Alumni Donors Aren't Getting the Most Bang For Their Buck. Here's a Push to Change That

Another new building goes up at Oregon state

Alumni donors can be forgiven for looking across the higher education space and asking—to paraphrase Peggy Lee—"Is that all there is?"

According to the Council for Aid to Education, alumni accounted for more than a quarter—that's $10.8 billion—of college and university donations in 2015. And yet, according to the American Council of Trustees and Alumni (ACTA), donors have watched as universities have been the scene of "cost increases far exceeding the rate of inflation, lowered academic standards and attacks on campus free speech." We would add that employers report an epic mismatch between the skills young people are learning in college and the skills required for today's jobs. Meanwhile, universities keep training certain kinds of credentialed professionals—like lawyers and humanities Ph.D.s—who find themselves unable to secure employment.

Some return on investment. At a time when donors are increasingly keen to back nonprofits that can demonstrate impact and are run efficiently, higher ed institutions seem like a bad bargain. So why do they keep pulling in the big bucks from donors?

It's a question we've been asking quite a lot at Inside Philanthropy, particularly regarding dubious capital expenses and the lack of economic incentives to reign in ever-escalating tuition.

And so we were intrigued to see ACTA introduce its newly expanded Fund for Academic Renewal (FAR), providing higher education donors with a vehicle for making "meaningful donations that will have a beneficial impact on U.S. colleges and universities."

The fund will assist donors in designing gifts "that can be tailored to their individual interests and financial circumstances." The organization’s "expanded academic, legal, and philanthropic services can help individuals to craft intelligent gifts or pool their resources with other like-minded donors to maximize their impact."

The fund, in short, promises more bang for the donor buck. Let's quickly look at the contextual dynamics that cultivated its expansion.

First off is the performance engagement boom. While measuring impact in, say, the arts education world may be relatively ambiguous, it can be far more cut and dried in the higher education space. We can't think of a more biting metric than tuition increases. And so I empathize with alumni donors who write generous checks only to see costs further escalate.

Second is the rise of "effective altruism." While alumni can earmark donations for whatever causes they choose, they're no longer guaranteed a free pass in the court of public opinion. One of the many examples of public figures questioning the wisdom of an alumni donation came from New Hampshire Governor Maggie Hassan, who felt there were better uses for $1 million earmarked for a new football stadium scoreboard. And we don't need to remind readers of the withering fire that's been directed at some recent big gifts to wealthy schools, like John Paulson's $400 million donation to Harvard.

This "name-and-shame" dynamic can have an unwitting cumulative effect on donors concerned about real or perceived impact.

Lastly, while most of the higher ed coverage here at IP looks at donor gifts earmarked for specific issues, like scholarships and new buildings, many gifts, according to ACTA, go directly to annual funds, over which donors have no control whatsoever. "Even major donations," it says, "are sometimes repurposed in ways that fail to respect the donor's original vision."

The services of the Fund for Academic Renewal will be available to donors at no cost thanks to a grant from the Diana Davis Spencer Foundation, a right-leaning funder known for trying to squeeze the most out of our educational institutions and also interested in combating political correctness. Which of these goals is more important to FAR's agenda is hard to say. As we've reported before, there's a fair amount of interest in the conservative funding world in helping steer right-leaning campus donors away from status quo giving and toward more targeted investments that advance their values. The conservative philanthropy leader James Piereson, among others, has written on this and made an argument that weaves together points about both efficiency and values. The bloat of academia seems to bug thinkers like Piereson nearly as much as excessive liberalism.

In previous posts on this topic, I've repeatedly wondered why alumni donors aren't more vocal in demanding accountability from their alma maters. The tide, however, seems to be turning. A recent post, for example, looked at how particularly small, elite liberal arts have reported a decline in donations, accompanied by a laundry list of complaints, including, among other things, political correctness run amok.

The expansion of FAR represents a new tool that donors now have at their disposal.

Featured