The Bottom Line

As a graduating senior, I’ve been endlessly hounded to “donate to the Penn Fund!” since the fall. The University as a whole has also been in the midst of a highly-publicized $3.5 billion capital campaign, which has been doing well, despite the economic conditions a majority of Penn alums are currently facing.

University funding is indeed a strange animal in economics. To paraphrase then-Lehigh University president, and former Penn Engineering dean, Gregory Farrington in his presentation to my Governor’s School class, “We call up our alumni and ask them for money, and they give it to us without expecting anything in return! No other for-profit business organization has this kind of economic model.” Granted, the alumni get a tax deduction for the amount they donate, but generally, the only thing donors get is that warm and fuzzy altruistic feeling that comes from “doing a good deed.” However, this feeling hardly puts food on the table or pays the bills.

So then, why do people donate to their alma maters? Freakonomics, in a very old post, explains one possible reason: as alumni’s children approach the college application age and have signaled that they would like to attend his or her parent’s alma mater, the probability of alumni giving increases with each successive year. For some strange reason, alums psychologically correlate giving money to the school they went to with raising their kid’s chance of getting in. Keep in mind that we’re not talking about the kind of money that gets buildings or programs named after you, just a couple hundred or grand here and there.

If I had a kid currently attending high school, I could somehow rationalize that particular line of reasoning. But I ask my fellow undergrads as the more objective observers, would you subscribe to that thought? I don’t, which makes me wonder exactly why alumni ultimately donate…

Angela Hu Uncategorized admissions, alumni, capital campaign, donations, freakonomics, penn fund