Monday, November 12, 2012

Brown et al. on Charitable Donations to Higher Education

Jeffrey BrownJeffrey R. Brown (Illinois - Department of Finance) and his co-authors have posted The Supply of and Demand for Charitable Donations to Higher Education.  Here is the abstract:

Charitable donations are an important revenue source for many institutions of higher education. We explore how donations respond to economic and financial market shocks, accounting for both supply and demand channels through which these shocks operate. In panel data with fixed effects to control for unobservable differences across universities, we find that overall donations to higher education – and especially capital donations for university endowments or for buildings– are positively and significantly correlated with the average income and house values in the state where the university is located (supply effects). We also find that when a university suffers a negative endowment shock that is large relative to its operating budget, donations increase (demand effects). This is especially true for donations earmarked for current use. We conclude by discussing the importance of understanding how donations respond to economic shocks for effective financial risk management by colleges and universities.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

LHM

http://lawprofessors.typepad.com/nonprofit/2012/11/brown-et-al-on-charitable-donations-to-higher-education.html

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