This paper first examines the economics of higher education and the five economic problems that face institutions of higher learning: inflation, expansion of educational services, fluctuating student enrollments, need for an enlarged and modernized capital plant, and uncertain sources of income. The paper then reviews the trends and potential of three major sources of private philanthropy: foundations, corporations, and private individuals, and argues for the importance and necessity of private philanthropy. Finally, some suggestions are made for identifying and cultivating potential donors. These include: (1) researching all sources of support, (2) establishing 2-way communication with potential donors, (3) development of good publicity techniques, (4) establishment of special groups of alumni and friends for the financial support of the institution, and (5) a capable and well-trained staff of fund raisers. (AF)