by Jeff Small
The Council for Aid to Education (CAE) released the results of its annual Voluntary Support of Education (VSE) Survey today which estimates the total and variety of gifts to colleges and universities in the United States over the last year.
According to the survey, giving to colleges and universities increased 2.3 percent to $31 billion in 2012, falling just shy the high water mark set in 2008 of $31.6 billion.
In general this tracks with giving to the nonprofit sector and the economy as a whole over the past two years, where slow growth has followed the abrupt collapse of the Great Recession.
Another statistic that is reflective of this slow growth is the fact that around half (52.8 percent) of institutions surveyed raised the same or more than they had in 2011, while the other half (47.2 percent) reported declines in giving.
One of the more interesting findings of the survey, from my perspective, was the fact that giving for capital purposes dropped 3.2 percent while contributions for current operations increased 6.2 percent.
The balance of giving for capital and current operations has experienced a number of fluctuations in recent years, with donors shifting away from capital giving as the economy contracted and shifting back towards capital giving as the economy rebounded.
The CAE points to a strong correlation between giving for capital purposes and the growth and decline of stock values on the New York Stock Exchange. When stock values have increased or fallen, giving for capital purposes has fallen in near lockstep.
The drop in giving for capital also appears connected to a slight decline in giving by alumni. Total giving by alumni declined 1.3 percent in 2012, despite the fact that alumni giving for current operations increased by 10.8 percent.
So what do these findings mean for you and your institution?
First, it is important to not interpret a climate study as a local weather report. By that I mean that while it is important to know the currents that are driving the overall system, it is equally or more important to know your own local conditions.
Slow growth in the sector does not mean your organization must be resigned to slow growth, nor does a shift away from capital mean your donors who have expressed interest in capital gifts will suddenly pull away.
It does, however, give us an important insight into donors and their collective mindset. As we’ve seen repeatedly in studies like this one, Giving USA, and the Nonprofit Fundraising Study, donors continue to be slow to return to pre-recession giving levels, but they are re-engaging gradually.
So if you want giving at your institution to increase substantially in the near term, you can’t depend on a rising economic tide to make it happen.
You can either cross your fingers and wait for the proverbial lightning strike, or you can make strategic investments in proven fundraising practices that increase donor contact, grow donor relationships, improve internal efficiency, and build a fundraising infrastructure that can withstand the ebbs and flows of the larger philanthropic climate.