Wednesday, February 27, 2013

Higher Education Fundraising -- A Case of the Rich Getting Richer?

America's colleges and universities are often portrayed as bastions of liberal thought that indoctrinate their students with philosophies of wealth redistribution.  If the halls of academia are truly dominated by such philosophies, they have a strange way of showing it.  To the contrary, the nation's colleges and universities seem to be a prime case study in the rich getting richer.

Take the recent news, reported in the Washington Post, that Stanford University was the leading university in terms of fundraising in 2012, and the first to raise over $1 billion in a single year; Harvard and Yale filled out the top three.  As it turns out, these three were already among the highest in terms of wealth levels of colleges and universities in the US prior to these record hauls.  To get a feel for the magnitude of their advantage, consider as a comparison group the three largest universities in the US in terms of undergraduate enrollment (as reported by US News, and excluding for-profit and online universities): Arizona State University (ASU), University of Central Florida (UCF), and The Ohio State University (OSU).  The chart below shows, on a per student basis, how much each university raised in their most recent fiscal year.  (The student numbers also come from the US News annual survey, while the financial data comes from each institution's respective audited financial report).



In case you are wondering, yes, ASU and UCF did receive contributions.  It is just that the contributions, which amounted to less than $1,000 per student, pale in comparison to the levels at the top three.  How is this the rich getting richer? Consider now the net asset balance (i.e., the residual wealth) of each school.


The dichotomy is strikingly similar in the two charts.  Many people justify the disparity by noting that the private schools must rely more on private wealth and contributions because they do not get the benefit of government subsidies.  As it turns out, the largest fundraisers are also the most adept at getting grants and government support as well.  The next chart shows the level of grants and government support of each institution in the most recent year, again on a per student basis.


True, ASU, UCF, and OSU get state tuition subsidies.  However, the prominence of grants (particularly research grants) at the top 3 fundraisers even outweighs the fact that they are private.  In short, the most wealthy schools seem to be quite adept at garnering even more wealth, while those that serve the most students find fundraising a much more daunting task.  What this reveals about the motives of donors and how these top 3 schools are able to so successfully raise funds are just two of many questions I have.

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Some caveats in interpreting the data:
- all per student figures are based on undergraduate enrollment.  If graduate enrollment differs across schools, examining rates based on all students may alter the data somewhat.
- while many grants are research grants, and many of those are federally funded, private grants are also surely in the data.  Also, much of these grants are awarded competitively and are not intended to be need based.
- though accounting rules are quite similar between state and private institutions, the particulars of their accounting policies may lead to some variation classification, which could also distort the data.

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