Md. colleges raising more despite slump

But some fear giving will falter if economic slowdown persists

June 23, 2008|By Gadi Dechter | Gadi Dechter,Sun reporter

Maryland colleges and universities are raising more money than ever despite a faltering economy, though some campuses are worried about declining alumni giving and say that the economic slump, if it persists, could hit the education sector in coming years.

As of May 31, the 13-campus University System of Maryland had raised nearly $220 million in the fiscal year that ends this month, a 27 percent increase over last year's total during the same period. At the private Johns Hopkins University, donations are on track to hit $450 million this fiscal year, making it the strongest year ever for one of the nation's fundraising powerhouses.

"Overall, the development programs are performing exceedingly well in light of the current economic conditions," said Leonard Raley, president and chief executive officer of the University System of Maryland Foundation, which manages philanthropic contributions for most of the state's public colleges. "I can't say that I see the economy having a real impact in any significant way."

But Barry Gossett, a member of the university system's governing Board of Regents who chairs a fundraising committee, said he has been hearing "pushback" from prospective donors concerned about the economy.

"I think the next couple of years will be very challenging," said Gossett, a businessman who gave $10 million last year to his alma mater, the University of Maryland, College Park. "The economy is very soft, and with the rise [in cost] of petroleum products and food, people have to make choices. And obviously they've got to protect themselves."

Gossett said very wealthy donors, who give much of the money that colleges raise from individuals, are expressing concern about depreciated stock holdings and that those who give in the $50,000 range are increasingly concerned about personal bills.

Sheldon Caplis, vice president for institutional advancement at the University of Maryland, Baltimore County, said he expects "either next year or the year after, if the market doesn't rebound, that we would see some effect, because assets would be down."

Across the country, contributions to colleges were up by 6.3 percent, to $29.75 billion, during the fiscal year that ended in June 2007, the most recent period for which national figures are available. But there was a 1.5 percent drop in alumni giving last fiscal year, according to an annual survey of college fundraising published by the New York-based Council for Aid to Education.

Fundraising officials in Maryland continue to report a decline in the numbers of alumni who give to their alma maters, though that is a trend that has persisted for several years and probably is a function of increased enrollment and difficulty in reaching out to young alumni who do not have traditional telephone lines, experts say.

Still, since 1998, private donations to higher education adjusted for inflation have increased every year except for 2002 and 2003, after the U.S. recession of 2001 and 2002, according to the Council for Aid to Education.

As the increased costs of operating colleges have outpaced rises in tuition and other revenue sources, such as state support, private giving has become an increasingly important component of university business models. Colleges try to increase alumni giving because the rates factor into influential rankings such as those by U.S. News and World Report, and because the relatively small gifts made by most alumni are less likely to be restricted to a particular use.

Perhaps most important to professional fundraisers: Cultivating donors at an early stage can have payoffs if they become wealthy later in life.

"It's all about relationships," said Janet Wiley, Goucher College's interim vice president for development. "People who are charitable continue to be charitable, and over the course of someone's life they may have the ability to make a major gift."

The college fundraising sector is insulated from relatively mild economic fluctuations, experts say, in part because it relies overwhelmingly on big-ticket donors to fill endowment coffers. At Hopkins, for example, 77 percent of the money raised in its $3.2 billion capital campaign ending this year came from several hundred donors who each gave $1 million or more - even though roughly 240,000 donors have contributed since the campaign's launch in 2000, said Fritz Schroeder, senior associate vice president for development and alumni relations.

"There's still a lot of accumulated wealth out there," said University of Baltimore President Robert L. Bogomolny. The economic climate is "killing our students and their families, but in terms of development, I think we'll be OK unless there's another major drop in the economy."

This fiscal year, donors gave the University of Baltimore more than $10 million, a record for the urban campus and nearly four times the amount raised in the preceding fiscal year. The jump is attributable in part to a major gift that will be announced next week, Bogomolny said.

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