Just Saying No to Colleges

By Richard Vedder

The news is out that private giving to universities rose a respectable 6 percent in 2007. But amidst the good news there was a sobering detail worth considering. Contributions from individuals --both alums and non-alums -- fell. While this was more than made up by corporate and foundation giving, it might be an indicator of increased disaffection by alums and "friends" towards universities. People are sometimes turned off by million dollar college presidents, excessively luxurious facilities, huge increases in tuition charges occurring despite rising private contributions, etc.

The colleges are saying "we have more young alums, and they typically give little" (some actually have negative net worth because of student loan debt). As an empirical matter, I suspect the average age of alums today is GREATER than it was, say, a decade ago. Enrollments are rising, but slowly --slower than in earlier decades when new alums were a larger portion of the alumni population. Moreover, contributions from non-alumni (very few who are young) were down slightly last year. The colleges don't want to admit it, but possibly some people are "just saying no" to what is increasingly perceived as an arrogant, elitist, wasteful and inefficient system.

Another trend worth noting --geography matters. The shift in population southward and westward over time has led to schools in growing regions gaining financially relative to the older bastions of college wealth. There are four California schools among the top 20 in contributions in 2007, while several Ivy League schools were missing from the list (Princeton, Dartmouth and Brown). While California is actually now a source of out-migration among native born Americans, a lot of big donors are probably graduates from the 1950s, 1960s, and 1970s, when the Golden State was a magnet for migrants. Hence it is perhaps only a matter of time before Stanford goes ahead of Princeton and Yale on the list of most endowed schools. The Ivies are helped, of course, since they are truly national universities, but people still, other things equal, prefer to give locally to institutions whose positive influence can be observed first hand.

By the way, all of this, in my way of thinking, adds to the case for more transparency by colleges. People don't give to schools sometimes because they really don't know how the money is going to be used -- and colleges are not terribly forthcoming on how they use the vast amounts of money they receive. And, in my opinion, some donations are spent in ways that would be highly displeasing to donors (that is probably why colleges try to keep finances secret). But the aura of secrecy around university finances may lead some donors to actually believe monies are wasted even more than what is truly the case. Let the light shine in.