The Joy of Giving (and Getting in Return)

Would you donate more money to your alma mater if it increased the chances of your son or daughter getting in?

What would you do if that school rejected your loved one?

For hedge-fund titans, private-equity kings, corporate chieftains and lesser but still well-moneyed mortals hounded by alumni associations, these are not idle questions.

A new study has answers: "We find that the presence of children increases an alumnus's giving, that giving drops off after the admissions decision, and that the decline is far greater when the child is rejected," say economists Jonathan Meer of Stanford University and Harvey S. Rosen of Princeton in a new working paper.

Meer and Rosen, who got access to alumni contributions data from "an anonymous selective research university," found that the incremental chance that a parent would donate to their alma mater increased each year between the ages of 14 to 17 if their child wound up applying to that school.

If the child got in, then the parent's elevated level of giving was maintained through their child's college years.

But if a skinny envelope arrived in the mail, then the incremental chance that the parent would donate dropped close to zero, matching the same level of giving as alumni with no children.

Self-interest was not the only motivator for giving. Meer and Rosen calculated that self-interest accounted for 48 percent of alumni giving while altruism accounted for 52 percent of giving.

The authors stress that the results may not necessarily apply to other selective schools.

And what happened after the child left college? The incremental chance that parents would donate returned to their child's pre-acceptance levels, suggesting that self-interest is a life-long affliction ... or asset.

by Zubin Jelveh