Increase of Restricted Donations to the Swarthmore Fund

The Swarthmore Fund, which contributes to the college’s operating budget, consists of both restricted and unrestricted gifts by donors. In recent years, gifts to the college are becoming increasingly restricted. Young donors especially are increasingly restricting their philanthropy. Although unrestricted gifts allow for more flexibility in the college’s budget, restricted donations are important in supplementing the Swarthmore Fund and do not hinder the college’s ability to use funds, according to Assistant Vice President for Finance and Controller Alice Turbiville.
“An important part of the college’s budget is made up of both restricted and unrestricted gifts. Although the endowment provides the most significant portion of  the college’s funding, these gifts are vital for the running of the college.”
“Gifts to support the budget include the Swarthmore Fund and some federal and state
Support,” reads the Operating Budget Summary from 2016. “Given our reliance on endowment spending to support our operating budget, particularly in turbulent financial markets, we continue to strive to maintain the delicate balance between current needs and intergenerational equity.”
When donors give gifts to the college, they have the option of restricting where and how the funds will be spent. Restricted giving can significantly change the way in which a gift will be used. According to Zain Talukdar ’19, a Phonathon worker, restricted gifts are one of the many ways in which a donor can give to the college.
“Restricted gifts fall under one of the many categories that pay for the Swarthmore Fund,” said Talukdar. “Rather than allocating to the general pool of money, money is allocated to a specific group and counts as a restricted gift.”
The Swarthmore Fund is vital in supporting activities and providing opportunities for Swarthmore students. On the Swarthmore College website, the Swarthmore Fund is identified as the primary way in which the college supports present student needs, whereas the endowment ensures the long-term sustainability of the college’s goals. This means that gifts to the Swarthmore Fund go towards financial aid, staffing needs, and summer mentoring programs, among other things. According to Turbiville, restricted giving provides support in specific areas of the college’s budget.
“Restricted donations can provide the college with much-needed support for specific areas of the budget such as student financial aid,” said Turbiville. “These donations do not necessarily make it more difficult to use funds, depending on the donor agreement, but endowed gifts certainly impact the timing of the use of the gift.”
Unrestricted donations can have a broader and more flexible role in funding the college. These gifts allow the college to use funds wherever they are needed and can have the most immediate effect due to their flexibility.
“Unrestricted Swarthmore Fund gifts provide the college with the most flexibility for use of the funds and have an immediate positive financial impact,” said Turbeville. “Unrestricted gifts account for approximately $5 million of budget support, which is less than 5 percent of annual operating costs.”
According to Fritz Ward, senior associate director of marketing, the national trend of donors giving restricted gifts has become more common in recent years. This trend is reflected in the proportion of Swarthmore donors restricting their gifts. Five years ago, 9.2 percent of the Swarthmore Fund donors gave restricted gifts, while last year, this percentage rose to 13.4 percent.
“Over the last 20 years, there’s certainly been a national trend of more donors choosing to identifying a specific area for their philanthropy,” said Ward. “We have seen an increase at Swarthmore that reflects this trend as well, but the vast majority of Swarthmore Fund donors, 86.6 percent last fiscal year, choose to make unrestricted gifts, which provides the college with the greatest flexibility.”
Although the trend of restricting donations is increasing, Talukdar reports that the majority of his Phonathon experiences have involved unrestricted gifts to the Swarthmore Fund.
“People from my experiences don’t give restricted gifs that much,” said Talukdar. “Basically in a year and a half of working at Phonothan, I think I’ve had two restricted gifts.”
The college has been working steadily to increase the philanthropy of young alumni. The Swatober Young Alumni Challenge, which concluded on Monday, was one such way to do so. This challenge matched each donation made to the Swarthmore Fund by young alumni with a $100 contribution to the Swarthmore Fund by the Board of Managers. The challenge managed to raise a total of $24,000 between October 24 and 31, according to Ward.
“The college has been moderately successful in our efforts to engage our young alumni philanthropically,” said Ward. “The college’s goal is to engage young alumni in a wide variety of ways, which includes everything from young alumni events to career services support to volunteer opportunities to philanthropy.”
One significant difference in the philanthropy of young alumni is the higher rate at which they restrict their gifts than other college donors. This is reflective of a national trend in increased gift restriction among younger donors, according to Ward.
“In the fiscal year of 2016, approximately 19.9 percent of young alumni designated their gift, while 11.5 percent of the rest of the alumni body did so. In the fiscal year of 2015, 14 percent of young alumni designated their gift, while only 9.5 percent of the rest of alumni did so,” said Ward. “The percentages vary year to year, but it’s consistent that a higher percentage of young alums designate their gifts than the rest of the alumni body.”
Many explanations exist for the increasingly restricted philanthropy of young alumni.
“There are a number of reasons often cited for this trend, from differences in generational attitudes to an increase in giving options, but one reason we see young alumni restricting their gifts at Swarthmore at a higher rate than the rest of alumni body is simply due to the relatively brief amount of time that has transpired since they graduated,” said Ward.
Gifts are often restricted, so that donors can ensure that their philanthropy goes towards an area they are especially passionate about, such as specific departments, clubs, or athletics. Young alumni often retain a stronger connection to the campus because of their recent graduation, and they are more likely to identity with certain programs, professors, or groups that they wish to support.
Although Talukdar rarely runs into restricted donations during his Phonathon work, he believes that restricted giving is important for young alumni engagement, and it can provide an opportunity for increased giving.
“To some degree, alumni are entitled to give to whatever they want to give to,” said Talukdar. “I think people would be more likely to give to the school if it was a restricted fund, so they know what it is going towards.”
While restricted philanthropy is on the rise among recent graduates, it remains an important contribution to the Swarthmore Fund and plays an integral role in supporting students, groups, and programs on campus.

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