compared to $11.36 billion in fiscal year 2015. This decline is partially caused by a decrease in the number of mega gifts made in 2016, with only two gifts of $100 million, down from eight in 2015.

VSE 2016

Gifts from alumni and non-alumni individuals declined 8.5 percent and 6 percent respectively in 2016. While this decline is concerning, it is likely partly caused by a continued shift towards giving through family foundations and donor advised funds. Additionally, the stock market was weaker in 2016 than in 2015, which could also help explain the decrease in giving from individuals.

Giving from corporations, foundations (including family foundations), and other organizations increased in 2016 by 14.8 percent, 7.3 percent, and 9.8 percent respectively, helping to balance out the decline in personal giving.

What does this mean for your organization?

Pay attention to alternative giving vehicles. If the 223 institutions that reported giving from family foundations, closely held companies, and donor-advised funds had treated these dollars as coming from individuals, then total giving from alumni and non-alumni individuals would have been 10.9 percent higher. Your organization needs to pay special attention to individuals who use these and other alternative giving vehicles (e.g., IRA charitable rollovers), make sure that hard and soft credits are assigned properly in your database, and ensure that recognition and stewardship activities take place.

Feature giving to current operations. Gifts to current operations totaled 61.3 percent of total giving to higher education in 2016, higher than gifts for endowment purposes. While endowments are important, philanthropic support for current operations is a top priority at many institutions. The 2016 VSE survey results show that donors are willing to support current operations. Featuring opportunities to make unrestricted and restricted gifts for current operations, along with their expected impacts, can resonate with donors.

Monitor public policy. Increases in federal spending for economic infrastructure, such as roads, will likely buoy construction and other related economic sectors. Know which of your alumni and non-alumni individuals could be favorably impacted by this infrastructure spending. Federal legislation that lowers the top marginal income tax rate increases the after-tax cost of making charitable gifts. However, such increases also leave persons with more after-tax dollars which can be used to make more charitable gifts.

See the Council for Aid to Education’s full press release here.

BWF Client Advisory originally published February 10, 2017

Copyright © 2017 Bentz Whaley Flessner and Associates, Inc.

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