TY - JOUR AU - Brown,Jeffrey R. AU - Dimmock,Stephen G. AU - Weisbenner,Scott TI - The Supply of and Demand for Charitable Donations to Higher Education JF - National Bureau of Economic Research Working Paper Series VL - No. 18389 PY - 2012 Y2 - September 2012 DO - 10.3386/w18389 UR - http://www.nber.org/papers/w18389 L1 - http://www.nber.org/papers/w18389.pdf N1 - Author contact info: Jeffrey R. Brown Gies College of Business University of Illinois at Urbana-Champaign 1206 S. Sixth Street Champaign, IL 61820 Tel: 217/333-3322 E-Mail: brownjr@illinois.edu Stephen G. Dimmock Division of Finance and Banking Nanyang Technological University Singapore, 639798 Tel: 65 6790-6119 E-Mail: dimmock@ntu.edu.sg Scott Weisbenner University of Illinois at Urbana-Champaign Department of Finance 340 Wohlers Hall, MC-706 1206 South Sixth Street Champaign, IL 61820 Tel: 217/333-0872 Fax: 217/244-9867 E-Mail: weisbenn@illinois.edu M1 - published as Jeffrey R. Brown, Stephen G. Dimmock, Scott Weisbenner. "The Supply of and Demand for Charitable Donations to Higher Education," in Jeffrey R. Brown and Caroline M. Hoxby, editors, "How the Financial Crisis and Great Recession Affected Higher Education" University of Chicago Press (2015) M2 - featured in NBER digest on 2013-02-01 AB - Charitable donations are an important revenue source for many institutions of higher education. We explore how donations respond to economic and financial market shocks, accounting for both supply and demand channels through which these shocks operate. In panel data with fixed effects to control for unobservable differences across universities, we find that overall donations to higher education - and especially capital donations for university endowments or for buildings- are positively and significantly correlated with the average income and house values in the state where the university is located (supply effects). We also find that when a university suffers a negative endowment shock that is large relative to its operating budget, donations increase (demand effects). This is especially true for donations earmarked for current use. We conclude by discussing the importance of understanding how donations respond to economic shocks for effective financial risk management by colleges and universities. ER -