What determines alumni generosity?

Alumni giving is correlated with institutional characteristics, such as quality and development efforts, and student characteristics, such as quality and wealth. Empirical analysis is complicated by the expected correlation between institutional quality and student wealth, and the possible endogeneity between institutional expenditures bn education (one common measure of quality) and the level of alumni support the institution receives. This paper uses a two-stage least squares approach with data on quality and variables correlated with student wealth to address these issues. Quality variables are found to have a positive impact on the average alumni gift, with that impact most significant for private universities and liberal arts colleges. Wealth variables also have a positive impact on the average gift, with the estimated coefficients most significant for public universities. Development effort is very important in determining the level of giving for all three types of institutions.