Solicitation and Donation: An Econometric Evaluation of Alumni Generosity in Higher Education

Abstract

This paper evaluates the relationship between alumni solicitation and alumni donation within institutions of higher education. The issue of alumni giving is important for universities because the average cost of university tuition has increased dramatically over the past 20 years at an annual growth rate larger than the United States CPI (Harvard University Factbook, 2005–06). For instance, in 2005 at Harvard, only 21 percent of total university income came from student tuition, whereas 48 percent came from donors. By 2003, alumni donations across all US universities have become on average the largest source of donations and in 2005 have risen to 26.6 percent of university donations. Of key importance for our research is resolving the debate within the literature on the effect of solicitation of alumni donations. We employ a fixed effects model on the largest and longest-spanning panel dataset yet seen in the literature on alumni giving. This dataset consists of 2,986 universities and colleges in the United States over a period of 12 years. Second, we look at those schools most highly regarded in the US, as determined by the US News and World Report, which consists of 117 schools. We determine that solicitation efforts, in all of our regression analyses, provide a positive marginal effect on levels of alumni donations. Thus, we add to the field on alumni generosity by developing definitive conclusions regarding the verifiable effects of solicitation, as well as other university-specific characteristics.