Today I received a call from a college I attended, thanking me for my charitable gift. As I am grateful for the education I received, a gift to the President’s fund seemed a natural way to show my appreciation. I’ve written several blogs about the good, bad and ugly of college giving. Depending too much on large, corporate donations has its drawbacks, for example. (Blog 3/18/16) But let there be no doubt, the care and feeding of higher education should be of prime concern to all of us as it is graduates from these institutions who will shape the country’s future.
In this election cycle, political candidates have expressed concern about the growing price tag for a college education. A small, liberal arts education can charge a student up to $80,000 per year. State institutions are cheaper but high enough to drive many young people into the arms of community colleges. Congress, concerned about rising tuition cost, is “examining how endowments are managed and spent at the richest 56 schools.” (“Colleges Face Up to Lower Returns,” by Janet Lorin, Bloomberg Businessweek, July 18-24, 2016, pg. 37.)
Historically, higher education spends 4-5% of their endowment funds to meet the needs of their institutions. (Ibid pg. 37) But with interests rates low, many have decided to conserve their trusts by reducing the amount of their withdrawals. To make up the difference, they are forced to make spending cuts. Concurrently, governments, faced with budget deficits, have reduced their support for higher education. (Ibid pg. 37.) As a result, scholarships and student loans have been reduced.
Schools are becoming more dependent upon the generosity of their alumnae. Happily, providing that assistance is easier today than in the past. Last year, the federal government passed a law that allows people over 75 with IRAs to donate those funds in part or in whole to charitable giving. Doing so will reduce the contributor’s tax obligation. Anyone who can take advantage of this opportunity should consider it. A contribution to his or her alma mater will ensure that a good education awaits the young.