Five Reasons You Should Be Donating Money To Your College

by Hank Coleman

Presbyterian College in Clinton, SCYou should be donating money to your college. I love donating like to my alma mater. I give money to them every month, and I’m even considering including them in my will. There are so many reasons that you should consider donating money to your college.

A couple of weeks ago there is a spirited debate on the blog, Tie The Money Knot, about whether or not you should be donating money to your college and giving back. I quickly found myself in the minority, and I wanted to elaborate more on why I think that you should be donating money to your college.

Five Reasons College Donations Are Important 

Donating Money To Your College Protects Your Investment

I look at my diploma as a certificate of stock from my college that I went to. The value of that diploma goes up and down depending on what my college does, how is portrayed in the news, and how it improves throughout the years.

My goal is that my college diploma will increase in value throughout the years. One way that I can still influence that is by giving back to my alma mater. It is one reason why you should consider donating money to your college. It is a protection of your investment of the four years and most likely thousands of dollars that you have invested.

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Colleges Need Donations For Their Operation Budgets

When I was working on the staff of my college’s student newspaper, I was introduced to the air workings of collegiate budgets. I was amazed that a large percentage of my college’s operating budget came from our endowment.

And, of course, the endowment comes from the generous donations of alumni. So without alumni donating money to your college, the operating budget of the college could be squeezed. It would be a shame to have sequestration to her college budget much like the federal government is facing America today.

Helping And Giving Back To New Students

Donating money to your college also helps give back to the next generation of students. The money that you donate to your alma mater often goes to new scholarships and to help fund new programs for the next classes of students who will attend your college.

It is often wonderful to think that donating money to your college can have a lasting impact on future generations of your fellow college students long into the future to come.

Ranking Well In National Polls

We have to face facts. If a college wants to attract great students in great faculty, then they need to rent well the national polls. And, one attribute that colleges are graded against is the amount alumni give. most rankings in national magazines rank colleges based on the percentage of alumni who gave back to their alma maters.

So often in the rankings is far more important for a college to have many small gifts with a high percentage of alumni giving back rather than one or two large gifts with very few alumni giving back and donating money to your college.

The College Gave You So Much To Start With

When I think of my college, I have nothing but good memories. I look back and I think of all the things of my college gave to me. You gave me a start, new friends, great experience, life lessons, and was a place where I met my wife. I think that I owe so much more to my college that I’ll ever be able to repay. And, that is why I give freely from my heart back to my alma mater which I love so much.

I understand that giving to any charity is a personal decision. There are many people who simply don’t have the financial means to give back to charities they care about whether it is their college alma mater or another cause they love. I also think that there are far too many people who can give back and simply choose not to. And, I think that is a down right shame.

Do you give college donations back to your alma mater? Do you get back with your money, your time, or your energy? I love to hear your thoughts on why are why not you are not donating money to your college.

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.


Hank Coleman has written 591 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


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{ 16 comments… read them below or add one }

John S @ Frugal Rules

We give to my University when we can and for many of the same reasons you listed here. Honestly, it’s a little low on our priority list, but do give when we can. One would think with the amount they have coming in that a school would not need it, though fundraising is a major thing for many.

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Hank Coleman

So many people have a negative taste in their mouths about the cost of higher education, but most people do not understand the role that giving and fundraising plays in their current, short-term operational budget. It is like assuming that someone is rich simply because they have an nice car or live in a nice neighborhood. It doesn’t look at the underlying situation, cash flow, total net worth, etc.

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Anne @ Unique Gifter

I am a huge believer in donating to my alma maters!! Having been on some boards of organizations that rely on government funding and/or donations, I know how difficult it can be to operate without funds. Another thing of note – people love to donate to projects, but not keeping the lights on or the buildings maintained. That’s one of the areas that I try to support, personally.

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Hank Coleman

I love your second to last sentence! “people love to donate to projects, but not keeping the lights on or the buildings maintained” That is perfect! Well said! Thank you.

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Richard

I’ll be the devil’s advocate here:

1. You mention operating budgets – ask yourself, why are they so large to begin with? It’s because University President compensation is correlated and causally related to the size of their operating budget. That is why there is an arms race in terms of new facilities, etc.
2. If I didn’t benefit from a scholarship and paid full freight, I feel no obligation to give back.
3. Look at the size of the endowment. Most of the prestigious school endowments are so large they could use the money to reduce tuition but they don’t.
4. You are probably doing more good by donating to your local public school.

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Hank Coleman

These are some great comments. Flawed but really thought provoking. I’m not sure about the #1. Can you point to an article or something that proves that one?

#2 – Like I mentioned in the article, I think of my diploma like a certificate of stock. I want its value to increase of course. Donating money to make my alma mater better is directly tied to that goal. I went to a small liberal arts college in SC for my undergrad, and I want you, guys in California, and even Maine to have heard of it eventually.

#3 – I think we all know that’s not what endowments were designed for. It’s like an annuity or a fancy emergency fund that gives off earnings every year that are used for a host of things on campus to include some operating expenses. At last report, Harvard’s endowment had about $32 billion and Yale had about $19 billion. With full priced undergrad tuition costing about $37,500 per year at Harvard, the endowment would pay for about 213,00 students’ four year full rides to the school. With 7,180 undergrads, the endowment could cover 29 years worth of tuition for students. Okay…when you crunch the numbers, that just sounds bad. You may have a good point there. Although what do you do after year #29?

#4 – You honestly think that government bureaucrats, even local ones, can wisely spend money any better than collegiate ones? Donating money to public grade schools in America may make a difference if we ALL did it, but not just one or a few people. Public schools in America need serious help beyond what we give to colleges and universities.

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Richard

I went to small liberal arts school in Virginia that is routinely ranked in the top 20 nationally. However, over the years my view of its value has diminished. I believe that the additional coursework I did at UGA and the MBA I got from Georgia State helped my career and earnings far more than my liberals arts degree did and they were a fraction of the cost (my employers paid for most of my MBA). My current thinking is that I will fund the majority of my childrens’ education at a large state university and if they do well we will discuss what, if anything, I will contribute towards a masters. I am now of the view that most of these small liberal arts colleges are just country clubs – if you went to one then I think you would agree. My hope is that online learning will be a disruptive force that will hold down or reduce tuition by the time my children attend.

I have administered compensation for the last 15 years for several large companies. One saying that usually rings true is ‘follow the money’. Compensation surveys scope their data in many ways but for higher paid jobs the most common are revenues for public companies, assets for financial companies and operating budgets for universities. When schools compare their salaries to other schools they compare themselves based on operating budgets (as well as who they compete with for students, faculty, etc.). In all cases the larger the revenues/assets/operating budgets, the higher the pay.

Regarding endowments – how much is enough? Remember these institutions pay little in the way of taxes.

When I mention local public schools I’m referring to the foundations that typically fund an extra science or computer teacher. I think it is hard to argue that this donated money doesn’t have a direct impact as opposed to some college ‘general fund’ that goes towards dubious trips and conferences attended by college administrations.

If I still haven’t convinced you then I would at least recommend that you make restricted gifts to your college. Restricted gifts allow you to earmark your gift toward a particular program, department, or scholarship and is more likely to have a direct impact.

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Money Beagle

I went to a private college so it’s even more important there, since they don’t receive any public funds. Even publicly funded universities depend on donations for capital improvements, new buildings, renovations and the such. While I think a lot of spending in that regard has gone a little overboard, the fact is that without good facilities, it will be harder to attract quality students and professors alike. I know that I still benefit from my college education today, over fifteen years later, so I can easily justify the small cost of donating to them on an annual basis. (Plus, we get a calendar that I hang on my office wall, which is great for keeping my memories and such alive)

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Hank Coleman

I’m a sucker for freebies and swag! My college continues to send lame bumper stickers. I wish they would change it up. I would love a great calendar!

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The College Investor

I found it interesting that when it comes to rankings, a more important metric is percentage of alumni who give. So, it doesn’t matter how much, but if everyone gives $1, it looks really good for rankings.

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Hank Coleman

It’s a function of what percentage of your alumni are envolved with the college and active with it.

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Elizabeth @ Simple Finance

I don’t donate to my college – never have. I went to a top-5 University, and a lot of my classmates are ridiculously successful already; I always figure “I’ll donate once I’m financially secure and have the spare cash to do it.” I’m probably closer to that point than I realize.

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Hank Coleman

That’s a very astute observation. We are all probably hardest on ourselves and expect more.

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Sarah Park

Donating money to College will benefit both you and the school. Why not donate when you have some extra, right?

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Roger @ The Chicago Financial Planner

You make some good points Hank. We have given minimally to our alma maters in recent years as most of out checks seem to go to the schools that our two in college attend, our oldest is out thankfully, but still we’ve had at least one in school since the fall of ’06.

As to your point about the national rankings, when our oldest was a frosh at USC she had a PT job phoning alums to get them to contribute. Her instructions were to get them to give even $5 because the percentage of alums donating was part of the ranking system.

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Dean C

This is a poor argument. As of 2012, sixty-nine colleges and universities, from Amherst to Yale, from Notre Dame to Yeshiva, had endowments of at least one billion dollars each. That’s one billion, with a “B.” Topping the list is Harvard with over $30 billion in the bank, but Yale, Stanford, and Princeton all exceeded $15 billion and every school in the Big Ten but Iowa makes the list – and that state makes up for it with tiny Grinnell College at roughly $1.4 billion. The combined total of all college endowments is probably not quite enough to pay off the national debt, but it’s a lot more than you will ever have in your 401(k).

If you’re lucky enough to have a full-time job in the private sector then you likely work year-round. Sure, you get some weekends and holidays off – and maybe even a few weeks’ vacation if you can find the time to take it – but college professors and administrators get the same weekends and holidays plus “winter break,” spring break, and summer vacation. Don’t even try to get in touch with a college professor between May and September; they’re too busy travelling, likely at someone else’s expense.

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