Alumni Donations and Colleges’Development Expenditures: Does Spending Matter?

A bstract Since college development officers supply recognition to alumni and seek donations in return a model is devised wherein this exercise of market power in the exchange is included. Data for three years is used from eighteen universities and colleges‐public and private, large and small, research and teaching oriented. The findings indicate that schools with higher development costs generate substantially more donations. Several demographic characteristics of the student body were tested. Schools with higher participation in fraternities and sororities have higher giving, while schools with a higher proportion of part‐time students have lower giving. Surprisingly, having an NCAA Division I athletic program has no significant effect on alumni giving. Likewise, alumni donations seem independent of whether a school is public or private, or is or is not a research institution. Finally, the size of a school's endowment has no predictive value, but the level of annual bequests is strongly positively related to alumni giving.