Two new reports offer a snapshot of charitable giving and endowment performance at U.S. colleges and universities during fiscal year 2021, showing growth and sparking discussion about the implications for college access. Among the highlights were an unprecedented increase in unrestricted gifts and a look at endowed funds earmarked specifically for diversity, equity, and inclusion initiatives.
Increased giving, unrestricted donations in FY’21
In fiscal year 2021, which began July 1, 2020, and ended June 30, 2021, U.S. colleges and universities recorded a 5.1 percent inflation-adjusted increase in donations, for a total of $52.9 billion, according to an annual survey from the Council for Advancement and Support of Education (CASE). Alumni donations increased, with strong growth in gifts to endowed funds—philanthropy that often supports scholarships.
The CASE survey of 860 institutions also indicates that unrestricted gifts rose by 30.2 percent percent across all donation sources in fiscal year 2021. Unrestricted gifts accounted for just 7.4 percent of total giving, but the increase is notable: unrestricted gifts “can be among the most valuable” because they are not earmarked for specific purposes and allow institutions to direct support where it is needed, Higher Ed Dive notes. The growth came in large part from contributions from former New York City Mayor Michael Bloomberg, the Lilly Endowment, and MacKenzie Scott. “I’ve never seen this leap in unrestricted giving,” Ann Kaplan, senior director of the CASE survey, tells Inside Higher Ed.
Scott, who donated $7 billion to nonprofits and higher education institutions across 2020 and 2021, prioritized giving unrestricted donations to minority-serving institutions, community colleges, and schools serving low-income, Pell Grant-eligible students.
As a result, two-year colleges reported a 52.5 percent increase in donations in fiscal 2021, Inside Higher Ed reports. Amir Pasic, dean at Indiana University, says Scott’s generous unrestricted donations may encourage other philanthropists to follow suit. “Something like this catches a lot of attention,” Pasic says, “and people are maybe doing more to support the core of an institution rather than trying to control what it’s doing.”
Endowments grow, with nearly half dedicated to financial aid
In addition to increased charitable giving, fiscal year 2021 brought significant endowment growth, according to a new study from the National Association of Colleges and University Business Officers (NACUBO) and TIAA. On average, college endowments posted a one-year return of 30.6 percent, net of fees. The report, which reflects survey responses from 720 institutions, also highlights 15 percent growth in new endowment gifts.
While some observers have questioned whether the strong growth would prompt changes in colleges’ average spending rates to boost financial aid and other programming, spending has remained largely the same.
“Endowments are managed with an eye on the very long term and to ensure intergenerational equity, not privileging today’s students or today’s institutional needs over those of the future,” Susan Whealler Johnston, president and CEO of NACUBO, tells The Washington Post. “The spending rate did not drop last year in the face of low returns, and it has not risen this year in the face of high returns,” she explained in a webinar. However, Charlie Eaton, sociology professor at University of California and author of Bankers in the Ivory Tower, asserts that some schools could afford to increase endowment spending to increase college access. “If they enrolled more students from low-income backgrounds,” he tells the Post, “they could make a further contribution to equity.”
According to NACUBO, 47 percent of colleges’ endowment spending in the 2021 fiscal year went toward financial aid. At some of the wealthiest, most selective schools, that allowed students to graduate nearly debt-free. However, given the limited number of low-income students who actually attend those colleges, there’s a relatively small impact on overall college access.
Beyond financial aid, some experts are urging colleges to consider how their endowments support racial and economic equity more broadly. Some institutions are starting with the racial and gender makeup of their endowment managers, Robert Raben, executive director of the Diverse Asset Managers Initiative tells Inside Higher Ed, adding that “Harvard, University of California, Duke, and Georgetown are very explicitly making moves, reaching out to women and people of color.”
NACUBO for the first time this year also asked colleges and universities about endowment gifts earmarked for diversity, equity, and inclusion initiatives; 65 percent of institutions reported receiving such gifts.
Anthony Abraham Jack, a professor at Harvard’s Graduate School of Education, emphasizes the importance of programs that enable lower-income students to participate fully in the college experience and meet their basic needs. “There are students staying on campus over spring break with no access to food,” he says. “Invest more in the services that will help students deal with these disparities.”
Some institutions have begun dedicating more funds to initiatives that ensure all students have a sense of belonging and equitable experiential access. The Post highlights how Johns Hopkins University’s $9.3 billion endowment has enabled it to boost recruitment of and programmatic support for first-generation and low-income college students, who now make up 27 percent of the university’s undergraduate population, compared with 16.1 percent in 2013.
Wealthy public systems similarly have an opportunity to deploy their resources to achieve equity goals, says Jack. “Think about how many public school systems are on the [top endowment] list. And think about how much inequality exists within those systems. If you are not at the flagship, it’s a very different experience,” Jack said.