Investment Strategies for Donation Portfolios with Fragile Assets
39 Pages Posted: 31 May 2016
Date Written: May 28, 2016
Abstract
In the presence of conditional charity, universities must undertake costly revenue raising to qualify as prospective recipients of private donations. This paper considers the donation portfolios of U.S. universities between 2003 and 2014 to investigate whether a strategy that includes beliefs about donor withdrawal can improve decisions about investments in revenue-raising activities. The results indicate no wealth effects. However, the evidence shows that the strategy can help some institutions smooth the revenue streams of their overall donation portfolios and rebalance from withdrawing donors. The results remain unchanged after accounting for the costs of adjusting revenue-raising activity levels.
Keywords: Portfolio Choice, Investment Decisions, Criteria for Decision-Making under Risk and Uncertainty, Educational Finance, Financial Aid
JEL Classification: G11, D81, I22
Suggested Citation: Suggested Citation