Overall, people are giving more to nonprofits. Over the last 40 years, the average yearly increase in charitable giving in the U.S. has been $10.7 billion and reached an all-time high of $484 billion in 2021. U.S. Higher Education institutions have enjoyed similar success, with longer-term trends showing consistent donation increases in both current dollar and inflation-adjusted terms. In 2021, giving to institutions of higher education in the United States rose nearly 7% to $52.9 billion.1
Despite these trends, challenges such as rising tuition costs, inflation, and the potential for loan forgiveness may impact future higher education fundraising in both the short- and long-run. Successful institutions need to be mindful of these developments and use them to inform fundraising strategies designed to expand their base and increase recurring gifts.
Over the last 20 years, the average cost of tuition and fees has risen significantly. Private four-year institutions have seen an average increase of 6.2% per year, while public four-year institutions have average increases of 9.0% per year, both of which have meaningfully outpaced inflation.2 As tuition costs increase, students who borrow to pay for their education will have higher debt service payments after graduation, leading to less disposable income to give back to their alma maters. Alumni—historically a reliable and recurring donor base—may feel less able to give if their debt load is significant.
While, as a whole, higher education institutions have not yet experienced a meaningful decline in giving, the impact of rising tuition costs on charitable contributions can vary depending on the reputation and financial stability of the institution, economic conditions in the surrounding areas, and the effectiveness of the school’s fundraising efforts.
Contribution trends have also varied by the size of institution, with some smaller institutions seeing a significant increase in charitable giving over the past decade. The advantage for smaller institutions may include a donor base that is connected on a more personal level and recognizes the impact, both educational and cultural, that smaller institutions play in their communities. This connection can lead to greater support and engagement with the institution.
Overall, higher education institutions continue to be a popular destination for philanthropic contributions due to their important role in shaping the next generation of leaders and advancing knowledge and research. Many donors see supporting higher education as an investment in the future and a way to give back to the communities in which they live.
The expansion of online giving platforms and social media have made it easier for individuals and organizations to give directly to institutions and causes that align with their values and goals. This has helped to expand the reach and impact of charitable giving in the higher education sector and has increased donor engagement, making it easier for donors to track and monitor the impact of their giving. Engaged donors are more likely to make larger gifts and to support institutions on a regular basis.
As donor development and engagement become increasingly important, the trend we have seen developing is the expansion of online giving. The increased use of online giving allows institutions to continue focusing on their alumni base while expanding donor reach with less outlay than traditional activities.
For those institutions looking to improve their online giving efforts, we offer these suggestions for consideration.
The donor is more likely to initiate a second large gift after this process.
In conclusion, institutions should continue to monitor trends and the impact they have on charitable giving to higher education. One thing will remain constant: in a dynamically changing environment of rising tuition, inflation, and potential for student loan forgiveness, donor development is more important than ever.
1 “Giving USA 2022: The Annual Report on Philanthropy for the Year 2021,” pages 48 and 55, Giving USA Foundation, researched and written by IUPUI Lilly Family School of Philanthropy, available with a subscription online at givingusa.org.
2 “Average Cost of College by Year,” by Melanie Hanson, EducationData.org, January 9, 2022, available online at educationdata.org/average-cost-of-college-by-year.
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