The relationship of annual giving and endowment payout to future tuition dependency at private master's universities

Vincent Michael Maniaci, University of Pennsylvania


In the course of my research I found a great deal of speculative writing on fundraising, but very little quantitative research and virtually nothing on the impact of not tying the annual fund into long-term strategic planning. I found a great deal of literature related to strategic planning and some studies done on financial vulnerability for nonprofits. Most importantly—through the work of Bill Massy relating to managing budget efficiency, long-term planning and endowment—I was able to ground my study in his framework for sources of operating revenue. I developed a very simple equation whereby the operating budget is equal to the annual fund plus endowment payout plus net tuition. Revenue from research indirect cost and government subsidy is not applicable to private institutions, and I found net revenue from auxiliary enterprise to be insignificant and, therefore, did not include it in the study. ^ The question arose as to where the benchmark should lie for setting the annual fund and endowment payout as percentages of the operating budget. I used the Voluntary Support of Education report as a database to test private masters granting institutions. To find the benchmark, I conducted two analyses of variance using categorical independent variables for both the ratio of annual fund to operating budget and the endowment payout ratio to the operating budget. ^ What emerged from the study was a benchmark, but more importantly a sense of the psychology driving the bad business practice attributable to many presidents. The psychology is related to the high subjective time discount of many presidents i.e. the executive tendency to spend rather than save. Perhaps most interesting of all is the taxonomy created by the study, whereby using the 4 percent benchmark, institutions are divided into four groups: those with low annual fund and low endowment payouts, those with high annual funds and low endowment payouts, those with low annual funds and high endowment payouts, and those with high annual funds and high endowment payouts. ^ I anticipate that the findings in this study will draw attention to the issue of subjective time discount among presidents and alter the perception that presidential perspective is most accurate for setting budgets and strategic planning. Moreover, I believe the taxonomy can be used to inform the decision making process for strategic planning. (Abstract shortened by UMI.) ^

Subject Area

Education, Finance|Education, Administration|Education, Higher

Recommended Citation

Maniaci, Vincent Michael, "The relationship of annual giving and endowment payout to future tuition dependency at private master's universities" (2003). Dissertations available from ProQuest. AAI3084877.