Even as the recent economic downturn hurt fundraising efforts at colleges and universities across the country, private donations soared to record levels at Harvard last year, according to a study of higher education funding.

With a record $683 million in private donations, Harvard overtook Stanford University as the most powerful fundraising machine in higher education. Two years ago Stanford had claimed the number one position from Harvard but last year finished second among all national universities with $469 million in private gifts. Columbia and Yale Universities followed with about $350 million each.

Private donations continued to increase during the 2001 fiscal year but the pace fell off dramatically compared to the year before. Colleges and universities throughout the nation endured shrinking endowments and minimal growth in fundraising because of the recent recession, according to the report released late last month.

The results came from an annual survey on giving to colleges and universities conducted by the Council for Aid to Education (CAE), a nonprofit group established in 1952 to promote corporate support for higher education. CAE is part of the RAND Corporation, a non-profit think tank.

The study revealed a nationwide increase of 4.3 percent in university fundraising for the 2001 fiscal year—down from a 13.7 percent increase the year before.

According to the report, the major source of growth last year came from private foundations, which are nonprofit groups that must pay out about 5 percent of their assets to maintain their tax-exempt status.

The surge in foundation giving—even in the face of an economic downturn—was made possible by a doubling of total foundation assets during the economic boom years between 1996 and 2000. Those good years carried over despite the recession, said the study’s author, Ann E. Kaplan.

“There was such a huge increase in foundation wealth during the mid to late ’90s that it’s going to take them a few years to pay out on the commitments they made during that time,” she said. “It if wasn’t for foundation growth we probably would have seen a decline.”

Helped by these private foundations, total fundraising for all universities reached $24.2 billion in 2001, up $1 billion from the previous year.

This increase in giving came during a year when stock markets fell across the board—the New York Stock Exchange dropped 3.4 percent and the Standard and Poor’s Composite Index declined even more sharply, falling 15.9 percent.

These declines hit university funding in several ways. Most endowments, which are heavily tied to the stock market, suffered. Harvard’s endowment, the largest in the nation, saw a decline from $19.2 to $18.3 billion. Stanford experienced a similar drop of just over 5 percent.

But Yale, which has the second-largest endowment in the country, defied economic trends by posting a $600 million gain—climbing to $10.7 billion.

The sluggish stock market also hurt contributions of stock, land and other gifts of so-called “appreciated property,” which declined by 8 percent.

The strongest increase in giving came from private foundations—which gave almost one-fifth more in 2001 than the year before. Overall, colleges and universities find their largest source of funding among alumni contributions, but compared to the large increase in foundation giving, alumni support rose by just 0.4 percent last year.

To compensate for the recession, many universities are expanding their fundraising efforts as they await an economic recovery, said Robert C. Pringle, associate vice-president of developmental marketing at Stanford.

“When times are tough you don’t close your doors, but you do a lot of cultivation work,” he said. “People will remember that you called them when they didn’t have any money.”

Although the national economy has already shown signs of improving, the study’s author says many fundraisers are not very optimistic about the future.

“Even when the recession officially ends, it takes a few months for people to experience it in their own lives, and we don’t know what will happen with the stock market,” Kaplan said. “The outlook doesn’t look very robust, but we might be surprised.”