By Sarah Hansen and Matt Schifrin
The season for college rankings is upon us, and each year media outlets (including this one) vie to create the most insightful listings, often with increasing complexity. However, the best way to evaluate a four-year college education may actually revolve around just one variable – alumni giving. At its core, the goal of most colleges is to produce happy and successful graduates who give back. So instead of crunching the usual ROI metrics -like employment statistics, salaries and job placement stats-Forbes developed a proprietary ranking we call the Grateful Graduates Index.
The index ranks private not-for-profit colleges with more than 500 students using two variables: the median of total private donations per enrolled student over the last seven years, as reported to the Department of Education, and the alumni participation rate, or the percentage of graduates that give back in the form of donations to their colleges each year, regardless of dollar amount. The alumni participation rate, compiled by the Council for the Advancement and Support of Education (CASE), is averaged over three years. Total median dollar donations are given a 70% weighting in the index and the alumni participation is given 30%.
While conventional rankings that measure ROI are typically rigged in favor of large universities and STEM focused schools like Stanford, Caltech, MIT and Columbia University where alumni tend to land higher paying jobs in the fields of tech or finance, Forbes GGI levels the playing field somewhat for smaller liberal arts colleges, whose alumni tend to earn less, but may very well be happier. Thus colleges like Wellesley College, Hamilton and Carleton College rank above such venerated larger schools as Yale, Harvard and the University of Pennsylvania.
In 2018, Dartmouth College takes the top spot for the second year in a row with a median 7-year donation of $24,000 and average participation rate of 41%, followed by Williams College, Princeton University, and Amherst. Big-name schools like New York University, Villanova University, and Carnegie Mellon University find themselves much lower on the list, despite receiving large dollar donations per student, due to lower alumni participation numbers. Harvard University, the top ranked school of Forbes Top Colleges list, ranks number 30 in terms of alumni happiness and success based on its relatively low participation rate of 18% .
With 2018’s new tax law in place, an overall downward trend in alumni giving may become more pronounced in the next few years. And while it’s too soon to see any real effect this fiscal year, Brian Flahaven, Senior Director for Advocacy at the Council for Advancement and Support of Education (CASE), anticipates that donations to colleges and universities may slow further due to new rules related to itemizing and charitable tax deductions that will disproportionately affect small- to mid-size donations. Smaller donations tend to come from younger graduates rather than older, more established donors with a long track record of giving. “That pipeline of new younger donors is really what we’re most concerned about,” he says.
Megan Morey, Vice President for College Relations at Williams College, says she’s seen firsthand a decline in donations from younger alumni. As a result, Williams is developing new methods to encourage engagement among new graduates, whether through volunteer programs in which community volunteer hours are matched with donations, or through programs that allow alumni to direct their gifts to specific areas of interest. “We’re working very hard to reverse that trend in alumni giving,” she says.
Find 2018’s rankings below.