While the full impact of the economic downturn is still unclear, the University is starting to see a decrease in immediate payments by donors who have pledged money to Michigan.
According to University officials, the economic downturn hasn’t forced donors to go back on their pledges, but many are taking more time to pay their pledged amounts. With donations stretched over longer periods of time, the University may have to modify some programs because funding that was thought to be available for this year may not be available until later.
This comes at the same time that the total amount of money donated to the University has declined along with the University’s endowment.
But Vice President for Development Jerry May said the vast majority of donors are fulfilling their pledges as if the economy were perfectly healthy.
“Eighty-five percent of the cash-pledged goals have been paid,” May said. “We’ve got a little over $300 million unpaid that people are making pledged payments on. We are only about 4 percent behind in terms of people’s pledge payments, so 96 percent of people are paying their pledges on time.”
But May added that though few donors have canceled their pledges, there are some donors who have extended the period in which they make payments to fulfill their pledged donations.
“No one has canceled their pledge,” May said. “No one has said ‘I pledged $100,000 in the campaign but I’m giving you $20,000 but I can’t give you any more,’”
“What we do have is some anecdotal information that a handful of people — oh, let’s say 10 to 15 — that say ‘what I need to do is elongate my pledge, so I was going to pay it over the next three years, I now need to extend that to the next five,’ ” he said.
When asked if these delays will affect University programs, Judith Malcolm, the director of communications and donor relations for the University’s Office of Development, said because donors are extending their payment times, the University now has less money to set aside for programs originally expected to receive more money sooner.
“If they were putting this into a scholarship account, it means there will be less money there earning interest,” Malcolm said. “If their gift was to be spent now, yes it does mean there’s less money to be spent so if they were funding a scholarship there is less money for the students.”
The total donations to the University between the 2007-2008 fiscal year and the 2008-2009 year have declined from $184,214,257 to $155,191,066 according to the University Board of Regents website. University officials acknowledge that a small part of this decline is because of the economic downturn.
The donations total isn’t likely to increase anytime soon, May said. He predicts that in the coming months, as the University further feels the impact of the financial crisis, getting new donations will become more difficult.
“I think new commitments are going to be harder to get,” May said. “We’ve just gone through a tremendous period in the last eight years of this campaign where we had a campaign, and that was the thing that was really positive. Now we don’t have a campaign, we have what we call regular fundraising, so there’s not the same sense of deadline, if you will.”
The downturn comes on the heels of the University’s record-setting Michigan Difference Campaign, which raised $3.2 billion since it became public in 2004.