Endowment and Donations Rebound
Tags: Education, Nonprofit

by Staff

Strong in 2010

2010 proved positive for Stanford’s endowment, which grew to $13.8 billion by the close of the fiscal year. In contrast to the 2009 fiscal year, in which Stanford weathered a -25.9 percent investment return, 2010 brought a 9.6 percent growth rate and a 14.4 percent return on endowment investments.

These numbers surpassed both Harvard’s 11 percent return and 5.4 percent growth, and Yale’s 8.9 percent return and 2.0 percent growth rate over the same period.

In light of this recent economic upturn, the increased endowment and generosity of Stanford University’s major donors have facilitated several large-scale projects across campus. Among its many renovation and construction projects, Stanford boasts newly revamped row houses, a new building for the Graduate School of Business, a dining hall, and the Bing Concert Hall, which is scheduled to be finished by fall 2012.

Although increases in endowment and alumni donations have played primary roles Stanford’s expansion, other efforts have played key roles in the initiation of new projects. For example, Stanford’s 100 million-plus financial aid budget is jointly backed by the endowment and the Stanford Fund.

Additionally, donors gave more than $20.2 million in the 2010 fiscal year, representing 9.7 percent increase from last year. About three-fourths of these resources go to undergraduate financial aid, while the rest goes towards student life and academic experience.

Funding Future Success

The Stanford Challenge, a campaign to raise $4.3 billion has entered its fifth and final year. Regarding the Challenge, Rebecca Smith-Vogel of the Office of Development said, “We are especially focused on undergraduate financial aid, interdisciplinary graduate fellowships (known as SIGFs), the K-12 education initiative, and the arts initiative.”

Closing the financial aid deficit is a primary goal for all fundraising campaigns, yet the Stanford Challenge distinguishes its support of programs and initiatives as “[bolstering] a multidisciplinary approach to teaching and research as [the Stanford Challenge] strives to find solutions to intractable global problems,” explained Smith-Vogel.

In addition to direct program initiatives, the Challenge also hopes to “educate today’s students for leadership roles they may take up when they leave Stanford.”

While special fundraising efforts like the Stanford Fund and the Stanford Challenge help to shorten the timescale of many University projects, building and maintaining a reliable donation base — primarily comprised of alumni — is of central importance to the University.

Among prestigious universities, Princeton leads the way in alumni donations with about 60 percent of alumni donating every year, beating the national average of about 11 percent. Harvard’s alumni donations rank at a distant second with an annual rate around 40 percent.

Stanford focuses on building “relationships with [its] supporters so that they have a deep understanding of how Stanford works and where their support could be most beneficial” said Smith-Vogel. Rather than the sheer volume of donors, the focus of Stanford’s approach is not how many, but how often, how much, and how willingly these donors keep giving to Stanford.

The culture of giving to Stanford is dominated by a few conspicuous names. In addition, the biggest donor to the Fund last year was the class of 1984, giving more than $800,000.

More recent and less economically well-off graduates are far less present within these figures. Nick Hersh ’10 said, “I get the feeling that Stanford generally treats [its] donors well…. Where I have some major gripes is how the money is allocated and being used once it gets donated.”

Because gifts to a general fund cannot come with strings attached, alumni donors may feel disenfranchised when they see their money disappearing into the Stanford Fund without being able to target their specific areas of interest.

Seeking out Seniors

In response, Vogel-Smith said, “Our younger donors start to learn about the importance of supporting Stanford through gifts to The Stanford Fund or to the various annual funds at the graduate schools when they are students…. Our goal is to establish a relationship with even our youngest donors that helps them understand the important role their giving plays in sustaining Stanford, no matter the size of the gift.”

Younger donors are cultivated during their senior year through the Stanford Gift and they often receive phone calls and emails asking for gifts to the university after graduation. Stanford seeks to create long-lasting connections with these young alumni who will hopefully give more when their finances permit.

However, size does seem to matter when it comes to transparency. While major donors are able to exercise extensive control over how their money is used, recent graduate Emily Kinney ’09 stated, “If I knew the money was going to the arts or to my particular department, I would be more inclined to give. I feel that certain parts of our University are more adequately funded and supported than others, so targeted, transparent giving would be an incentive.”

Given the endowment’s recent rebound and the onset of the fifth and final year of the Stanford Challenge, support is likely to grow. While giving to Stanford may remain unusual for students and alumni still paying off undergraduate loans, Stanford’s insistence on constant renewal and a stellar financial aid program encourages alumni support of all kinds.

Regardless of a donor’s ability to control the allocation of their donation, relinquishing money to the Stanford Fund represents an indisputable net gain in that it aids in the provision of an outstanding education to students of all backgrounds.