How Do Students Benefit From Fundraising Campaigns?

• Philanthropy has been a mainstay of higher education for centuries.
• Fundraising campaigns bring in millions, sometimes billions, of dollars to universities.
• Students benefit in numerous ways from campaigns, but not right away.

As you walk around campus, you might encounter banners displaying a peculiar logo and a tagline reading something like "Light the Way" or "Make Possible" or "The Call to Lead." You'll see these graphic elements on your college's home page, in email signatures, and on your school's social media channels. Your parents will receive mail with the tagline emblazoned across the front.

If so, your college is in a fundraising campaign, raking in millions of dollars from alumni and other donors.

But what's in it for you? How, if at all, will this money impact you and your education? Where does all that money go?

Philanthropy and American Higher Education

Today, annual giving to higher education in the U.S. exceeds the GDP of 108 nations.

Philanthropy has been a staple of higher education from the earliest days. When John Harvard bequeathed his estate and library in 1637 to a fledgling institution established a year before, the "colledge" in "Newetowne" became Harvard College.

Today, annual giving to higher education in the U.S. exceeds the GDP of 108 nations. In fiscal year 2019, colleges raised $49.6 billion, a figure that has grown steadily over the past decade.

Giving is top-heavy. The 40 top fundraising private and public institutions accounted for nearly half — 43% — of that $49.6 billion.

Where does the money come from? Here's a snapshot from 2020:

Keep in mind, individual giving drives private philanthropy. If you combine the alumni and nonalumni slices, you get 39%. But the foundations category includes family foundations, which essentially is individual giving by another name. Families establish foundations for tax purposes and give through that vehicle. And other organizations encompasses what's called "donor-advised funds" that comprise contributions from individual donors.

In short, much of the money given to colleges and universities — including most of the largest gifts — comes from wealthy individuals.

You'll likely see their names around campus: on libraries, residence halls, stadiums, classrooms, and labs. It's impossible to overstate the impact donors have made on higher education — at private institutions especially, but increasingly at public ones as well.

What Is a Capital Campaign?

Chances are your college is either in a capital campaign, has just completed one, or is planning one. Campaigns have been a staple of higher-education fundraising for generations, waged by institutions large and small. You'd be hard-pressed to find a campus in the United States that hasn't conducted a campaign of some magnitude.

As the term implies, capital campaigns originally were designed for a single purpose, such as building a new library, gymnasium, or science center. Such facilities are known as capital assets. Today, comprehensive campaigns are broader, touching every aspect of university life. The term capital campaign persists nonetheless, and the two are more or less interchangeable.

Campaign fundraising goals range from a few million dollars to billions. Consider these staggering figures reflected in some current and recent "mega" campaigns:

Why do colleges conduct campaigns? After all, institutions raise money all the time, year after year. But a campaign thrusts fundraising into overdrive. It creates a sense of urgency, a feeling that a college is on the cusp of greatness and is ready to seize the moment. The only missing ingredient is philanthropy.

A campaign rallies an institution's wealthiest donors and inspires them to give at unprecedented levels, as these campaign figures attest. It enables a college to share with the world its remarkable accomplishments, its grandest plans, its hopes and dreams, its vision for the future. And it puts a very public price tag on that vision.

Speaking of which, if you are seeing those signs around campus and elsewhere, your college's campaign is in the public phase. Campaigns typically run for five to seven years. In the early stages, known as the quiet phase, colleges are busy sharing their plans with top donors and securing large gifts.

[A] campaign thrusts fundraising into overdrive. It creates a sense of urgency, a feeling that a college is on the cusp of greatness and is ready to seize the moment.

When they "go public" after a few years, they'll announce they've already raised at least half — sometimes two-thirds — of the campaign goal. That's when the public phase, a marketing effort to gain support from everyone associated with the school, kicks off.

Everyone includes you and your family. Parent giving has grown considerably in recent years, which seems counterintuitive given the rising cost of education. Asking parents to give to a campaign while they're also paying tuition? It happens.

They'll ask you, too. Students sometimes wish to participate in a campaign, especially seniors, who pool funds to contribute a parting class gift to the effort.

Once the goal is reached and the campaign is complete, the college will celebrate and thank the donors. Then they'll get busy planning the next one.

How Do Students Benefit From Campaigns?

So where does all that money go? Will it impact your education and overall experience?

It depends.

If your college recently completed a campaign or is just finishing one, you potentially could reap the benefits. Philanthropic support typically underwrites the following:

Chances are, you're already benefiting from investments made during prior campaigns: the gym you work out in, your faculty mentor who holds an endowed chair, the named scholarship you received, or the spiffy new dorm you call home. All likely were made possible through philanthropy and campaigns.

But these types of investments often take years to materialize. So if your institution has just started a campaign, you might not see immediate results or benefit much directly. New buildings require time to plan and construct. Your department might gain several new faculty positions, though filling those slots could take a while.

Keep in mind, too, that donors making large gifts often spread payments over five years. If a donor pledges $10 million to your school late in the campaign, you'll never experience the full impact of that gift.

What's more, campaigns tend to attract planned gifts included in estates and wills, many of which won't be realized for years to come.

And then there's the long-term nature of endowments. Think of an endowment as a bank account that pays interest. Colleges spend only the interest and don't touch the principal. When your college makes a splashy announcement touting a $5 million endowed gift for scholarships, don't expect $5 million to be at your immediate disposal.

Universities typically spend only 5% of an endowment's value, meaning that gift will generate $250,000 for scholarships each year.

So what's the bottom line? If your school is in a campaign or has just announced one, be thrilled about what it means for the future of your alma mater — just don't expect to benefit much or to see many changes around campus right away. Maybe a groundbreaking or two, and certainly some headline-grabbing announcements of big gifts.

But rest assured philanthropy has impacted your journey and has made your college experience that much richer. Remember this when you're an alum and your alma mater comes calling.

Feature Image: Andersen Ross Photography Inc / DigitalVision / Getty Images