Jim Carson has a post on why he won't donate to his Alma Mater and relates some pretty heavy horror stories as to why. Jim and I are on the same page for this for our undergrad degree, but I found I sort of had to donate to my MBA school.
Like Jim I had a bad experience with the financial aid office during my undergrad education (but not as bad as his). I was going to school during the oil bust of the mid 80s (anyone remember that?) when Dad's small engineering services company went from over 50 people to two, bringing his income to essentially zero. My parents had me go apply for financial aid but I was denied since last year's income was just fine, we don't care what you will make this year. That was strike one. Strike two was that the school raised the tuition every single year I was there. I vowed at the time that I would take those tuition increases out of any money I decided to donate later on in life. Since I still haven't decided to donate, they still have thousands of dollars to work off. The third strike is that the president of this fine institution makes a hell of a lot more than I make today. In fact, he makes more than my wife and I put together. More than the President of the U.S. If they can afford to pay some schmuck nearly half a million dollars a year to run an institution with about 2,000 undergraduates, they obviously aren't in need of any funds. Strike three.
This doesn't count the fact that the last alumni magazine I received before I got my name removed from the mailing list not so subtlely endorsed various left-wing political causes. It's like this place tried to go out its way to piss off half their alumni. So no money for them. Ever.
My business school is a different story. My MBA was largely funded by my employer at the time, so I had no bad experiences with my parents mortgaging their house to make a tuition payment. The main reason I donated, however, is that I am still networked to a lot of my fellow alums, some who serve on the alumni board. So when my buddy whom I have drinks with when we are in the same city calls up and does a pitch for a small donation, I sort of feel compelled to send him some small amount, like what I spend in a week at Starbucks. At least it's tax deductible.