I attended a seminar today at which one of the speakers explained that typically university endowments contain a significantly greater percentage of restricted gifts than unrestricted gifts. In other words, the bulk of the donations to the endowment are restricted by the terms of the gift as to the kinds of expenditures that will be permissible eg student scholarships, faculty lines etc. I was wondering why this is the case. When I make charitable donations, I generally leave it up to the organization to whom I'm giving the funds how they want to spend the money. I figure they have a better idea than I do about what their priorities are at any given time. I understand that alumni of a particular school may make a donation and want it to be spent within that school rather than at one of the other schools within the university. And I certainly understand the importance of restricted gifts for particular purposes – such as scholarships enabling disadvantaged groups to fund their studies. But why would it be the case that universities in particular attract a larger percentage of restricted than unrestricted gifts (if indeed this is the case in practice)?
Restricted versus Unrestricted Gifts
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Isn't that just the nature of the fundraising business? Any time you ask for endowed scholarships, endowed chairs, endowed centers, they're always earmarked. It's rather hard to ask for $2 million with no indication of the deliverables (although that type of gift does exist, esp. from alums, trustees, and board members). Also, some donors do not have personal ties with the school or the larger university. So, they're more likely to be supporting a cause or investing in the success of a certain program. Thus, it's not surprising that unrestricted gifts — like donations to the annual fund — don't compare well with major donations.