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The Fall of Unrestricted Giving

Jennifer Bernstein

Vice President

Development and Alumni Relations

Rick Reiss

Senior Vice President

University Advancement

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Let’s TalkUnrestricted Giving

� enables universities to have flexibility new opportunities and to financially address unexpected challenges.

� highly desired by university stakeholders, including presidents, trustees, deans, and financial officers

� are strongly correlated with a high degree of affinity and trust by donors

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� How reliant is your institution on unrestricted gifts?

� Very reliant

� Moderately reliant

� Not reliant

� Not Sure

Poll Question

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On the DeclineUnrestricted Giving: A thing of the past?

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On the DeclineUnrestricted Giving

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On the DeclineUnrestricted Giving

Over the past forty years the percentage of alumni giving to all colleges and universities peaked in 1990 at approximately 18%. In 2012 the alumni giving participation rate was 9.2%, down from 9.5% in 2011 and 9.8% in 2010. The participation rates for different types of higher education institutions ranged from a low of 0.7% for public associate degree-granting colleges to 4.5% for public Master’s degree universities to 9.5% for private Master’s degree universities to a high of 21.5% for private baccalaureate institutions.

Dan Schipp, Johnson, Grossnickle & Associates

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The DriversWhat is causing the decline?

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The DriversWhat is causing the decline in unrestricted giving?

� Economics of higher education and fundraising

� Lower public trust of institutions

� New era of mass customization

� A culture of empowered philanthropy

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Since 1988 participation rates of giving to education have declined. This trend has been incessant. I tie this to the rising cost of higher education. I think that even the average college graduate of a public or private institution looks at the cost of higher education and may walk away concluding that no one needs their $500 gift. It is happening more and more that people—even college graduates—perceive, however incorrectly, that they can’t afford a higher education for their children. This declining rate of participation has happened at almost every institution. And, it doesn’t end well because the discovery of donors into the process of multiple year engagements at larger and larger giving levels with fewer and fewer people doesn’t make economic sense. We’ve made up for this by getting bigger gifts from fewer people. As a result, we’ve become very dependent on the top 1% to 10% of donors.

Michael F. Sinkus, Marts & Lundy

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The DriversEconomics of Higher Education

The DriversEconomics of Fundraising

As budgets get tighter, ROI can drive strategic decisions. According to the AAFRC Trust for Philanthropy, 78.3% of all charitable contributions come from individuals. It is also well known that 80%-90% of all funds raised from those individuals are from the top 10% of donors. In other words, major giving is where it's at. This is not to preclude the importance of broad based memberships and giving at all levels, but rather to focus your fundraising energies on the best return on investment (ROI) of time, staff, volunteers, and other resources, facilities, etc.

Fundraising Costs and Return on Investment - National Averages

Method Cost Return on Investment

Direct mail to general lists (non donors) 115% 15%

Special Events 50% 50%

Planned Giving 25% 75%

Direct mail to prior donors 20% 80%

Foundations/Corporations 20% 80%

Major Gifts 5-10% 90-95%

National Average, all methods: 20% 80%

Source: James Greenfield, Fund-Raising: Evaluating and Managing the Fund Development Process)

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The DriversPublic Trust: Down Generally

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The DriversPublic Trust: Stable for NGOs

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The DriversPublic Trust: Down for Higher Education

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In a Recent Study…

� A majority (55%) view college as increasing important to succeed, but citizens worry that college opportunity is diminishing, principally because of price, with 70% indicating that many qualified students may not have the chance to attend.

� Over 80% believe students borrow too much to pay for college.

� 60% think that colleges increasingly put “bottom line” business concerns ahead of educational needs of students.

Source: Squeeze Play 2010: Continued Public Anxiety on Cost, Harsher Judgments on How Colleges Are Run.” The National Center for Public Policy and Higher Education/Public Agenda

� Do you think donors trust your institution?

� More than in the past

� The same as in the past

� Less than in the past

Poll Question

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The DriversMass Customization or Why Don’t They Know Me?

� Companies deliver highly customized experiences on a large scale

� Expectation from customers that companies and, now, institutions know them personally

� Donors expect a seamless experience in giving that is highly personalized to their unique habits and interests

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The DriversMass Customization or Why Don’t They Know Me?

� The internet customizes search on anonymous users

� New tracking technology personalizes advertising across the web depending on your searches and the content in your email.

� As a result, consumers have been acculturated to receiving highly personalized and personally relevant information from websites, news outlets, retailers, etc.

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The DriversA new culture of empowered, customized philanthropy

“Research shows Millennial donors – or those born between the early 1980s and the early 2000s – are as generous as other generations were at the same age, but that they are “much more focused on wanting to support the things that matter to them…”

John Lippincott, Recent President, CASE

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The DriversA new culture of empowered, customized philanthropy

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� Donors at all levels have access to more information than ever

� On watchdog sites, including Charity Navigator and Guidestar, donors can see:

� An organization’s level of transparency (as judged by the site)

� Names of key leadership

� 990 tax forms

� Reviews

� Financial Data

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Survey Responses

Are alumni requesting more restricted giving options?

# Answer Response %

1 Yes 16 70%

2 No 7 30%

Does your institution's annual fund contain specific sub-funds?

# Answer Response %

1 Yes 19 79%

2 No 5 21%

How many specific sub-funds are under your annual fund?

# Answer Response %

1 1 - 5 3 16%

2 5 - 15 6 32%

3 15 - 30 2 11%

4 30 or more 8 42%

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Does your development team sponsor a crowdfunding campaign?

What is the general theme of your annual fund communications?# Answer Response %

1 Scholarships 20 91%

2 Annual Fund 19 86%

3 Choose your own adventure 6 27%

4 Participation 15 68%

5 Pride 10 45%

6 Other 2 9%

# Answer Response %

1 Yes 5 22%

2 No 18 78%

Q&A Break

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Solutions

1. Make a convincing case to the leadership

2. Work with faculty and staff to identify alumni hot-spots

3. Use data analytics and hyper segmentation for max ROI

4. Use directed giving, crowdfunding, and day of giving campaigns

5. Refocus on the fundamentals, especially smart stewardship

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Solutions: Making the Case to Leadership to Move to a Restricted Annual Fund

� Get the CFO on board first!

� Show them the trends in your own data

� Show them the trends at your benchmark schools

� Talk about building a culture of philanthropy for the long-term

� U.S. News & World Report

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� Invite faculty to informal meetings to discuss your efforts

� Identify What’s In It For Them (WIFM)…and then deliver!

� Develop your partnership with Student Activities

� Use crowdfunding to support faculty-staff

� Create a staff development fund

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Solutions: Leveraging Faculty & Staff and Finding Alumni Hotspots

In Action: UC San Diego has a staff development that provides funding for conferences and other career training opportunities to enhance staff contributions and further their careers

� Look at existing models (e.g. Northwestern University)

� Consider hiring help (Target Analytics, Reeher, MSP Digitial Marketing)

� Work with faculty experts

Solutions: Data Analytics and Hyper-Segmentation

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� Directed Giving allows donors to funnel their gifts to broad budget-funding categories but not confine their contributions to specific areas

� Creating a family of funds gives your phonathoncaller a lifeline when people ask where their Annual Fund gift will go

� Directed giving empowers donors with choice and provides an in-house method of identifying the affinity of a prospect

� Example: Pace Race’s family of funds

Solutions: Directed Giving

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Examples of Donor Directed Giving

� A giving model that is highly customized for low-level donors: DonorsChoose.org (http://www.donorschoose.org/)

� Allows donors to pick classroom-based teaching projects across the country

� Crowdfunding:

� USeed at UVA is a great example of a University Crowdfunding site: https://uva.useed.net/

� Peer-to-peer fundraising

� Friend-based fundraising for races and other charity events

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� Crowdfunding is a digital platform used to raise funds for innovative projects/campaigns

� Allows the ability to pool together thousands of smaller scale donors in a short period of time

� Crowdfunding works through social media networks to solicit support from pledges

� Helps engage donors that are usually never reached, and can be useful for schools who have non-traditional students.

� Stewardship emails allow the donor to see exactly what the organization has been able to do with the funds. This connection also bridges the gap between alumni and students, setting a foundation for possible future networking

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Solutions: Crowdfunding

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� The Annual Fund worked with the student team to help fundraise for weR Gold.

� These students also belong to other organizations, it is expected that their organization promotes each project.

� RPI annual fund created a division called the selection committee including mostly young alumni. While any student can post a proposal for crowdfunding, the selection committee picks specific projects (usually in greatest need) to be placed on the crowdfunding portal.

� Learn more at http://wer.rpi.edu/gold/

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Crowdfunding Case Study: Rensselear Polytechnic Institute (RPI)

� An Integrated giving program that takes advantage of the entire university giving community including donors, students, student/athletes, faculty, trustees, & staff

� Extensive collateral through social media

� Linked to direct-mail and phone program

� Often use challenge grants

� Egs. include National Philanthropy Day, Giving Tuesday, and University/College Giving Days

� Knight Foundation: Giving Day Playbook: www.givingdayplaybook.org

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Solutions: Days of Giving

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Case Study: 42 Hours of Giving at Farleigh Dickinson University

• Set a Goal

• Secure Challenge Grant

• Provide “Sharing” message for social media

• Include Alumni Chapters

• Advance direct-mail

• Dedicated Web Page

• 24 hour call-back line

• Promote! Promote! Promote!

• E-mail blasts

• Thank you!

• Assessment

• 15% of FDU’s alumni donors give via 42 Hours of Giving

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Solutions: Stewardship � Remember: it’s easier to receive support from existing donors than gain a

brand new donor!

� Stewarding directed giving donors requires a bit of creativity

� Create a new donor welcome package

� Thank you videos and thanking donors on social media

� Start a thank you letter with a story

� Change up your thank you phone call script

� A postcard is worth a thousand words

� Remind donors how they’ve made a real impact

� Report successes and updates to donors

� Make your donor feel part of something

� This is relationship building – keep your donors feeling good

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Q&A35