Universities Raised a Staggering Amount of Money Last Fiscal Year, Despite a Tepid Stock Market

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The Council for Advancement and Support of Education just released key findings from its annual Voluntary Support of Education survey, an industry standard for showing how money is flowing across the higher ed sector. And while CASE will publish a more detailed report this spring, readers accustomed to the field’s flush post-pandemic state may find the brief’s top line a little disorienting.

While support for U.S. higher ed institutions totaled $58 billion in the fiscal year ending June 30, 2023, that figure represents a 2.5% decline — and a 5% decline adjusted for inflation — from the previous year. CASE attributes this falloff to the usual suspect, the U.S. stock market, which lagged in December 2022 — precisely the time when most donors made their end-of-year gifts.

As I have in years past, I reached out to Ann Kaplan, the study’s author and CASE’s senior director, to get her take on the findings. She told me we shouldn’t be surprised given the state of the stock market at that point. “The stock market is very important because it affects the timing of gifts, and there was a decline,” she said. Moreover, the 2021–2022 fiscal year’s historic $59.5 billion windfall was “unusually strong, so you would expect that regression to the mean.” 

A drop in giving by both alumni and non-alumni alike accounts for that regression, while support from “organizations,” which includes family foundations and donor-advised funds, rose slightly. Funders dialed back gifts for capital purposes, and in another non-surprise, prominent research institutions raised a disproportionately large percentage of total dollars.

While any decline in support always grabs attention, when you add it all up, CASE’s findings paint a picture of a resilient higher ed ecosystem in which funders largely shrugged off a down market and inflationary pressures to keep the wheels turning. “The main finding,” Kaplan said, “is that giving was at the second-highest level since the survey began in 1957.”

Digging into the numbers

CASE collected data on charitable gifts and grants raised by 757 colleges and universities for the fiscal year ending June 30, 2023. The participants represented just 23.6% percent of the nation’s colleges and universities, but raised 79% of total voluntary support for U.S. higher education institutions in the 2022–23 academic fiscal year. 

Of the $58 billion raised, $37.5 billion (64.7% of the total) came from “organizations,” followed by alumni at $12 billion (20.7%) and non-alumni individuals at $8.5 billion (14.7%). CASE’s definition of “organizations” includes not only private foundations and corporations, but also family foundations and DAFs, both of which can double as conduits for individual giving. Once we take this into account, individuals’ support for these institutions may be higher than the combined 35.4% of giving already attributed to alumni and non-alumni individuals.

Adjusted for inflation, support from alumni and non-alumni individuals dropped 13.4% and 12.8%, respectively, compared to 2022. Giving from organizations, meanwhile, rose by 0.1%, adjusted for inflation, over the previous year — not much of an increase, but an increase nonetheless.

I asked Kaplan if she had any theories to explain this disparity between individual and organizational giving. “I would attribute it to the fact that some organizations, particularly foundations, commit gifts a year ahead,” she said. Kaplan also noted that because foundations must disburse 5% of the value of their assets every year, regardless of how the market is performing, “when the stock market the previous year was so high, commitments from some institutions were formed.” In addition, she said, “individuals may have given to DAFs during that year, and the DAFs had the capacity, even with assets eroded somewhat by the next year’s stock market performance, to give more.”

If we dig a bit deeper into “organization” data, we find that year-over-year giving was down 1.8% for foundations and up 3.2% for corporations and 4.4% for “other” types of organizations, respectively, with the latter category encompassing transfers from DAFs. As far as gift purposes are concerned, when adjusted for inflation, support earmarked for capital purposes dropped 11% and support for current operations dropped 0.5% over 2022.

Familiar data points

CASE tracked 11 gifts totaling $100 million or more in 2023, accounting for 3.9% of the $58 billion raised. Universities received seven such gifts in 2022, representing only 1.8% of the total amount raised, although Kaplan said we shouldn’t read too much into a year-over-year increase. “Over time,” she said, “it doesn’t appear that these gifts are rising in prominence.”

In one of the report’s more intriguing data sets, 236 institutions reported giving by levels of gift. Sixty-nine percent of the total amount of money these institutions raised came in the form of gifts ranging between $250,000 and higher. However, since CASE wasn’t collecting comparable data 10 years ago, Kaplan said we don’t know if these crucial “top-of-the-pyramid” donors are becoming more powerful over time.

CASE also found that the top 20 fundraising institutions continue to vacuum up a disproportionately large amount of total donations — $15.5 billion in 2023, which constitutes 26.7% of the annual total, although this percentage peaked at 29.9% in 2019. These schools, CASE notes, are “predominantly research/doctoral institutions.”

“Steering the ship for a journey”

Kaplan has spent a lot of time thinking about factors that compel donors to give. As the former research director and author of Giving USA, she mentioned how many reports on giving trends zero in on age and household income, while other research considers the consumer price index and gross domestic product.

That said, Kaplan said she hasn’t seen any of these metrics “propel things the way the stock market does,” especially if a donor’s 401(k) is flush during tax-planning season. “When you see your retirement fund is doing well,” she said, “you think, ‘well, I can give more money away this year.’”

Again, we need to remember this thinking doesn’t apply to all funders. Private and family foundations have to move money out the door no matter what, although the amount disbursed hinges on the size of the foundation’s assets, which ebb and flow based on market performance.

Donors and foundations’ portfolios were doing phenomenally well in December 2021, which explains why universities raised an unprecedented $59.5 billion during that fiscal year. Kaplan said when she first saw the data, she thought, “There’s no way that’s sustainable.” She was correct, and CASE’s latest brief explains why — the Dow Jones Industrial Average, NASDAQ Composite, NYSE Composite, and S&P 500 were down 8.7%, 33.5%, 11.5% and 19.6% from January 1 to December 31, 2022.

Next year’s CASE report will cover giving from July 1, 2023 to June 30, 2024, so I was curious to see where things stood with the stock market when donors made their end-of-year gifts this time around. On December 29, 2023, the DJIA closed at 37,690 — a 14% increase over the previous year, and at the time of this writing, the index is hovering around 38,949.

These figures may help advancement officers sleep better at night, but Kaplan imparted a piece of advice that’s been a recurring theme in our annual chats. Just as financial advisors tell investors that trying to time the market is a fool’s errand, fundraisers “should be steering the ship for a journey and not just respond to things that come along the way,” she said. As a case in point, even though the $58 billion universities raised in the past fiscal year was a decline over 2022, it still represents a 17% increase over 2019's $49.6 billion total.

“You may think, ‘The stock market is weak, maybe we should postpone this campaign,’” Kaplan said. “No — the time to make the case is when you have the case, not in reaction to things that are outside of your control.”