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US Colleges, Universities Attract Record Donations

Tom Burroughes, Group Editor , February 11, 2019


The sheer scale of donations - some of them coming from UHNW individuals - highlights why philanthropy advisory is an increasingly important wealth management offering.

Benefactors gave a record $46.7 billion to US colleges and universities in the 2018 financial year, highlighting how education is a major destination for high net worth and ultra-HNW philanthropy.

Giving increased by 7.2 per cent in the 2018 financial year, the ninth straight year of such gains, according to the Council for Advancement and Support of Education’s Voluntary Support of Education survey. (For most schools their financial year ends on June 30.)

"The increase was buoyed by a strong stock market and overall economy during the period studied. In addition, the collective work of advancement professionals, who make the case for support, is essential to growth in philanthropic support of the nation's education institutions," the organization said. "Gifts from every type of donor increased. Notably, gifts from the category "other organizations" increased by 13.5 per cent, nearly double the increase from any other type of donor. This category includes fundraising consortia, religious organizations, and, significantly, donor-advised funds (DAFs)."

Harvard, Stanford and Columbia universities each raised more than $1 billion, demonstrating how the top universities are pulling away from the rest of the field.

Family Wealth Report has covered issues concerning big gifts to academic institutions in the past. 

The top 10 schools by total donations represent less than 1 per cent of all US colleges and universities. These schools raised 18 per cent of all funds last year.

Breakdown of donors

Source: Council for Advancement and Support Of Education

High-profile donations, such as a $1.8 billion gift by media tycoon and former New York City mayor Michael Bloomberg to John Hopkins University, demonstrate the scale of these transfers. It also underscores why wealth managers continue to see philanthropy as no longer an add-on service for clients but often state its central importance.

The survey takes data from 929 institutions and schools represent about one-third of US colleges and universities.

These donations are not a purely a US phenomenon. In the UK, for example, a British ultra-high net worth hedge fund tycoon, David Harding, has broken a local record, giving £100 million ($130.2 million) to the University of Cambridge. Harding is the founder of the hedge fund business Winton. He is joined in the donation by his wife, Claudia, a trustee of the Science Museum Foundation. Amounts involved in modern philanthropy, even allowing for inflation compared with the era of the Rockefellers, Mellons and Guggenheims, are large. In May last year 14 billionaires said that they had signed the Giving Pledge, formally joining the 154 other billionaires who have pledged to transfer at least half of their vast wealth to philanthropic causes. The Giving Pledge was started in 2010 by Bill and Melinda Gates and Warren Buffett (source: CNBC, 31 May, 2017). At that time, the Gateses were worth a collective $88.5 billion, and Buffett was worth $74.2 billion.

In Asia-Pacific, Australian businessman Stan Perron, who died in November last year, reportedly left the majority of his $2.8 billion fortune to charity. Earlier in December 2018, the chairman of a Hong Kong business conglomerate donated RMB200 million ($29 million) to a Chinese university. The money from Lui Che-woo, chairman of K Wah Group and director of Lui Che Woo Charity, will be used for providing better research and teaching facilities, as well as supporting the development of medical, pharmaceutical science and other related disciplines for the university. In September 2018, Chinese e-commerce tycoon Jack Ma, co-founder of Alibaba and China’s richest man, said that he was retiring from the company to focus on philanthropy. Alibaba is China’s largest corporation and, with a listing on the New York Stock Exchange, is currently valued at $420 billion. (Ma started getting involved with philanthropy several years ago.)

Large donations can sometimes make the data quite volatile, as shown by a recent dip in UHNW contributions across all forms of philanthropy, albeit as part of a rising trend.

Regular FWR contributor and editorial advisory board member Susan Winer, chief operating officer of Strategic Philanthropy, has written about the planning and advisory issues that big gifts raise.

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