Fundraising, Part 3: Higher education cultivates major gifts

By Todd Cohen

[This article was written for Blackbaud.]

A rebounding economy and long-term investment in major gift donors paid off for colleges and universities in 2013, says John Lippincott, president of the Council for Advancement and Support of Education, or CASE.

Schools that have shown fundraising success also are doing a good job in their stewardship of donors, including younger donors, by engaging them in their institutions in ongoing ways, he says.

In a CASE survey a year ago, its members said they expected 5.8 percent growth in giving in 2013, compared to 2012, a projected pace roughly equivalent to the 20-year average growth for CASE members.

“We are now back to normal rates of growth in the aftermath of the recession,” Lippincott says.

Driving that growth has been the recovering economy, and the cultivation of major gift donors, or those making gifts of seven figures or more, he says.

In a fundraising campaign with a goal of $1 billion or more, 87 percent of funds typically are given by 1 percent of donors, and those major gifts generally are a function of “the number of times you ask,” he says.

“What is accounting for the kind of success people are anticipating comes down to the development of the relationships with the major donor community,” Lippincott says. “Those donors are giving as a result of the long-term relationships they have with the institutions.”

Institutions that are doing well “are the ones that spent a lot of time listening to their donors during the worst of the recession,” he says. “And they’re reaping the benefits now.”

Key to cultivating those donors is to find ways to meet the growing expectation of major donors to have “a level of engagement with the institution beyond simply the transaction of the gift,” he says.

That kind of stewardship, which often can lead to future gifts, typically involves inviting major donors to serve, either formally or informally, in an advisory or governance role at the school so they truly become key advisers and “stakeholders” in the institution, Lippincott says.

Colleges and universities also are looking for ways to maintain relationships with major donors.

Scholarships represent a good opportunity to develop those relationships by providing donors with ongoing interaction with scholarship students, with the donors often serving as mentors for the students.

Schools also have been working to better engage younger donors.

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,” Lippincott says.

“The appeal that institutions often will make is a very specific appeal to people several years out of the institution,” he says, so those young alumni “can see how this is going to have a meaningful and immediate impact,” he says.

A school might ask recent graduates and even current students to support a bike-sharing program on campus, for example, “something real that they can relate to, rather than a general appeal,” he says.

In comparison, says Lippincott, a 1971 graduate of Wesleyan University, his annual gifts to his alma mater are made “out of a sense of general obligation, rather than what my money is actually going to.”

Schools also are making increasing use of digital media to more effectively reach donors, and not only younger alumni, he says.

“The greatest age group for growth in social media is the 65-plus age group,” he says.

For younger donors, who handle many if not all their transactions online, digital media represents a natural platform for giving.

For those donors, social media also represent a platform that is “more more important for donor acquisition than it is for dollar acquisition,” Lippincott says.

“Even if gifts from recent graduates are $10 or $25 gifts, using social media, it’s as important that you’ve gotten those recent graduates into the habit of giving, and acquired information about what they’re interested in, and can use that to sharpen the appeal,” he says.

Planned giving also has become an key fundraising program at many colleges and universities.

Major donors, who account for most of the recent growth in fundraising revenue, often want to make their gifts through planned giving vehicles, Lippincott says.

And at a time of low interest rates, he says, donors often prefer planned giving strategies such as annuities that make regular payments to donors, with the remainder of the gift going to the college or university.

“Those annuity payments now are quite appealing,” he says, “because they frequently pay significantly higher interest rates, rather than people parking their money in any fixed income asset.”

Next: Data key for independent schools

The series:

Part 1: Growth tied to capacity, cultivation, communication.

Part 2: Healthcare groups invest in capacity.

Part 3: Higher education cultivates major gifts.

Part 4: Data key for independent schools.

Part 5: International affairs groups refine message.

Part 6: Religion focuses on fundamentals.

Part 7: Arts and culture groups focus on donors.

Part 8: United Way diversifies.

Part 9: Conservation groups connect with donors.

Part 10: Communication, planning key for human services.

Part 11: Peer-to-peer strategy fuels medical research.

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