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April/May 2010 – Web Exclusive

Less Giving When it Hurts

“We have increased our fundraising totals at Texas Tech University, even in the recession.”

– Kelly Overley,
Texas Tech vice chancellor for Institutional Advancement

Economy Pinches College Donations

by Clint Shields

A slumping economy has tightened budgets for families everywhere. It has also affected the amounts alumni are able and willing to give back to their alma maters.

According to a February 2010 report from the Council for Aid to Education (CAE), donations to colleges and universities across the country fell by almost 12 percent in the reporting year that ended on June 30, 2009. The drop was the sharpest seen in the survey’s 41-year history.

Kelly Overley
Texas Tech vice chancellor for Institutional Advancement

Given last year’s economic conditions, a slowdown in giving was expected.

“The decline was not a surprise,” says Ann Kaplan, who coordinates the CAE’s Voluntary Support of Education Survey. “Giving should gradually rebound. It takes time for contributions to recover, but they should stop falling.”

Schools across the state have seen donations decline. The University of Texas at Austin, for instance, saw donations fall 16 percent in 2009. Similar patterns were seen at Texas A&M University, where donations fell by 10 percent in 2009; UT-Southwestern Medical School, down by 21 percent; and the University of North Texas, down 30 percent.

Surviving the Slump

Despite the slowdown, donation coordinators remain optimistic. For the University of Texas System, which includes 15 campuses, donation funds were down, but participation was not.

Many schools across the state have seen donation declines.

“In the midst of a down economy, UT System institutions collectively recorded the most donors in their history,” says Randa Safady, vice chancellor for External Relations for the UT System. “Giving was down, yes, but donors understood that the important work of UT institutions must continue in an up or down economy.”

The drop in donations came after strong years for many schools, the UT System included. The system received nearly $1.5 billion in CAE’s 2007 and 2008 reporting years. Still, its 2009 total was the fourth-best year of giving in the system’s history, Safady says.

As for the future, again, optimism is key, she says. Fundraising efforts for university plans, building projects and donation campaigns will continue in earnest and 2010 will be another challenging year.

“Historical patterns indicate that as the economy recovers, contributions will rise again,” Safady says. “Fiscal 2009 was difficult for colleges and universities and also for those individuals that care about them. Institutions will have to work hard to maintain giving levels from the past year.”

Randa Safady
Vice Chancellor, External Relations, University of Texas System

Donations to different components of a university’s system also rise and fall from year to year, which can make donation totals harder to interpret. For instance, the Texas Tech University System, which now includes the university, the school’s health sciences center and Angelo State University – saw donations decline, according to the CAE report. Donations to Texas Tech itself, however, have not.

“We have increased our fundraising totals at Texas Tech University, even in the recession,” says Kelly Overley, Tech’s vice chancellor for institutional advancement. “Our alumni and supporters continue to believe that education is the best investment they can make in the future of our state and our country.”

Timing is Everything

Other schools have bucked the downward trend for donations. Rice University, which relies on alumni for 27 percent of its revenue, has seen its donations increase in each of the past two years.

In Dallas, Southern Methodist University (SMU) has enjoyed an increase as well. According to the CAE report, SMU’s donations for the 2008 report year increased by 11 percent, to $75 million, and then jumped by 37 percent in 2009, to more than $103 million. The increases came, in part, thanks to a timely donations campaign.

“We were fortunate to launch a campaign in early fall 2008, just before economic conditions turned,” says Brad Cheves, SMU’s vice president for Development and External Affairs. “Therefore, we already had pledges on the books [and] a volunteer organization, staff and infrastructure in place.”

You can view the CAE report, as well as fiscal 2009 donation totals, on the CAE Web site.

Giving Slows Down

Private donations from individuals, alumni, corporations and foundations fell sharply at Texas colleges and universities in 2009, with few exceptions.

Donations to Selected Texas Universities, 2009
School 2009 Donations Percent Change
From 2008
University of Texas at Austin$238 million-16%
Texas A&M University$187 million-10 %
UT Southwestern Medical School$115 million-21%
Southern Methodist University$103 million+37%
Rice University$95 million+11%
Texas Tech University System$94 million-4%
Baylor University$45 million-2%
Texas Christian University$35 million-15%
University of North Texas$13 million-30%

Source: Council for Aid to Education

The donation drive was the university’s second in recent years, Cheves says, after another successful campaign that ended in 2002. Following its conclusion, the school began securing “lead” gifts – significant amounts that launch a project or initiative – in 2005, 2006 and 2007, which ultimately helped it stay ahead of the recession.

Cheves expects the school to remain on target in terms of its cash flow, and notes that most donors are not altering their payment schedules. More importantly, he says, the 2009 numbers were not an anomaly for SMU, which has successfully grown its donations for years.

“Over the past 10 years, we have had several record years, and our trend over that time is an average growth in giving of 5.5 percent per year,” Cheves says.

Sound fiscal management, he says, has kept building projects from being delayed during rough economic times. But Cheves adds that it’s no time to rest. The university still recruits hard to keep the dollars flowing.

“Absolutely we do,” he says. “And everyone else does as well.” FN

Endowments Tumble

Endowments – money granted or donated by groups or individuals as permanent funding to generate investment revenue – also suffered in fiscal 2009 (July 1, 2008 - June 30, 2009). According to a report by the National Association of College and University Business Officers, schools participating in the group’s annual survey reported an average endowment loss of more than 18 percent nationally. Several Texas schools, both public and private, were among the respondents.

School or System2009 Endowment FundsPercent Change From 2008
University of Texas System$12.1 billion-24.8%
Texas A&M University System$5.1 billion-23.7%
Rice University$3.6 billion-21.6%
Southern Methodist University$1.0 billion-26.3%
Texas Christian University$0.9 billion-20.2%
Baylor University$0.9 billion-17.7%
Texas Tech University System$0.7 billion-14.2%
University of Houston System$0.5 billion-25.9%

Source: National Association of College and Business Officers

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