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B-School Alumni Giving Is Up—Sort Of

B-School Alumni Giving Is Up—Sort Of

(Clarifies that Ross School decreased the minimum gift requested of alumni in fiscal year 2010 and that the change was limited to alumni giving to the school for the first time. Corrects the name of the Mississippi Lime Company.)

After sputtering for the past two years amid the economic downturn, alumni giving is beginning to make a gradual recovery at leading U.S. business schools. Of Bloomberg Businessweek's 30 top-ranked full-time MBA programs that reported data, the percentage of alumni who gave money to their schools in 2010 averaged 21.7 percent, up one percentage point from 2009, but the amount given is down more than 4 percent.

The modest uptick comes as many schools are renewing their efforts to tap their vast alumni bases, in hopes of securing more money for endowments and programming in tight economic times. The level of giving may be an improvement from a few years ago, but it is still not back to where it was in 2007, a headier time when alumni were freer with their money, says William Jarvis, the managing director and head of research at the Commonfund Institute, a nonprofit investment outfit for colleges and universities.

"Anecdotally, what studies have been showing is that giving has been coming back to a certain extent, but it is not robust," Jarvis says. "Giving remains subdued compared with what it had been before the downturn."

After a Difficult Decline

Many schools are just starting to emerge from what had been one of the toughest periods in recent history for alumni gifts, Jarvis says. In fiscal year 2009, 60 percent of U.S. colleges and universities reported a decline in gifts, while only 26 percent reported an increase, according to the most recent survey of 842 colleges and universities by Commonfund and the National Association of College and University Business Officers.

At business schools, many alumni remain cautious about how much money they plan to hand over to their alma mater. The median amount that alumni gave fell nearly $7 in 2010, to $153.91, with median gifts at each school ranging from $69 to $350 . Of the 23 schools that reported data on median gifts, only six schools had an increase in the median, while the remaining 17 were flat or down in this category.

Of the 25 schools that provided data on the percentage of alumni making contributions, 13 reported an increase, while the remaining 12 were flat or down. But even schools with unusually high levels of alumni giving have been affected by the frosty economic climate, including Dartmouth University's Tuck School of Business (Tuck Full-Time MBA Profile). Of the top 30 schools, Tuck has the highest percentage of alumni who give, with 67 percent making gifts in 2010, up two percentage points from 2009. But this year, the school's median gift dropped $50, to $200 from $250 in 2009. Despite that, the school managed to generate more than $5 million in revenue for the school's annual alumni giving campaign, an improvement from 2009, when it dipped below the $5 million mark, says David Celone, Tuck's director of development and annual giving.

"We didn't see participation fall off the map when the market collapsed. People continued to give; they just gave a little less, but we didn't lose our loyal donors," Celone says. "We saw growth last year, and we expect to see growth again this year."

A Slide in the Median

At the University of Michigan's Ross School of Business (Ross Full-Time MBA Profile), 14 percent of alumni donated to the school, down three percentage points from 2009. Meanwhile, the median gift fell $50, to $100, in 2010.

Giving trailed off in 2010 because the school's alumni base has been hit disproportionately hard by the economic downturn, especially the 12,500 Ross alumni in the Michigan region, who make up the school's largest alumni cohort, says David Emery-Peck, Ross' director of annual giving and alumni relations. The school also wrapped up a capital campaign in 2008, he notes, and many alumni have been experiencing "donor fatigue" as they complete their pledges. As a result, the school was more conservative about the amount it asked alumni to give in 2010. Typically, the school asks alumni giving for the first time to consider giving a minimum gift of $50, but in fiscal year 2010 the school slashed that amount by $25.

"We backed off a little bit and decided to be more conservative in our asking strategy," Emery-Peck says, "and people took us up on it and gave a smaller amount."

Engaging a New Generation

Some schools are being more strategic about getting younger alumni to make gifts, in the hope they will become lifelong donors. The University of Virginia's Darden School of Business (Darden Full-Time MBA Profile) has done more personalized outreach to alumni in the past few years, putting a special emphasis on the graduating second-year MBA class, says Elizabeth Lewis, director of the Darden Annual Fund. About 85 percent of the 2009 class made a gift to the school's annual fund this year, up from around 40 percent in 2008, according to a chart of annual fund participation by class that was published in the school's alumni magazine.

In addition, the school asked more alumni than ever to participate in the giving campaign, by reaching people through social networking sites or writing them a personal letter, says Mike DeCola, chairman of the Darden Foundation's development committee and a graduate of Darden's 1977 MBA class. For Darden, the extra effort has paid off: This year 43 percent of alumni made a gift to the school, up from 36 percent in 2009. The median gift also rose, going to $150 from $100 in 2009.

"I think we realized early on that to achieve any kind of success in the 2010 fiscal year, it was going to require us doing something different," says DeCola, who is also the president and chief executive officer of Mississippi Lime Co. "A lot of the class agents just engaged other people in the process, and that had a multiplier effect."

The Tactic of Matching Gifts

Other institutions are making renewed efforts to reach out to alumni by offering to match whatever gifts they make. The Wharton School (Wharton Full-Time MBA Profile) recently announced its December Challenge on its website; if 2,000 alumni give at any level in December, the school will receive a $100,000 gift from a donor. As of Dec. 9, nearly 200 alumni had donated to the campaign, according to a donor count on the Wharton website.

The University of California, Berkeley's Haas School of Business (Haas Full-Time MBA Profile) is running a New Alumni Challenge open to undergraduate and graduate students from the classes of 2006 and upwards, including students who will graduate in 2011. Any gift students make will be matched dollar for dollar by the University of California, Berkeley Foundation, up to $1,000 per donor. The school did the New Alumni Challenge for the first time last year—and managed to raise more that $3 million for the Haas Fund, including $496,038 in matching gifts, according to the Haas website.

For a handful of schools, good news came this year in the form of large alumni gifts in excess of $10 million. This year, six business schools—including Harvard Business School (Harvard Full-Time MBA Profile), New York University's Stern School of Business (NYU Stern Full-Time MBA Profile), and Georgia Institute of Technology's College of Management (Georgia Tech Full-Time MBA Profile)—reported gifts in this category, up from four in 2009.

In October, Harvard announced a $50 million gift from India's Tata Group, its largest from an international donor in the school's 102-year history. Georgia Tech received a $25 million gift from an anonymous donor, $20 million of which has been set aside for matching gifts from alumni. So far, the school has raised an additional $12 million dollars in matching funds from alumni, putting it on track for its most successful year ever at alumni fund-raising, says Philip Spessard, the business school's senior director of development.

"The timing and magnitude of this gift [have] been extraordinary," says Philip Spessard, the business school's senior director of development. "While both public and private universities and business schools are struggling through the economic downturn and state budget cuts, we've been able to continue to expand."