Why It’s More Critical than Ever to Cultivate the Middle of Your Giving Pyramid

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In Academic Impressions' recent free webcast Rethinking Campaign and Major Gift Strategies, we put together a snapshot of data culled from a series of recent surveys and reports. While many institutions responded a fear years ago to the recession by focusing increasingly on cultivating top donors, the snapshot we presented documents the extent to which this strategy may be unsustainable for your shop.

Here are the highlights:

More Focus on Top Donors, but Fewer Donors

According to the CASE Campaign Report 2011, over the past five years (2006-2011):

  • The percentage of campaign dollars provided by the top 1% of donors has increased from 64% to 77%
  • The percentage of campaign dollars provided by the top 10% of donors has increased from 87% to 95%

So only 5% of campaign dollars are being provided by the middle of the donor pyramid.

Here are a few reasons why this should be concerning:

  • According to Target Analytics' Q4 2011 donorCentrics Index of National Fundraising Performance, the number of donors for all nonprofits has declined over the last six years by 5.3%, and the overall number of new donors acquired per year has declined 14.6% over those same past six years. In tightening their belts and targeting primarily top givers, many fundraising shops are bringing in fewer new donors.
  • Yet in higher education, almost half of all donors make their first gift to the institution more than 20 years before making a commitment at the major gift donors, according to Eduventures' 2008 study Transitioning Donors to Higher Gift Levels.

It comes as no surprise that the cultivation of a major donor is a long-term project, but the numbers offer a stark picture of the risks of not investing resources in cultivating more donors and cultivating them earlier.

Here are a few more data points to consider:

Donors Are Getting Younger, and Feel Less Engaged

Not only do more than half of donors make their first gift two decades prior to making their first major gift; the age at which they can make a major gift is getting earlier. According to the Capgemini and Merrill Lynch World Wealth Report (2011), 32% -- nearly a third -- of net-worth individuals (HNWIs) in North America are under age 55, an increase over previous annual reports.

Yet, when the Collaborative Innovation Network for Engagement and Giving conducted a national survey of alumni in 2010 at the 100 institutions wiht the highest alumni participation rates according to US News & World Report, they found that only 52% of alumni at these institutions believe that their alma mater keeps them closely connected and values its alumni relationships.

In an increasingly competitive philanthropic climate, engaging potential donors as early as possible and strengthening the early and middle stages of the donor pipeline is critical to a shop's continued success.

While advancement shops are generally successful at securing the gifts critical to meeting institutional goals, there remains no better representative than an academic leader to pitch an innovative program or solicit an important gift. Unfortunately, crowded agendas and divergent backgrounds often keep academic and advancement professionals from developing truly effective working relationships.

Strengthening the Donor Pipeline

In our recent free webcast, we asked a panel of three experts for their advice on strengthening the donor pipeline:

  • Mark Jones, vice president for external relations at Hollins University
  • Jim Langley, president and founder of Langley Innovations
  • Christine Tempesta, director of strategic initiatives at the Massachusetts Institute of Technology (MIT)

Here are some of their suggestions, with additional resources:

  • Ensure that your annual fund's leadership giving program is robust -- moving donors into the upper levels of this program is a critical for ensuring that you have a strong cadre of committed donors for the next campaign
  • Besides creating a loyalty society and promulgating years of consecutive giving, have a strong buy back program in place. Institutions with strong loyalty societies have seen middle-of-the-pyramid donors take more ownership of their institution's future and their role in it; Jones and Langley both cite examples in which donors have contacted the institution, on their own intiative, to "buy back" years in which they missed giving to their alma mater. For a particularly strong example of a loyalty and buy back program, take a look at Vanderbilt University.
  • Build a strong student philanthropy program with messaging that begins at the transition into the institution and with a structured senior campaign that models future institution/alumni interactions prior to the student's transition to alum. For critical steps and examples of effective student philanthropy initiatives, read our article "Engaging Future Donors While They Are Still Students."
  • Conduct regular research, surveying your alumni not only about their overall satisfaction with your institution but about whether they feel valued in their relationship with the institution, what their most meaningful experiences at your institution were, and who had the greatest impact on their lives and career while they were students. For more on how to use such a research effort to engage your alumni in meaningful ways, read our article "Reconnecting and Re-engaging your Alumni."
  • As a part of that research, identify faculty or staff who had a significant impact on your alumni. You can use that information to foster ongoing relationships with those alumni, because connecting alumni with your institution through their relationships with faculty will be far more meaningful and effective than connecting alumni with development officers. For a forward-thinking and long-term approach to cultivating these relationships, read our article "Taking Engagement to the Next Level: Building Achievement Networks."

"Surveying and interviewing your constituents not only about what they think of you but what matters to them, what concerns them -- that is one of the most effective means of engaging your alumni. By asking their opinion -- and documenting how you are responding to what they tell you -- you show respect for them. You show that you care about their voice and their views."
Jim Langley, Langley Innovations

  • How the president can take a lead role in defining the case for support and identifying inspiring projects defined by specific objectives rather than categories of institutional need
  • How the president can define for donors the difference a philanthropic dollar makes in achieving key objectives
  • The respective roles and responsibilities of the president, the vice president for advancement, and the board chair
  • The president’s specific role in donor stewardship, campaigns, piloting new models for fundraising, volunteer management, and asking
  • How to onboard a new president in ways that strengthen rather than stall the work of fundraising

What to Do if You are a Community College

When asked about ideas for engaging donors in the local community if you are a community college and have less tradition of a strong relationship with your alumni base, our panel suggested that often, what will matter most is having the college president circulate among the community for a year in advance of the campaign, meeting with alumni and with business and community leaders to share ideas about future directions for the college and to solicit input about how the institution can best serve the community, so that college and community can move into the future together.

This year of input-gathering and collaborative planning makes a compelling case for the campaign; the institution won't just be rolling out an agenda absent the community's input. Rather, the community will see their input in the plan; they will already be invested in it.