No Limits? The Giving Gap

Note: Bold indicates lowest in category. Some values and calculations are approximate. All facts and figures come from the websites, financial statements and 2012 annual reports of Amherst, Swarthmore and Carleton, along with the 2012 Grinnell College Honor Roll of Giving.

Fundraising represents a critical component of how a college finances itself. Alongside endowments and net tuition revenues, donations allow colleges to fund their annual operations, offer financial aid, hire new faculty, expand programs and improve facilities. Many colleges recognize the importance of fundraising and have large alumni relations and development offices to solicit donations from alumni, friends and benefactors of the college. Last year, Stanford University fundraised a record $1 billion.

Colleges and universities raise funds in many forms, the most common of which are unrestricted gifts, restricted gifts, bequests and grants. Unrestricted gifts are donations that can be used however an institution chooses. Restricted gifts can only fund a donor-specified project. A bequest is made from an individual’s or family’s estate after their passing. Grants are awarded to fund research, programs or facilities and come from foundations, companies and governmental agencies. While other forms of giving exist and colleges calculate fundraising differently, adding these types of gifts together generally produces a college’s reported fundraising.

The table below compares Grinnell’s 2012 fundraising with that of peer liberal arts institutions Amherst, Swarthmore and Carleton. The data reveals several stark differences. Most notably, Grinnell lags far behind its peers in absolute fundraising, with Amherst taking in nearly twelve times as much in donations last year. Another important fundraising metric is the alumni participation rate, which is the percentage of solicitable alumni who made a gift (of any size) to the college. Within the group, only Grinnell has an alumni participation rate under 50 percent.

Are these differences exaggerated by college size? Naturally, a school with a larger alumni body is expected to have a higher fundraising intake. Student body size is also relevant when interpreting fundraising data. Since Grinnell has the smallest alumni population and the 2nd smallest student body of the four colleges, fundraising per student and fundraising per alum are potentially more informative comparisons. Unfortunately, Grinnell barely improves relative to peers with these adjustments. On average, Grinnell alums donated only $337 last year, which is one-fourth as much as Carleton alums. In addition, Swarthmore and Carleton fundraised more than three times as much as Grinnell on a per student basis.

Why is there a giving gap? Historically, Grinnell has not invested in development and fundraising to the extent of our peer institutions. Twenty years ago, Grinnell had low costs and an enrollment of 1300, meaning net tuition revenues and the endowment were sufficient to fund annual operations. But as increases in college costs have outpaced the growth of these revenue sources, fundraising has grown in importance to colleges as a means of funding annual operations and expansion projects. Amherst’s “Creating Connections” campaign has raised over $470 million since 2007, and Carleton successfully fundraised $300 million during a campaign from 2004 to 2010.

Donations are more than a windfall: they are required to maintain an elite liberal arts college. President Kington and the Board of Trustees have recognized that Grinnell must improve its fundraising, and they have increased the college’s investment in development and alumni relations. While Grinnell’s endowment is sizable, it is not the largest among liberal arts colleges either in absolute or per student terms, and by all measures our fundraising lags substantially behind peers. If the giving gap persists, Grinnell’s lack of resources will leave it unable to compete with Carleton, Swarthmore and Amherst. The good news is that ample room exists to increase Grinnell’s fundraising without asking Grinnell’s alumni to behave in a manner outside the norms of their peers from other institutions.

 Ishan Bhadkamkar ’13 is an intern with the Grinnell College Investment Office.