Day 11: Fundraising
A series following my new class: The Economics of Higher Education
We’re back for Day 11! Day 10 was an independent work day, so no post for that one.
On Day 8 we talked about how Colorado College finances itself. We looked at CC’s public financial report for AY23-24 and saw that 63.5% of its operating revenue came from current students and families through tuition, fees, room, and board. The other big category of revenue came from donors: 22.8% from endowment returns and 4% from gifts and contributions.
Today we’re talking about where those donations come from. How much do we know about which people give money to colleges and which people give more than others? And can we say anything specific for MY college?
Today’s readings
Clotfelter, C. T. (2003). Alumni giving to elite private colleges and universities. Economics of Education Review, 22(2), 109-120.
Lara, C., & Johnson, D. (2014). The anatomy of a likely donor: Econometric evidence on philanthropy to higher education. Education Economics, 22(3), 293-304.
Clotfelter, C. T. (2003). Alumni giving to elite private colleges and universities. Economics of Education Review, 22(2), 109-120.
This paper examines patterns of alumni giving to 14 private colleges and universities in cohorts of students who enrolled in 1951, 1976, and 1989. The data are based on the College and Beyond study, which includes administrative records from the colleges and universities and surveys fielded in 1995 and 96. This is a little out of date, so these patterns may or may not apply to today’s students and alumni. But guess what! There’s another round of the College and Beyond survey, this one covering students who enrolled in 2000-2001 and were surveyed all the way up to 2021. Deidentified data are available through ICPSR at UMich (Go Blue!). Do I hear a senior thesis topic calling?
The authors find that alumni who actually graduated from the institution they enrolled in initially give 3-4 times as much as those who don’t. Duh. Those who make more money as adults or got an MBA also give more. Also duh. People who got a graduate degree from the same institution they went to for undergrad again give more. Again duh. People who went to a liberal arts college give more than people who went to a private university. (Hey, good news for me there!) Nonwhite students who started school in 1976 gave less than white students, but nonwhite students in the 1951 cohort weren’t statistically significantly less likely to give than their white counterparts. Married people give a bit less.
The authors emphasize that those who were “very satisfied” with their college experience give 40-50% more than those who were not. I think they put emphasis on that variable because that’s presumably something colleges can try to influence. One of the strongest correlates with being “very satisfied” is whether the student says they had a mentor in college. Those who reported a close connection with someone at their school were 20% more likely to be “very satisfied” than those who didn’t.
The policy implication of this paper is that colleges should do their best to ensure that students feel like they have a mentor in college.
Lara, C., & Johnson, D. (2014). The anatomy of a likely donor: Econometric evidence on philanthropy to higher education. Education Economics, 22(3), 293-304.
Which alumni give to MY college? Well whaddya know, one of my colleagues and his student asked and answered this question for US!
My senior colleague somehow convinced our Advancement office to give him the donation records of 27,000 alumni. (Note: He is very good at convincing people to do things. I’ve watched him do it. To me.) They have data on age at the time of giving in 2004-7, gender, division of major, involvement in student government/greek life while in school, marriage to another alum, physical distance from campus in 2004-7, highest degree attained, and median income in that age bracket and Census tract. They use logits to look at the likelihood of giving, and zero-truncated Poissons to look at the amount of the donation conditional on the alum giving at all.
Contrary to studies of other schools, Colorado College alums are more likely to give when they live far away from campus, and when they give they give more. This is probably because we’re in flyover country: our most generous alums tend to end up on the coasts, far away from us in Colorado. Also different from other studies, CC alums who live in wealthier places (and thus likely have higher incomes themselves) are less likely to give to the college; but when they give, they give more. The authors delicately suggest that perhaps our friends in Advancement should take note of this oddity and ask our presumed wealthier alums for money more often.
Single alums give less often and less, while those who are married to other CC alums give more often and those related to other CC alums (a.k.a. legacies) give more often and more when they do give. (Remember on Day 7 we saw that Ivy Plus schools give an admissions bump to legacies? Yeah. Wonder why.) People give most often between the ages of 49 and 66 and the size of donation tends to increase with age almost linearly.
Alums who attend more college activities as an adult are more likely to give and give more when they do, while alums who engaged in more activities while in college actually give less when they do. Unless their Greek. People who went to fraternity and sororities activities while in school are more likely to give (though they give no more than the typical donor). People who received academic awards in college are less likely to give, but when they give they give bigly. Athletes are less likely to give and give less when they do.
Interestingly, the authors use the coefficients estimated on data from 2004-2006 to see if they can predict which alumni give to the college in 2007. They can, with 91% accuracy. Can they predict how much those alumni give? Yes, with 92% accuracy. Amazing!
What are the policy implications of this paper? To increase giving to Colorado College, we want our students to get married to each other. We want them to attend Greek events while they’re here (maybe that’s where the marriage magic can happen? That wasn’t my experience of frat parties, but what do I know). We want them to attend alumni events after they graduate. And we should enroll more legacies, more people who will get masters and PhDs, and fewer athletes.
Next up, how CC and many other colleges use a lot of their donated dollars - Day 12: Financial aid.
I met my wife at the big state school we both went to. We sometimes think about donating but one of our conditions is that they have to take the names of slaveholders and segregationists off the buildings. Like, I don't need my money going to a school that names its dormitories after senators who voted against the civil rights act and routinely said the N-word in public.
The reason I bring it up is that I wonder how questions of donor values are handled by the econ literature on this topic? Are there studies that look at the political or ethical preferences of donors and how that impacts the decision to give/how much?
Also, interesting point about marriage! If higher ed continues to be predominantly female, should we expect donations to decline since there are fewer married couples who shared the same alma mater? (Presumably there are not enough same-sex couples to make up the difference.)