The present study presents a formal model of the dynamics of a university's reputation that points to the existence of a snowball effect where alumni donations raise a university's reputation, which in turn generates additional alumni donations. Given that econometric results presented in this study confirm the model's main findings, supporting a university's financial development arm at optimal levels should receive thorough consideration by the university's administration. Our model and empirical results also suggest that university administration should better assess the reputation-enhancing facets of an institution deemed integral by peer institutions, as these determine the outcome of its fundraising efforts.