Altruism in the “market” for giving and receiving: A case of higher education

0272-7757189 $3.00 + 0.00 0 1989 Pergamon Press plc

Economics of Education Review, Vol. 8, No. 4, pp. 367-376,1989 Printed in Great Britain.

Altruist in the “Market” for Giving and Receiving: A Case of Higher Education JANG Department

H. Yoo and WILLIAM B. HARRISON

of Economics, Virginia Commonwealth

University, Richmond, VA 23284, U.S.A.

Abstract -

This paper examines donations to colleges as the outcome of the simultaneous solution of supply and demand functions. Donors demand attention and prestige supplied by college fund raisers. Colleges maximize donations; donors maximize recipient services. To test this model, cross section data were obtained from 13 private colleges. Besides the price variable, the amount of donations per donor, independent variables included number of donors and percent of large gifts, on the demand side. On the supply side, other independent variables included endowment per student, research expenditures, solicitation success rate, and a prestige variable. Equations were estimated with two and three srage least squares techniques. _ _

INTRODUCTION ECONOMISTS

have often speculated about the motives for philanthropic behavior. After all, it seems to contradict the classical concept of “economic man” motivated by self-interest. As Adam Smith pointed out, the butcher, baker, and brewer will supply your dinner for money, not for Iove. To assume otherwise is to risk going hungry. Relying heavily on analyses of donor behavior, most research to date has approached the subject by thesis”. This thesis testing an “interdependence suggests that one person’s utility depends directly on the utifity quotient of others. While interdependence of utility can be reconciled with the ability of one person to be better off without making another worse off, giving up goods without economic compensation so that another can have them is not efficient in a pareto optimal sense. Most studies also incorporate the donor’s capacity to give and a price variable, defined as one minus the marginal tax rate, reflecting the reduction of taxable income caused by giving. Other variables focusing on donor behavior have included a donor’s age, education, and sex. Recently theories have tried to quantify nonmonetary benefits of giving as well as social pressures to give, where they exist.

We have chosen to work with educational philanthropy - giving to higher education - because factors influencing such gifts seem to fit standard supply-demand analysis. PHILANTHROPY

AS AN ECONOMIC GOOD

Although recipients can influence giving, little attention is paid to them except to classify them by income or by public assistance categories. This demonstrates donor perceptions of recipients’ needs. However, recipients must play a role in the creation of the social pressures that affect donors. In fact, a recent study has analyzed both donor and recipient behavior in connection with athletic fundraising (Coughlin and Erekson, 1981). Our quarrel with the studies of philanthropy we are familiar with is that they fail to apply conventional supply and demand analysis to giving, thereby failing to treat it as an economic good. First, they do not use a price variable that is common to both donors (buyers) and recipients (sellers). Secondly, by concentrating on the interdependence thesis, a valid way to explain some aspects of giving, the donors have been as mistreated as those who derive satisfaction from the well-being of recipients. In other words, it seems more logical to classify donors

[Manuscript received 22 June 1988; revision accepted for publication 24 May 1989.1 367

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as conventional buyers who purchase some services from recipients, as discussed below. While some studies of giving omit any consideration of price at all, those that incorporate a price variable use a percentage represented by one minus the marginal tax rate. Yet the price of giving is not tax-determined to the recipients of philanthropy. Recipient’s benefits are derived from their ability to fund capital expansion programs, new resource acquisitions, current expenditures, and so on. In theory, recipients will want to continue fund-raising (developmental expenditures) until the last dollar expended brings in one more dollar of giving. Therefore, instead of a tax-determined price, we propose using the average amount of donation per donor as the price that a donor pays for whatever services received from the recipient and the price a recipient charges for services. Donors derive utility not primarily from interacting with the utility of receivers but from fund-raising expenditures by the receivers. As Hirshleifer put it, “gifts should be interpreted as a form of social exchange; if not reciprocated, the gift will be revoked. Therefore, what appears to be benevolence is actually indirect or disguised self interest” (Hirshteifer, 1985). The reciprocity can be in the form of fame, recognition, regular greetings, periodic visitations, etc. If one accepts this view, then donors must be placed on the buyer’s side of the market of benevolence, deriving both tangible and intangible benefits from the activities of receivers. While viewing donations in this way does not completely rule out interdependence, our model is more in keeping with Smith’s characterization of economic man, and the model encompasses both sides of the donations market with a common price variable. STATE

OF THE LITERATURE

Most empirical research that incorporates a price variable bases the variable on the tax deductibility of contributions (Boskin and Feldstein, 1977; Clotfelder and Feldstein, 1986; Feldstein, 1975; Hood et al.. 1977; Reece, 1979; Swartz, 1970). A taxdetermined price causes these studies to yield mixed results concerning the price elasticity of giving. However, the negative relationship between giving and disposable after-tax income seems to be consistent. Fund-raisers are well aware of the adverse effects upon giving of cuts in marginal tax rates.

They are especially apprehensive about recent tax law changes which reduce the deductibility of contributions and reduce marginal tax rates, thereby increasing the cost of giving. Many studies of philanthropy develop tests for the interdependence thesis (Becker, 1974; Boulding, 1962; Hochman and Rodgers, 1973; Reece. 1979; Schwartz, 1970; Scott, 1972). Because giving is found by some to have a recipient inc~~me/wealth elasticity greater than one, giving is often considered a luxury good to the donor (Becker, 1974; Reece, 1979). The relative income position of the receiver is variously represented by (I) dispersion of income within metropolitan areas (Hochman and Rodgers, f973), (2) wealth of the receiver group (Schwartz. 1970), or (3) family income of the lowest quantile of U.S. population (Reece, 1979). Our approach to the study of giving is quite different, being based on equilibrium analysis. In testing our own model we carefully chose the variables after considering all the existing arguments. MODEL

SPECIFICATIONS

In this paper we attempt to estimate both supply and demand functions, classifying gifts as one form of market exchange in which both givers and receivers are motivated by self-interest. Traditional neoclassical theory demonstrates the simL~ltaneous nature of market supply and demand. Following the Theil-Barten approach to the specification of a demand function (Barten, 1977; Theil, 1980), the quantity demanded for good X (i.e. 4,) in a market model, can be expressed in the log scale as

D, = F(Px, P,, Y, Z),

(1)

where P, is the price of X, P, is a vector of prices of close substitutes or complements, Y is the real income, and Z is a vector of preferences or tastes. On the supply side, the quantity supplied (&) may be written in a comparable form to the demand function: S, = G(P,,

P,, V, Tf,

(21

where P, is a vector of prices of inputs and V is a vector of other factors affecting supply, such as technology, and T denotes the impact of government rules on supply, such as taxes. The market will

Altruism in the “Market” for Giving and Receiving

determine the equilibrium equation

price and quantity by the

(SUPPlY) 1nQ = b0 + bllnP + b#END + b&RESEARCH

D, = S, = Q*

(5)

where

Q

= amount of donation per donor = percentage of gifts that are $100 or

NUM

= number of donors 0 if 1981 = 1 if 1976 = alumni’s commitments

more DUM VOL

END RESEARCH PREST

Potential donors, as consumers of recognition, have purchasing power. The donor’s utility is derived from special attention and social services dispensed by colleges. His objective function includes “income” from colleges, that is, fund-raising socials, individual recognition, honorary degrees, awards, etc. Subject to their incomes, most donors maximize these recognitions. Few give anonymously. Colleges are monopolistic. They are given an expenditure function, a revenue function and a production function. Subject to the latter, colleges maximize donations in their objective functions. The market structure here is a bilateral monopoly in which the colleges sell services to donors. The donor only wishes to receive recognition from his own alma mater. The college must appeal to each donor. In this bargaining framework, the college dominates because only it can dispense the services donors desire. Equations (l), (2), and (3) above are the general functional form which can be translated into an empirically testable form. Using a double-log relationship if applicable, we specify:

+ a&NUM (4)

= cost of fund-raising per dollar given

P GIFT

MARKET STRUCTURE

f a4DUM + U,

+ b&VOL + bfiUM + Uz

(3)

where Q* is the equilibrium quantity. Considering the neoclassical market theory, it is desirable to specify the demand and the supply equation as a simultaneous system in which price and quantity observed in the market should represent the equilibrium values. It is also important to form a simultaneous system for the philanthropic “industry”, because, as Coughlin and Erikson (1981) noted, donors’ decisions on giving are significantly influenced by receivers’ campaigns and social pressures from receivers. That is, philanthropic activities can be regarded in the demand side context as two-way transactions, as with conventional market activities.

(Demand) InQ = a0 + atlnP + a&GIFT

+ b&PREST

369

u,,u2

(measured by the total amount of giving divided by total number of alumni solicited) = endowment per full-time equivalent = amount of outside research grants received = school’s prestige (measured by the percentage of millionaires in total number of living alumni) = random disturbance terms.

TRADITIONAL SUPPLY AND DEMAND IN A COLLEGE/DONOR SETTING The cost of fund-raising per dollar given is used as the quantity variable, representing the satisfaction recipients provide for donors. The variable has two parts: first, alumni and community relations expenditures, including public information services, special events organized for alumni participation, and alumni advisory services; and second, expenditures tied to reunion giving programs, encouragement of deferred giving, special purpose drives, research and other on-going efforts to raise funds. In our view, the potential givers would welcome these activities and be willing to pay for them, just like the private goods or services they purchase. The other endogenous variable, P, the amount of donation per donor, is used as the price variable, and represents what an average donor would pay for the services expected from the recipient. This also represents the amount that the recipient should receive in order to provide the aforementioned services alumni relations, recognition, information services, etc. We divided total amount of

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donations by the number of donors to eliminate a “size-bias” from the data; that is, we assumed that the return to donors of spending an extra dollar varies with changes in factors other than the size of donation. This definition of the price that recipients charge is particularly important because none of the existing studies recognizes the possibility that givers’ benefits change as recipients’ expenditures change. Consider that without reciprocal treatment, most givers will halt their donations sooner or later. Fund-raisers’ costs for contacting donors, sending out newsletters and school publications, holding homecoming events, providing information on each alumnus, and the like, are part of the benefits that recipients offer givers in return for the gifts. Givers like recognition, they enjoy feeling good about giving, thus appreciate entry to social events, and are generally sensitive toward their peers. Social pressure and ego-building are two sides of the same coin. The variable GIFT represents the percentage of total dollar giving represented by gifts of $100 or more. This is used to capture income effects in the demand function. It is interesting to notice that there are large differences in the percentage of gifts greater than $100 among the institutions in the sample. One college with a relatively small alumni base and a relatively short history received more than 43% of the total amount of gifts in 1981 from people who contributed less than $100. In contrast, a college with a long history and many established alumni received only 6% of the total 1981 contributions from small gifts. We view this variable as representing the donors’ contributing capacity and thus as a proxy for their income. It may seem arbitrary to draw the line at the $lOO-level to measure the “income” capacity. However, it is not totally unreasonable to believe that most people will not consider gifts over $100 unless their annual income is substantial. Two more exogenous variables are used in the demand function: NUM measures the size of the market on the donors’ side, and DUM is a shift variable which differentiates other unmeasurable changes between 1976 and 1981. We assigned 1 to 1976 and 0 to 1981. On the supply side, services rendered by recipients depend first on price which is measured by the average amount the suppliers (schools) collected from donors. Recipients know that donors will be

motivated to the degree they receive some compensation - which in this case is measured by the amount of money they spent per dollar given. We do not use different tax deductibles in different states as the price variable for two reasons. First, although the marginal tax rate plays a significant role on the donor’s side, it may not represent the price the recipients actually pay for one dollar of donation. In our demand-supply paradigm, in which donations are exchanged for services rendered by recipients - just as a private good is bought and sold in the market - the tax deductibility feature cannot be used as a price variable applicable to both donors and recipients. Second, a recent study on this subject revealed that in view of recent experience, a change in the income tax rate, federal or state, may not have as great an effect on private support for higher education as has often been predicted.’ The second explanatory variable on the supply side, END, (endowment money in a college per fulltime student equivalent), is used to capture the need for supplying services to donors. Costly alumni services compete for college funds with many other demands on those funds. To the extent a college enjoys a large per capita endowment, the costs of alternative funding is less, relatively speaking, than the cost of alumni relations and fund-raising. The larger the per-student endowment, the less likely the college’s need for donations, and the weaker the incentive to provide services for donors. VOL. measures the alumni commitment rate. This is the amount of giving from alumni divided by the total number of alumni solicited. The quality of college services is measured by the degree to which responses are forthcoming from gift appeals. Both in terms of numbers of respondents and amount given, the quality of fund-raising efforts is a technological supply factor. Reunions, memorials for large donors, public recognition, and mailings are examples of qualitative activities. We also included a variable, RESEARCH, to capture colleges’ ability to entice grant support. As primary dispensers of research funds, foundations, governments and business enterprises clearly define the terms of their grants. These stipulations, to the extent they specify some academic objectives and omit others, tend to influence the “technology” of fund-raising efforts. For example, funds earmarked for cancer research in a complex of health sciences may necessitate appeals for balancing funds to

Altruism in the “Market” for Giving and Receiving

develop education in basic health services. This may also be interpreted as an alternative funding source which enables college budget officers to allocate more funds to fund-raising activities, thereby providing more services to potential donors. The last variable in the supply function, PREST, requires some discussion. In the conventional theory of supply, a profit-maximizing supplier would try to make his marginal cost equal to price of the product. Since we use here the average amount of donation as the price variable, one may argue that the quantity supplied, that is, the amount of services provided for donors, should increase as long as the marginal cost of supply is less than price, i.e. the average amount of donation. Therefore, it is reasonable to say that the more prospective donors there are who could contribute a large amount of money, the more feasible it is to broaden the list of contacts and spend more money on the campaign. We measure this effect by using the number of millionaires as a percent of total living alumni. The size of the gift is viewed as a determinant of the private services that recipients (suppliers) provide and donors (demanders) receive. In other words, the return to donors of spending an extra dollar is not likely to be a constant, but it is likely to increase in a non-linear fashion over some range. THE DATA Diffkulties in Obtaining Data on Giving to Higher Education Universities and colleges face stiff competition in the quest for the donor’s dollars, especially from other schools in the same area and other schools attended by the donor. Because all colleges - even publicly-supported ones - are critically dependent upon private sector funds, they leave no stone unturned in their search for contributions. Not surprisingly, they tend to be very secretive about their methods and their specific successes and failures. For these reasons, there is little data on how much schools spend on fund-raising and even less about the effectiveness of their efforts. Even if key techniques are used to induce giving, it is extremely difficult to get the data to support them. Yet economists have a very persuasive argument, as in Olson (1965) and in some other existing empirical research, that potential givers do expect to receive some incentive measures from receivers.

371

We think that a standard data collection program to support multivariate analysis of giving to higher education would be useful for several reasons. It would provide statistical information to individual schools without compromising their most confidential information. If particular incentives or other factors are found to be effective, they might be applied to other forms of giving. Moreover, economists would not have to compound two different motives, that is, choose between giving as a source of utility to the giver on the one hand, and giving as a source of utility to the recipient on the other. The Data Used for This Study Thirteen colleges submitted fund-raising data for 1976 and 1981, of which two provided only 1981 data. Because the data are confidential, we are unable to name the schools, but we list some of the data used and we specify the associated multivariate statistics. The data were generally conceived with two main areas of interest. The first area was (1) the costs of specific fund-raising activities, (2) the costs of alumni relations, which means keeping reasonably up-to-date files on graduates, college developments, and alumni events, and (3) other financial information about the school’s expenditures and income. This first area included information about the college endowment, the number of full-time equivalent students, growth rates of the student body, and total expenses of the college. We added to these demand-side data sets info~ation on research revenues and spending, both of which are obtained from other publications (American Council on Education, 1969, 1983). The second area involved characterizing the pool of potential contributors to each college: number of million-dollars prospects, age groupings and number of alumni, size groupings of gifts, etc. These areas of information are extremely confidential. Although we had limited data for fund-raising costs and contributions, we secured the material necessary to conduct a supply side study and to analyze demand factors. We excluded college public relations costs from our study. Many of these activities reflect revenues as well as costs, such as advertising revenues, alumni dues, magazine subscriptions, etc. Therefore, it is difficult to distinguish between college reiations costs concerned with alumni affairs and those connected with public information.

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Economics of Education Review

We also recognize that fund-raising costs are somewhat hard to compare among colleges - some represent reunion giving, some are for deferred giving programs, some are for special funds, and so on. While the benefits derived from fund-raising costs, which all the colleges in the study allocated separately, were not strictly comparable, the use of such costs is compatible with our testing of the model. Ideally, fund-raising costs would be divided to identify those which specifically promote reciprocating behavior by donors. We hope that future research will incorporate this more limited concept of fund-raising costs. ECONOMETRIC

RESULTS

Equations (4) and (5) are estimated using a variety of econometric methods. Since the model is specified in terms of a two-equation simultaneous system, both the two-stage least squares method (2SLS) and the three-stage least squares method (3SLS) are used. The results of these two methods are then corrected for heteroskedasticity because our pooled data covering 1976 and 1981 may contain some structural changes in the higher educational sector over the period. This correctional method is based on Pindyck-Rubinfeld’s (Pindyck and Rubinfeld, 1981) covariance model. Tables 1 and 2 show the estimation results of Eqns (4) and (5). Since ail the variables were converted to logarithmic values, the coefficients reported represent the elasticities of demand and supply with respect to their various determinants. Both the 2SLS and 3SLS methods consistently resulted in a negative coefficient of P in the demand function and a positive coefficient of P in the supply function whether corrected for heteroskedasticity or not. Statistical significance was also fairly high. with the exception of one instance on the supply side when the 3SLS method was used without a heteroskedasticity correction. The magnitude of the price elasticities in the demand and the supply equations are interesting. Based on the findings from the 2SLS methods, the price elasticity of the demand is approximately unity, whereas the same in the supply equation is rather smali. This seems to confirm our belief that donors are guided by their own self-interest and expect any increase in their donations to bc matched by an increase in some type of services provided by

the recipients. On the supply side, however, it has been found that college fund raisers do not seem to be very sensitive to “price” when they make decisions on the amount of services for the donors. even though there is statistically a strong positive relationship between P and the quantity of services supplied. Schools, even private ones, are severely limited by budgets in their capacity to adjust fundraising resources as they respond to new opportunities. In that sense, the college is like a “regulated monopoly”, unable to change the price, and certainly not in the short run. A reading of Coughlin and Erekson’s (1984) article suggests, for example, that the college athletic departments under discussion did not seem to feel responsible for keeping donors better informed of its schedules, performance records, and other fund-related activities. These authors ignore any potential effect on an increase in donations of fund-raising efforts. Yet positive events that givers can personally identify with - winning seasons and bowl appearances - seem to have strong effects on giving. Coughlin and Erekson combine potential contributions and efforts by the athletic department into “actual contributions”. Our second interpretation is based on the “selective incentive” hypothesis. Mancur Olson’s Logic of Collective Action. and some recent work following Olson’s reasoning by Dennis H. Sullivan, suggest that potential givers need individual incentives to encourage their collective action and thus reduce the free rider problem (Olson, 1965; Sullivan. 1985). Sullivan’s study on church giving concluded, for example, that a belief in sacramental participation and tithing, presumably a path to salvation, remained a strong incentive toward both church attendance and weekly contributions. The price inelasticity of supply seems to indicate that recipients are rational, self-interested people who will not voluntarily contribute to an organization - even one that promotes their self-interest - unless the organization offers “selective incentives” (rewards or immunities from penalties) in exchange for contributions for the common good. Coefficients of other variables in the demand and the supply equations are noteworthy. Signs of all the coefficients were as we expected. in particular, variable NUT plays a significant role in the demand function with a negative sign. Because we measured the quantity variable by the amount of services demanded per dollar of donation, the strong nega-

Altruism in the “Market” for Giving and Receiving Table 1. Demand function. Dependent

2SLV

GIFT

P

Intercept

endogenous

373

= Q (recipient’s services per dollar raised) DUM

NUM

0.3393 (0.0692)

-0.96OOf (-4.2993)

1.78083: (2.0135)

-0.89031 (-6.2870)

-

2SLS

0.2507 (0.0498)

- 1.0253’r (-4.3821)

1.8942$ (2.0807)

-0.9691’r (-6.1048)

-0.1812 (-1.1682)

3SLS

4.1114 (0.9759)

-0.6547t (-4.0358)

-0.75717 (-6.4365)

-

4.3199 (1.0229)

-0.6810; (-4.1371)

-0.80601 (-6.3031)

-0.1345 (-0.9801)

3SLS’

-0.9160 (-1.2577) 0.9373 (1.2849)

Note: Numbers in the parentheses are Student t-statistics. *These equations are estimated by the heteroskedasticity-correcting iStatistically significant at less than 5% level of significance. $Statisticatly significant at 6-15% level of significance. Table 2. Supply function. Dependent

Intercept

P

VOL

2SLS

10.7790t (10.6231)

0.2507$ (1.7665)

-05306t (-4.2997)

2sLs*

11.3847t (11.7558)

0.2843$ (2.1696)

3SLS

10.68671 (10.8760)

3sLs*

11.2520t (12.1690)

endogenous END

0.7325

16.43

0.7406

12.14

0.7471

17.72

0.7606

13.50

R2

F

-

0.8565

19.09

0.3926+ (5.1911)

-0.22741_ (-2.1923)

0.8879

19.81

0.0492$ (1.4058)

0.3286t (4.3466)

-

0.7471

17.72

0.0_518$ (1.6385)

0.3563t (5.1325)

-0.2135t (-2.1560)

0.7606

13.50

-0.6025t (-3.4107)

0.0439 (1.2105)

0.3618t (4.4611)

-0.60931 (-5.1625)

-0.6386t (-3.9279)

0.0464$ (1.4005)

0.1358 (1.1793)

-0.5663t (-4.8229)

-0.5100t (-3.1827)

0.1639$ (1.5570)

-0.6415t (-5.7508)

(-3.7194)

Note: Numbers in the parentheses are Student r-statistics. *These equations are estimated by the heteroskedasticity-correcting tstatistically significant at less than 5% level of significance. $Statistically significant at 6-15% level of significance.

donors expect to receive from the recipient. In short, a “small guy” psychology prevailed. Another notable finding is a large intercept of the supply curve which is also statistically significant. With the inelasticity discovered earlier, one may draw the supply curve as shown in Fig. 2. Point A in the figure signifies the large significant intercept on the horizontal axis. This clearly indicates that a recipient should provide a substantial amount of fund-raising services per dollar for the potential donors, even before any donations are made. Indeed, records from many colleges show that the initial investment at the beginning stage of a fund-

F

= Q (recipient’s services per dollar raised) PREST

tive relationship between NUT and e implies that the larger the donor pool, the fewer services the

.--

method.

RESEARCH

-0.5404t

RZ

DlJM

method.

raising campaign was substantial. In contrast, size of the intercept on the demand side is not certain in light of the student t-statistics. We may draw two alternative demand curves, D, and Dz, as shown in Fig. 1. D, wou!d be the demand curve facing institutions that do not have very many wealthy donors or that raise most of their funds from many small donors. In this case, the institution would most likely be in an excess-supply situation; that is, fundraising activities may not be able to attract any donations at all. In the normal situation, however, the curve should be like Dz, indicating that a substantial amount of per-person donation was attracted (Pa), with a significant amount of fundraising costs (or services) per dollar raised (QJ.

Figure

1. An inelastic supply curve and two alternative

demand curves. CONCLUSION Is altruism outside the realm of the classical theory? Is Adam Smith’s self-interested economic

Table 3. Selected

College code 0176 0276 0476 0576 0676 0876 0976 1076 1176 1276 0181 0281 0381 0481 0581 068 1 0781 0881 098t 1081 1181 1281 1381

Total giving ($ thousands) 2 294 1 132 6 123 2 881 4 695 4 985 3 283 2 291 8 541 2 234 4 168 2 162 8 619 4 537 6 740 to 266 2 572 15 540 5992 3 153 12 856 5 463 10 942

man capable of altruism? We have attempted to treat altruism as an economic good to be explained in a conventional supply-demand context. Departing from some existing studies, which use one minus the marginal tax rate as the price variable of donors, we characterized giving as the purchase of something to be supplied by recipients. Donors, therefore, are the purchasers of services and recipients are the suppliers, as implied by Hirshleifer (1985). Using fund-raising costs per dollar given as the measurement of services provided by recipients and the average amount of donation as the price donors pay for their services, we estimated the demand and the supply equations for giving. Data from 13 colleges for 1976 and 1981 were pooled to estimate the equations. Although conclusions are tentative due to the limited number of observations, this study found that the demand side has a unitary elasticity with respect to a per-person donation, while the supply side seems inelastic. The inelastic supply curve is quite plausible because recipients usually make more effort to impress existing donors in terms of presenting a positive school image and are more

data for study of giving to higher education

Percent of gift dollars from gifts of $100 or more 77.0 72.6 81.4 73.5 76.2 X9.8 73.5 81.6 94.4 75.5 76.6 82.3 89.7 Xl.6 85.2 88.1 x2.9 YO.9 87.5 57.0 94.3 87.1 86.4

(dollar

Endowment per Total giving per full-time equivalent student alumni solicited ($ thousands) ($) _ .._ _. _ - - 52.5 12.9 20.8 22.8 24.8 32.4 48.6 17.4 60.9 51.4 63.3 10.6 51.0 34.6 32.3 51.X 14.5 48.5 YO.0 27.8 67.9 52.0 63.2

183 123 104 225 122 221 124 213 803 201 206 151 19x 100 15Y 145 173 261 152 176 747 203 160

figures

are nominal)

Fund raising costs per dollar given 0.161 0.177 0.048 0. to9 0.089 0.088 0.060 0.145 0.057 0. tOA 0.149 0.221 0.030 0.092 0.087 0.063 0.103 tJ.040 0.063 0.087 0.057 0.100 0.036

Estimated number of gift prospects with a capacity to give $1 million or more 115 3 Y 5 13 20 8 8 13 27 49 : 17 11 37 4 21 27 11 13 21 13

Altruism

in the “Market” for Giving

strongly motivated to provide selected incentives than to try to raise funds from an unknown mass. We recommend, therefore, that cost-conscious fund-raisers try to allocate their resources more effectively, rendering psychic rewards to potential contributors. These rewards include, for example,

375

and Receiving

singling out on alumnus or alumna publicizing homecoming activities, opportunities to print donors’ bulletin. By stimulating self-interest, rewards encourage alumni to work tution.

for an honor, or exploiting names in a these psychic for the insti-

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AUTEN, G.E. and RUDNEY,G.G. (1986) Tax reform and individual giving to higher education. &on. Educ. Rev. 5, 167-178. BARTEN,A.P. (1977) The system of consumer demand function approach: a review. Economefrica 45, 23-51.

BECKER,G.S. (1974) A theory of social interactions. J. polit. Econ. 82, 1063-1073. BOULDING,K.E. (1962) Notes on a theory of philanthropy. In Philanthropy and Public Policy (Edited by DICKENSON,F.G.), pp. 57-59. New York. BOSKIN, M.J. and FELDSTEIN, M. (1977) Effects of the charitable deduction on contributions by low and middle income households: evidence from the national survey of philanthropy. Rev. &on. Statist. 59, 3.51-3.54.

H.R. (1980) The Costs of Higher Education: How Much Do Colleges and Universities Spend Per Student and How Much Should They Spend? San Francisco: Jossey-Bass. BOWEN,H.R. (1970) Financial needs of the campus. In The Corporation and the Campus (Edited by BOWEN,

CONNER, R.H.), pp. 75-93. New York: The Academy BREMMER, R.H. (1960) American Phj~anthropy. Chicago:

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