Higher Education Giving: Balancing Legacy and Impact
Donor Generosity
In the single fiscal year that ended on June 30, 2024, U.S. higher education institutions received a staggering sum of $61.5 billion in voluntary support, according to the Council for Advancement and Support of Education (CASE)’s Voluntary Support of Education (VSE) survey. Charitable donations from alumni accounted for $12.9 billion (21.0%), with foundations and corporations contributing $20.4 billion (33.2%) and $7.6 billion (12.4%), respectively. Note, however, that many foundations and corporations are funded, owned, or otherwise affiliated with alumni of the school which they are supporting. Clearly, higher education remains the centerpiece for American milestones, and many attribute to their alma mater elevated career choices, cherished memories, and especially prestige.
Purpose of Current Operation Gifts ($35.8 Billion)
Gifting Targets
It is perhaps no surprise that the lion’s share of donor restricted gifts to the endowment (48.3%) are earmarked for student financial aid. Access to college is an increasingly difficult challenge, as we explored in previous blogs, but many Americans on stable financial footing are giving back in a conscious effort to alleviate financial pressures for the next generation of students. When combining endowment gifts targeting financial aid with gifts made to academic and faculty & staff divisions (which purchase new learning tools, hire new professors, and expand department offerings), the sum totals 87.2% of all endowment gifts.
It is abundantly clear that the philanthropic priority remains bettering and expanding access to education. To that end, the majority of gifts are actually made to current operations (or current-use gifts), to be applied to an institutional purpose immediately, rather than invested into the endowment. According to a part of Harvard’s gifting policy: “current-Use gifts are defined as donations that may be spent down in their entirety.” Of the $61.5 billion in charitable donations received by higher education institutions in 2024, $35.8 billion (58.2%) went towards current operations, which covers primarily research, academics, and athletics. In this category of immediate impact, student financial aid only comes to 12% of all gifts.
Delayed Impact
Even for those who wish to create legacies and continue support for students, there is a suggestive reason to give current-use financial aid versus the endowment approach. While endowments provide long-term security for institutions, it could take a decade or more before each original donor dollar has created tangible benefit. Take Yale University’s endowment, which is invested in the famously steady Yale Model, which, as of the fiscal year that just ended in June, 2025, sports a 30 year average compound return of 8.14%. Assuming no market deviation for simplicity, and using Yale’s targeted annual spend of 5.25% of its endowment value for operations, we calculate that it would take over 13 years before a donor’s entire check is availed to their selected purpose. This fact also doesn’t take into account market downturns and inflation, which may further hamstring intended impact.
Unfortunately, current-use gifts are not the perfect solution either. Many, if not most, universities apply a modest assessment or gift fee to current-use gifts in order to cover overhead and expenses. According to Yale’s gifting policy, “all spendable gifts are subject to the university’s indirect cost recovery policy, which allocates 12 percent of the gift amount to offset the full costs associated with the program funded by the gift.” The gift fee also exists at public universities, albeit less. The University of Connecticut Foundation exacts a 5% fee to non-endowed funds. Fees within the same ballpark also exist at other public universities, like the University of Washington, University of Arizona, University of Alaska, and Rutgers University, to list a few.
“For donors who want to pair legacy with immediacy, and for students whose potential shouldn't wait 13 years to be realized”
None of this suggests that endowment giving is ineffective. Quite the opposite — it remains one of the most powerful tools for strengthening institutional resilience and extending educational opportunity across generations. But for donors seeking a more immediate, transparent, and student-connected experience, especially those who wish to champion financial aid as a matter of urgency, alternative models can be a meaningful complement.
At Scholar Basis, we’ve been working with financial aid professionals and donor-advised funds to create just such a model. Through our SaaS platform and affiliated 501(c)(3) pilot fund, we offer a structure where donations can directly support student financing through flexible, income-aware repayment grants. Our priority is making each dollar of generosity go the furthest it can for the students who need it most, with real-time impact tracking and personalized alignment between donor intent and student outcomes.
We’re not replacing endowments. We’re building alongside them; for donors who want to pair legacy with immediacy, and for students whose potential shouldn't wait 13 years to be realized.