Posted by: Jonathan Bydlak | April 27, 2009

Donor Choice Matters

The Wall Street Journal ran a much talked about article last Friday about the increasing tension between donors and college administrators. To give the one-sentence summary:

As schools struggle more than they have in decades to fund their core operations, many are looking to a rich pool of so-called restricted gifts — held in endowments whose donors often provide firm instructions on how their money should be spent.

The article is well worth a read, if just for the numerous examples of colleges that are ignoring donor wishes when deciding how to spend contributions. More interesting from our perspective, though, is the picture that it paints of the college-donor relationship. While rarely discussed, there is an inherent tension that exists in the world of higher educational giving between donors and the schools receiving financial support. To quote the article directly:

College presidents have long felt tension over the responsibility to honor “donor intent.” While schools appreciate the generosity, narrow restrictions on gifts made decades ago can tie their hands when times are tight.

Not surprisingly, the recent turn-down in the economy — and the associated fundraising difficulties for colleges — has made this tension more pronounced. As Marion Fremont-Smith of Harvard’s Hauser Center for Nonprofit Organizations puts it, there now is “much greater interest among donors in enforcing gifts than there ever was.”

Yet while this article illustrates well the conflict between the wishes of donors and recipients, in our view, it fails to draw the most logical conclusion. Even though “restricted gifts can account for as much as three-quarters of a university’s endowment,” it seems reasonable that colleges are poorly structured to honor such donor requests.

There’s no question that many donors contribute with a specific purpose in mind, whether that be promoting research in a particular field or helping fund a new athletic stadium. For many of these donors, their specific goals can only be accomplished by giving directly to a college. But for donors whose intention is to support student educational opportunity, why should they give to a college when they could give to students more directly?

Help us continue to grow:

Donors: Who do you want to support? Make a tax-deductible contribution to students today!

Students: Click here to apply.

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