The number of so-called mega donations to U.S. colleges is rebounding just as Harvard University begins a $6.5 billion capital campaign, the largest in the history of higher education.
There have been 16 gifts this year of at least $50 million, twice as many as for all of last year as donors gain confidence amid improving economic conditions, according to data compiled by the Chronicle of Higher Education. Developer Stephen Ross gave $200 million to the University of Michigan while Qualcomm Inc. (QCOM) co-founder Irwin Jacobs and his wife donated $133 million to Cornell University. Last week, former Los Angeles Dodgers owner Frank McCourt gave $100 million to Georgetown University.
“They not only have more confidence, they have more wealth to give away,” said Donald Fellows, president and chief executive officer of Marts and Lundy, a philanthropy consulting firm based in Lyndhurst, New Jersey. “The institutions have greater needs and priorities too so they are also probably being more aggressive.”
The importance of large gifts to capital campaigns can’t be overstated, according to John Lippincott, president of the Council for Advancement and Support of Education in Washington. Just 1 percent of donors account for 87 percent of the money raised by U.S. universities and colleges in campaigns of $1 billion or more, he said.
The pace of philanthropy in higher education is closely tied to the performance of the U.S. stock market. The number of mega gifts plummeted to eight in 2009 from 28 the year before after an economic recession and global credit crisis undermined equities, resulting in a 38 percent drop in the Standard & Poor’s 500 Index (SPX) in 2008.
While gifts rebounded in 2010 and 2011, they dropped again last year amid the Eurozone crisis, when Greece and other poor countries flirted with defaults and debated abandoning the single currency used by much of the continent. While the S&P 500 posted no gain in 2011, it gained 13 percent last year and is up 20 percent this year through Sept. 20.
“As wealth grows and people become more confident, their giving tends to follow that growth in confidence,” said Tim Seiler, director of The Fund Raising School at Indiana University. “This is a good time to be doing capital fundraising.”
Harvard’s aim to raise $6.5 billion by 2018 eclipses the $6 billion goal set in 2011 by the University of Southern California in Los Angeles. Stanford University, near Palo Alto, California, established new standards by amassing $6.23 billion in donations in a campaign that ended in 2011, beyond its goal of $4.3 billion.
Stanford, which is benefiting from the wealth of Silicon Valley entrepreneurs, also set a record by becoming the first university to collect more than $1 billion in gifts in a single year in its fiscal 2012. In the past few weeks, several schools have announced record fundraising, such as Texas A&M University, which got more than $740 million in donations and pledges in the year ended Aug. 31.
Harvard has already received $2.8 billion in donations and pledges toward its goal in the past two years, during what’s referred to as a “quiet phase,” Tamara Rogers, vice president for alumni affairs and development, said in an interview.
The campaign will let Cambridge, Massachusetts-based Harvard expand research and teaching in engineering, the arts and humanities, along with the fields of energy, neuroscience and stem cell research, Provost Alan Garber said. The university is also renovating dormitories and resuming construction that stalled after the financial crisis that began in 2008.
About 45 percent of the money raised will go to research, faculty and teaching, Rogers said. About 25 percent will be earmarked for student financial aid; 20 percent for construction and renovation; and 10 percent to support new initiatives.
“The timing now feels as good as it could be,” she said. “One takes advantage of opportunities, enthusiasm and good planning and that’s what we’ve done.”
Harvard’s fundraising effort is its first since 1999, when the school raised $2.65 billion over seven years. Harvard is the richest U.S. school with an endowment of $30.7 billion as of June 2012.
As the demands for operating a top-level university increase, institutions are scheduling capital campaigns with greater frequency, said Indiana University’s Seiler. The lag between campaigns is shorter than 10 years at many schools, he said.
Harvard President Drew Faust and other officials have spent the last few years crisscrossing the globe to meet with large donors and secure gifts that show commitment to the institution.
Recent gifts that will be counted toward Harvard’s 2018 goal include $125 million for the Wyss Institute for Biologically Inspired Engineering from billionaire Hansjoerg Wyss and $50 million from the Blavatnik Family Foundation to develop treatments from scientific discoveries.
The campaign will also help Harvard recruit top teachers and researchers. About half of the university’s $4 billion operating budget for fiscal 2012 went to employee pay and benefits, according to the annual report. About 5.5 percent of Harvard’s endowment, or $1.4 billion, was spent on Harvard’s operations in 2012.
Recent results show Harvard’s fundraising success. Donor pledges in the 2012 fiscal year totaled $909 million, up from about $758 million in the year earlier period.
The university will probably meet its goal because it has such wealthy and supportive alumni as well as a top-notch development team on staff, said fundraising consultant George Ruotolo, who runs Ruotolo Associates in Cresskill, New Jersey. Yet, the campaign could raise philosophical questions because Harvard is already so rich, he said.
While mega donors are back, fundraising overall is flat, suggesting a growing divide between elite schools and those not so wealthy. Charitable contributions to colleges last year increased just 2.3 percent to $31 billion, remaining below the high-water market of $31.8 billion in 2008, according to the Council for Aid to Education.
“When you look at Harvard and their endowment it’s hard to get your head around why they need $6.5 billion,” Ruotolo said.
To contact the editor responsible for this story: Lisa Wolfson at firstname.lastname@example.org