Grants & Private Funding
This article discusses how grants and private funding serve to sustain higher education in the United States. While traditional revenue sources still play a large role in higher education financing, institutions are beginning to more aggressively pursue non-traditional funding sources due to increased market competition and costs. Historically, these non-traditional funding sources have included private donations from alumni and other individual benefactors as well as from corporations, foundations, and similar entities. Continued federal grant support given directly to higher education institutions has also played a large role and has served to shape modern higher education.
Keywords Alumni; Benefactors; Corporations; Federal research grants; Foundations; Private giving; Voluntary support
Higher Education: Grants
While tuition revenues and, for public institutions, state and local appropriations play a large role in the financial support of higher education institutions, these traditional revenue sources are generally supplemented with other resources. Over the course of time, a number of different groups have become actively involved in the private financing of higher education. Additionally, the federal government has come to play a role in providing direct support to higher education institutions via grants for various purposes.
Individual Private Benefactors, Foundations, Alumni,
While not the founders of the institutions that took their names, John Harvard and Elihu Yale were the first considerable private benefactors in New England. However, it was not until the latter part of the nineteenth century that large gifts from single donors became more common (Rudolph, 1990). Private giving to higher education institutions accelerated after the Civil War when large personal fortunes were made during the period of rapid industrialization (Brubacher & Rudy, 1997). According to Rudolph (1990),
Endowments of sizable proportions were a contribution to the American college of the Industrial Revolution, of the remarkable rewards which it brought on the eminently exploitable American continent, and of the sense of stewardship which invigorated the possession of private wealth with a sense of public responsibility. (p. 181)
For example, Cornell originated with a $500,000 gift from Ezra Cornell, whose single gift matched the total accumulated endowment of all higher education institutions at the turn of the twentieth century (Brubacher & Rudy, 1997). As the twentieth century progressed, individual benefactors like Carnegie, Rockefeller, and Ford began to pour hundreds of millions of dollars into higher education. Their main aim was "not to found new institutions, but to strengthen older ones and sometimes modify their direction" (Brubacher & Rudy, 1997, p. 377). Brubacher and Rudy (1997) noted that endowments, which are supported by donations, have been especially crucial to private institutions as their financial "mainstay" (Brubacher & Rudy, 1997, p. 377). While not initially well-received, declines in state and federal public support have often led to a more acceptable view of private giving to public higher institutions as well (Liu, 2006).
In the early twentieth century, large philanthropic organizations that focused on supporting higher education in various ways were also created by millionaires and began to take shape. These included Rockefeller's General Education Board (1903) and Foundation (1913) as well as the Carnegie Foundation (1906) and Corporation (Rudolph, 1990). The foundations established matching-gifts principles under which colleges had to match (or sometimes even double) gifts they received (Rudolph, 1990). These principles not only led to extensive endowment drives to secure matches, but also to the preoccupation of college presidents' time with fundraising for matches (Rudolph, 1990).
As large gifts had to also be supplemented with smaller gifts, institutions began to put on general endowment drives. Yale was the first institution to initiate an annual alumni giving drive in the 1890s (Brubacher & Rudy, 1997). Yet, the time of regular, exceptionally large gifts to higher education seemed to draw to a close by the mid twentieth century as steep increases in inheritance and income taxes, which were used to cover war costs as well as new social services, took their toll (Brubacher & Rudy, 1997). Around this time, corporations began to be asked to play a larger role in the financing of higher education (Pollard, 1952).
Federal Government's Role
It was not until the middle of the twentieth century that the federal government began to deal directly with colleges and universities in providing them with assistance (Brubacher & Rudy, 1997). Specifically, World War II marked the onset of continuing federal involvement in higher education (Kerr, 2001). Kerr (2001) described the initiation of federal support for scientific research that was ushered in after World War II as one of two great impacts that have "molded the modern American university system and made it distinctive" (p. 35).
The move toward continuing federal grant support was sparked by "vast programs of contract research" (Brubacher & Rudy, 1997, p. 231). By 1950, about a dozen federal agencies were expending $150 million annually in such endeavors at various higher education institutions. However, federal resources tended to flow to a group of institutions that already had well-established scholarly reputations, and this led some to view the institutions as essentially representing a monopoly over federal research grants (Brubacher & Rudy, 1997, p. 231). Yet, over time research funds were dispersed across slightly more institutions. By 1990 about half of all federal support for research was concentrated at thirty-two institutions, as compared to twenty in 1963 (Kerr, 2001).
Federal support for research historically advanced three great national concerns: defense, scientific and technological progress, and health (Kerr, 2001). As such, the humanities and social sciences have traditionally received very little federal support (Kerr, 2001). Some of the federal agencies that have been major sources of research funds include the Department of Defense, the National Science Foundation, and the National Institutes of Health (Kerr, 2001). With the terrorist attacks of September 11, 2001, and the anthrax mailings that occurred that same year, Congress was compelled to direct more federal research funding toward homeland security projects (Borrego & Brainard, 2003). For instance, funding for homeland security projects, which included training programs as well as research, increased by 68 percent from fiscal year 2002 to 2003 (Borrego & Brainard, 2003).
By 1960 federal support for research at higher education institutions had reached $1 billion (Kerr, 2001). Federal research funds then increased about four times over between 1960 and the mid 1990s (Kerr, 2001). A period of particular rapid growth in federal research funding occurred between 1980 and 1995 when funding increased by 50 percent (Gladieux & King, 1999). Yet, overall between 1960 and the mid 1990s the rate of increase in federal research funds slowed as compared to previous periods (Kerr, 2001). Still, by 1995 federal research support had reached $13 billion (Gladieux & King, 1999).
Walton & Bell (2003) indicate that the many types and sources of college and university revenues include the following:
• Tuition from students and families
• Appropriations, grants, and student financial aid from state and local governments
• Research and other grants from the federal government
• Donations and gifts from private benefactors
Concerning grant aid, research and other grants from the federal government are the particular focus in light of the impact such aid has had on molding modern higher education (Kerr, 2001).
According to Liu (2006), revenues from private giving help institutions not only with their day-to-day operations but also may help fund various projects and undertakings initiated in the name of excellence. At the same time, only about 10 percent of expenditures at higher education institutions are covered by private funds (Strout, 2006a). In general, trends in private giving tend to align with the state of the stock market and the economy (Strout, 2006a). The number of campaigns and solicitations for private donations on behalf of higher education institutions also impacts growth (Strout, 2007).
Private funding can come from a number of different sources including individuals, business and industry, philanthropic foundations, civic groups, and religious groups (Pollard, 1952). Contributions to US colleges and universities increased 2.3 percent from 2011 to 2012. At $31 billion overall, the total is still below the 2008 high of $31.6 billion (Council for Aid to Education, 2013). During the same year, alumni giving declined 1.3 percent, and although the average alumni gift declined just of 1 percent, the average gift per alumnus increased over 10.5 percent. The main sources of private giving to higher education institutions in 2012 were foundations (29.5 percent), alumni (24.8 percent), other nonalumni individuals (18.8 percent), corporations (16.9 percent), other noncorporate and nonreligious organizations (9 percent), and religious organizations (.9 percent) (Council for Aid to Education, 2013). Overall, the primary sources of voluntary support to higher education institutions are foundations, alumni, and nonalumni individuals.
Liu (2006) explored what motivates donors of private support. For instance, alumni may be motivated by college pride and loyalty or may wish to guarantee the marketability of their degree. On the other hand, nonalumni individuals as well as foundations may be motivated by the desire to make a social contribution (e.g., improve higher education for all). Finally, corporations generally give to higher education institutions in exchange for certain benefits.
Alumni may make donations to their alma maters for specific purposes (e.g., to establish a scholarship or help fund...
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