Fundraising, Part 4: Data key for independent schools

By Todd Cohen

[This article was written for Blackbaud.]

Attention to data is driving fundraising at independent schools, which have seen steady growth in fundraising revenue since 2000, says Donna Orem, chief operating officer at the National Association of Independent Schools.

“The best schools have always been doing a lot of prospect research and looking at data and having that guide much of their fundraising,” she says.

Median fundraising revenue grew to nearly $600,000 in the 2012-13 school year, up from about $500,000 in 2000, according to a survey of NAIS member schools that generated responses from 970 institutions.

That growth was consistent for the period, except for a slight blip during the recession, but even then many schools found they could turn to a small number of donors who had the capacity to dig deeper and who “understood the challenges schools were facing,” Orem says.

Schools are using data to better understand donors based on factors such as gender and race, segmenting their base of donors and prospects.

“The fundraiser today in an independent school does his or her homework to really understand those nuances,” Orem says.

And with 10 percent of donors typically accounting for 90 percent of fundraising revenue, she says, schools are focusing most of their efforts in major-gift fundraising.

“Most schools understand they have to have a very effective major-gifts program, have to do research to understand who their best donors are, and have to have effective major-gifts fundraisers who understand how to engage those donors, who need ongoing cultivation,” she says.

And donors increasingly want to “be involved in the life of the school,” she says, and to “understand how their money has been used, and what the outcomes are.”

Schools also are looking for ways to cultivate students and young alumni, and increasingly are focusing on online and social media to connect with then.

And they are investing more in cultivating alumni.

Citing a groundbreaking 1998 study by Stanford University on alumni giving, Orem says alumni who give the most “are those who feel most connected to the school of today.”

Schools understand that “if the only time alumni hear from the school is when they need money, they won’t get money,” she says.

So schools are developing programs to engage alumni, such as programs in cities with large concentrations of alumni, and travel, and also are using social media to build alumni communities.

Recognizing that grandparents increasingly are involved in their grandchildren’s education, and often paying for it, schools also are developing programs to engage grandparents in the life of the school.

A big challenge for independent schools, Orem says, is a shortage of experienced development officers.

With more nonprofits looking for development officers, the recession prompting many development officers to stay in their jobs, and older Baby Boomers beginning to retire, schools have found it tougher and more expensive to fill openings.

Ultimately, whether a school is large or small, the key to effective fundraising is to “create a culture of philanthropy, Orem says.

“Just throwing people at the operation tends not to be so successful,” she says.

What works, she says, is helping members of the school community “understand why giving to the school is important to the life of the school, and understanding that most schools don’t charge what it costs to educate a child, and one of the most significant ways to make up those dollars is through giving.”

Next: International affairs groups refine message

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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Fundraising fundamentals key in tough times

By Todd Cohen

[Note: This column was written for Blackbaud, which asked me to help interpret and to comment on its charitable giving Indexes.]

Ongoing economic gloom continues to dampen charitable giving, underscoring the core importance of building and maintaining strong connections with donors.

Reinforcing the need for better donor development and retention are new data from Blackbaud

that show a decline in charitable giving overall and only a slight increase in online giving in the three months through September, compared to the same period last year.

With uncertainty about the economy and the fall elections undercutting expectations about how much donors will give, experts say, nonprofits need to do a better job understanding what is making donors anxious, and to stand by them, especially during the crucial year-end fundraising season, even if they are giving less or not making gifts.

“Don’t treat them differently because they reduce their gifts because they’ve had to, or because they stop giving for a year or two,” says Karla Williams, principal of The Williams Group, a national consulting firm based in Charlotte, N.C. “Treat them the same. If you treat them differently, they will not return.”

Lingering recession

Overall giving at 2,931 organizations that raised a total of $8.3 billion over 12 months fell 3.1 percent for the three months through September, compared to the same period last year, according to The Blackbaud Index of Charitable Giving.

In the same period, online giving at 1,926 charities that raised a total of $378.7 million online grew 2.7 percent, says The Blackbaud Index of Online Giving.

Independent schools outperformed fundraising overall and online.

A new specialty index focused on K-12 independent schools launched by Blackbaud, says overall giving grew 3.1 percent for the three-month period at 321 independent schools that raised a total of $499 million over 12 months. Online giving grew 17.6 percent at 132 independent schools that raised a total of $30 million online.

K-12 giving

For the fiscal 2012 school year, annual giving averaged $1,149 per student for the more than 1,400 private, nonprofit schools that are members of the National Association of Independent Schools.

While that average was up from $1,119 in fiscal 2011, it still remained below the $1,573 average in fiscal 2008, before the economy collapsed in the fall of 2008.

The new data from Blackbaud showing independent schools are outperforming nonprofit giving overall and online confirm the upswing for schools and “may be a harbinger of a pretty good year,” says Patrick Bassett, president of the National Association of Independent Schools.

Donor retention

The continuing impact of the recession underscores the need for nonprofits “to cherish the donors we have,” Williams says.

Nonprofits’ top fundraising priority, she says, should be donor retention.

“Retention is all about personalization, relationships, partnerships, and stewardship,” she says. “You may lose their dollars for a year, or get decreased dollars for a year, but they’re still giving, and you have to keep on treating them as a top donor.”

In a recession, nonprofits need to be “a little more sensitive to where our donors are as it relates to either their fears, their job losses, their job changes, their reluctance to give money right now when they’re feeling a little nervous about what’s going on in the greater economic climate, and give them the liberty to make the decision that’s best for them.”

Year-end fundraising

The final three months of the year are a crucial fundraising period for many nonprofits.

And while they typically set fundraising goals based on expectations about how much donors will give, “if those expectations are unrealistic, the fundraisers will be disappointed,” Williams says.

The most effective year-end strategy a nonprofit could pursue would be to give each member of its board of directors 10 names of top donors to call or visit.

“Don’t oversolicit or solicit when you’re anxious,” Williams says, “but solicit properly and personally.”

The key, she says, is to be patient with donors and avoid overreacting from fear that fundraising goals will not be met.

“When we overreact, we really risk putting the relationships in jeopardy,” Williams says.

To see the full report on the Blackbaud Index, click here.