Public higher education's changing financial environment is well documented. Facing shrinking budgets, competing priorities, public resistance to increasing state levies, and prohibitions on deficit spending, state legislators more and more often find themselves in the unenviable position of debating the relative essentiality of state services, including postsecondary education. As a result, higher education, a discretionary budget item in most states, has often been moved to the end of the state funding queue, resulting in state governments allocating a smaller share of their spending towards higher education. When tuition dollars cannot be increased further, public higher education institutions will become especially reliant upon alternative sources of revenue. Private giving is one of the more promising possibilities. This article addresses issues raised from the perspective of private giving. To understand how state appropriations and private donations are related at the institution level, an understanding of the behavior of donors and higher education institutions is needed. The level of state funding can influence the donors' willingness to give as well as the institution's fundraising effort. The article begins by considering both of these possibilities. This examination produces several implications for how the replacement of state appropriations with private donations would affect resource disparity among public institutions. A discussion of these implications concludes this article. (Contains 1 figure, 5 tables, and 15 notes.)