Colleges adjust to decline in giving
These hard economic times have made a college education more difficult in various ways — from students scrambling to find an affordable school to cash-strapped states cutting their funding of colleges.
A recent report by the Council for Aid to Education shows how, nationwide, colleges have also been hurt by an almost 12 percent drop in donations last fiscal year, which for most colleges ended June 30.
Alumni and other individuals, corporations and foundations tightened their purse strings.
The 20 colleges receiving the most donations got a total of $7.3 billion — 13 percent less than the top 20 reported the previous year.
No local college made the latest list, which Stanford University headed by raising $640 million.
Locally, the declines are more striking. The $120.8 million in donations received by 11 Rochester-area colleges for fiscal 2009 was 29 percent less than the $169.3 million recorded in fiscal 2008.
Suffering the biggest drop was the University of Rochester, which saw its contributions fall from almost $101 million in fiscal 2008 to about $64 million in fiscal 2009.
Alumni watching their pocketbooks were the biggest factor in the almost $7 million drop in donations received last fiscal year by Hobart and William Smith Colleges in Geneva. That was the second-largest local dollar decline.
“The colleges and universities in some respects fare badly in recessions because some see these institutions as being strong and, therefore, being able to do without their annual gift for a year,” said Jennifer Leonard, who as president and executive director of the Rochester Area Community Foundation has firsthand knowledge of charitable giving.
Endowment boosts
Contributions play an important role in college finances — but more so for funding long-term growth and major projects than for covering day-to-day expenses. Tuition and — for public colleges — government support are mainstays of funding. For large institutions such as UR, with Strong and Highland hospitals under its umbrella, the revenue streams are more complex and include Medicare and Medicaid payments.
Donations made to a college’s annual fund are the contributions most often used for immediate expenses. Private colleges also typically use about 5 percent of their endowment for operating costs.
Large contributions are often for particular projects or go into a college’s endowment for an earmarked use, such as student scholarships or new teaching positions.
One reason a college can show a sharp drop in contributions is that it had just completed a fundraising campaign. Monroe Community College, for example, showed about $2 million less in contributions in fiscal 2009 because its campaign for two major projects ended in fiscal 2008.
For UR — the top employer in the Rochester area with a $2.5 billion annual budget — the contribution drop of about 37 percent last fiscal year came at a time when UR’s Medical Center received about $12 million less than expected in Medicaid payments. UR’s endowment also dropped.
The reductions in revenue prompted UR to slow its rate of growth in expenditures from 6 percent last fiscal year to about 2 percent this fiscal year, said Ron Paprocki, UR’s senior vice president for administration and finance.
UR’s alumni gave $12 million in fiscal 2009 — less than half the $29 million they gave the previous year. And donations from individuals who were not alumni totaled $16 million — down 33 percent from the year before.
Last fiscal year, UR secured the highest total for new pledges in its history, including a $30 million commitment from Edmund A. Hajim, an investment manager and chairman of UR’s board of trustees, and $10 million from Ernest J. Del Monte, a local businessman.
Such pledges do not show up on the council’s annual survey, which only tallies cash received during a fiscal year — not pledges for future years.
UR has about 50,000 donors.
“Many people are timing their gifts to when the stock market is up,” said James D. Thompson, senior vice president and chief advancement officer at UR.
The effect of the drop of contributions on annual expenses was blunted by UR’s annual campaign raising about $9 million in contributions — about $2 million more than expected.
Giving trends
A squeeze on giving has been felt by most sectors of the economy because of the recession.
The Giving USA Foundation, which tracks charitable giving, found that in 2008 — at the outset of recession — donations by individuals nationwide dropped by about 3 percent.
The plummeting of stock prices in 2008 turned a period of growth in giving to colleges into a sizable decline.
“Having a down year, while it doesn’t cause a hiccup, it does sober you,” said Bob O’Connor, Hobart and William Smith’s vice president for institutional advancement.
Among the austerity measures Hobart and William Smith have put into place are a hiring freeze except for key positions and requiring department heads to submit plans for 10 percent reductions in expenditures.
But there is cause for optimism — giving to Hobart and William Smith Colleges is 27 percent higher than a year ago.
Meanwhile, Rochester Institute of Technology received almost $26 million in contributions during fiscal 2009, barely higher than the previous year.
Lisa A. Cauda, RIT’s vice president for development and alumni relations, considers such a showing good news.
“We remained flat, which in this economy was seen as an up,” she said.
