5 Important Higher Ed Fundraising Truths for FY2020

The end of the fiscal year puts me in a contemplative mood—as institutions close their books, they shift focus from the end-of-year scramble and begin to think about the opportunities ahead. With the future in mind, I think there are five fundraising truths that are especially urgent to understand as higher education fundraising leaders set the course for FY2020.

1. The Traditional Phone Model is Shifting

Over the past ten years, our research shows that there has been a 50 percent decline in donor participation rates in phone programs. More and more people are ditching their landlines and won’t pick up calls from numbers they don’t recognize. One of the most significant contributors to the declining phone program is lower phone effectiveness among middle-aged prospects.

• Fewer phone donors. Phone programs have seen an average reduction of 3,500 donors per school over the past 10 years.
• Fewer phone dollars. Blackbaud’s predictive modeling projects a $130K reduction of phone dollars over the next 5 years.
• Institutions are diversifying. Institutions have tried to develop other channels such as crowdfunding, alumni events, social media campaigns, and other digital means to address the decline in phone effectiveness. These initiatives are traditionally one-off events that are siloed and disconnected from other points of contact.

Bottom line: Phone is still an important channel; it just isn’t as productive as it once was. Segment-driven prioritization and over-calling have saturated constituents and opened the door to new approaches.

2. Adopt a Coordinated, Multichannel Fundraising Approach Today

Making up for ineffective and declining phone programs means adopting a truly coordinated multichannel approach. This approach leverages a combination of phone, email, direct mail, and SMS text messaging to make connections with alumni. It engages your audience by matching your ask with the communication cadence and method they’re most comfortable with.

• A numbers game. Across our community of higher education fundraisers, 80 percent of donors are acquired after four appeals, retained after five appeals, and renewed after six appeals.
• Maximize your touchpoints. On average, increasing to seven solicitations will net 90 percent of donors.
• An integrated approach. Engage annual giving audiences and personalize messaging by leveraging technology based on predictive modeling that prioritizes person-to-person interaction and cost-effective strategies.

Bottom line: People give in patterns, so start by building your interactions with them around their donation anniversary, graduation date, homecoming, and other significant dates in their relationship with the institution. Contact with donors should be a coordinated effort across several channels, but sequence is up to you—the research on sequence is inconclusive. But we do know a multichannel approach is always more effective than single channel and predictive models work with any sequence.

Read more about how to improve your fundraising success in the free white paper “Fundraising at the Speed of Life: Strategies for Sustainability Through Uncertain Times”

3. Without a Focus on Emerging Donors, Capital Campaigns Are Risky

Capital campaigns grow with each new iteration. It’s the nature of the beast—goals are considered the signature achievement of the president, executives, and the major gifts team. But now, the same committed evergreen donors who made campaign growth possible in the 1990s are aging out of prospect pools. And, those new evergreen donors stepping up to replace them are a smaller and considerably older group. The last 30 years of donor performance reveals some alarming trends.

• Less frequent donations. The average number of years of giving before becoming an evergreen donor in 1980 was 7, now it’s 20. Moreover, the median age for an evergreen donor in 1980 was 44.5, now it’s 62. Put simply, potential big donors are waiting longer to give and they’re getting older before they do.
• A shrinking donor segment. There has been a 30 percent decline in the number of middle-aged donors over the past 20 years. Much of the focus has been on younger alumni and would-be mega donors, while donors 30-50 years old have been largely ignored.
• Big donors are waiting longer. The median age of first-time “Top 100” donors increased from 53 to 67 between 1980 and 2017. So, your mega donors are waiting 14 years longer to achieve giving levels schools have grown accustomed to. This reality could significantly impact any current and future campaigns.

Bottom line: Many universities focus far too much on wooing small donors to inflate participation rates and wealthy constituents to land mega donations. There needs to be a renewed focus on emerging prospects and genuine, consistent interaction across all donor groups to keep donor pipelines full in all categories.

4. People Give to People, Not Channels

Fundraising strategies built on technology and social media have biases that exclude would-be constituents and contribute to a decline in their number. Institutions are focusing too heavily on platforms and not enough on people. Early attention and support can help newer donors continue their philanthropic relationships with institutions. By focusing on genuine interaction and cultivating real relationships, those young donors can grow into evergreen and sometimes even wealthy “Top 100” donors.

• Neglected relationships. Colleges and universities typically spend just 10 cents of every dollar on benefits that alumni can consume. In other words, 90 cents of every dollar is spent on asking for contributions.
• Neglected prospects. Seventy-nine percent of officer contacts are concentrated on “Top 100” donors while many prospects go undiscovered. In fact, 60 percent of the best prospects are either not assigned or not on their radars.
• Capitalize on meaningful moments. By adjusting your message to align with the life stages, priorities, and preferences of your constituents, you can prioritize quality interactions and ultimately lift results.

Bottom line: Schools need to identify potential major donors very early in life and through focused attention—and appealing to them in personalized, genuine ways—grow the relationship over time. That way, as donors move through different life stages, institutions can appeal to them appropriately, and ultimately, receive a major donation at some point. As donor populations dwindle, the future of fundraising at colleges and universities will hinge on their ability to restock their pipelines with new and emerging donors.

5. The Lifetime Value Model Offers Tremendous Opportunity

The lifetime value model means managing relationships for the lifetime of a constituent’s relationship with you. This approach still looks at gifts through the structure of a pyramid, but one with a much broader base that focuses on building relationships early with key segments who haven’t traditionally been targeted while simultaneously raising funds for current initiatives. The point of the pyramid is to identify the best prospects early on, establish the right path for their particular situation, and then create alternative paths that allow those in other segments to easily engage and ultimately give.

• Looking long-term. Considering an alternate view of the pyramid lets institutions take a long-term approach and raise money through more thoughtful, personalized campaigns built around meaningful moments and cultivating relationships. It encourages thinking of campaigns as 60-year endeavors, not 7-year initiatives.
• Finding ‘generational leaders.’ The term ‘generational leader’ represents alumni who are around 10 years removed from graduation and represent the top 10 percent of their peers for giving. They’re not major donors yet, but they’re positioned to become so in the future. Generational leader gifts are, on average, 9.5 times greater than their peers.
• Building strong pipelines. Identifying and starting relationships with generational leaders when they’re in their late 20s and early 30s should be the first step in building a strong fundraising pipeline. That creates a long-term relationship that can be nurtured and allowed to flourish.

Bottom line: Advancement teams have a tremendous opportunity to rebuild their large capital campaigns into sustainable, healthy fundraising avenues. It will take hard work and a change in culture and mindset, but it is the most realistic way to ensure fundraising streams are available for future students and organizational initiatives.

Learn more from Andy about the lifetime value model in the article “Fundraising at the Speed of Life”

 

*Research cited is from Reeher, Powered by Blackbaud.

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