Awards
Donor Relations/Customer Service: University of California, Berkeley - Gold Medal

Category 3C: Advancement Services Programs – Donor Relations/Customer Service
University of California, Berkeley – Endowment Financial Reporting

Contact: Nancy Lubich McKinney, Director of Stewardship, 2080 Addison Street #4200, Berkeley, CA 94720-4200, phone: (510) 643-7664, email: nlmckinney@berkeley.edu

Professional Staff: The program was launched through the efforts of a multi-disciplinary team of 18 people. None of these individuals was assigned to this project full-time. Going forward the program will be managed by one person.

Support Staff: None

Overall Program Budget: Approximately $17,750 or $11.32 per package mailed

Addressable Constituents: 713,000 individuals (in 589,000 households) and 114,000 organizations

Target Audience: Donors to and other persons appropriately associated with endowed funds

Affected Constituents: 1,568 households and organizations with the potential to grow

Mission Statement: Stewardship nurtures and builds lasting relationships between the University of California, Berkeley and those who support the institution with private gifts. An active advocate for donor interests, stewardship fosters and encourages private support by:

  • Acknowledging contributions in a timely, accurate and appropriate manner;
  • Recognizing donors in meaningful ways; and
  • Reporting to donors in a timely, consistent and accurate manner on the use, impact and financial management of their gifts.

The Business Problem: The University of California, Berkeley operates a decentralized fundraising operation in which each campus academic and programmatic unit is responsible for managing its own activities according to established campus-wide policies. Such policies exist, for example, for prospect management and gift acceptance, but do not yet exist for donor relations/stewardship activities. As a step toward developing campus-wide standards, if not policies, the campus in 2004 created the stewardship team within university relations’ development communications department. This team has a two-pronged mandate—to steward the Builders of Berkeley campaign, the campus’s $1MM+ donors, and to develop standards, tools and programs that support stewardship across the campus’s academic and programmatic units. The team was initially staffed with a director, a program manager and a writer, and was seeded with existing scholarship reporting and chancellorial gift acknowledgement programs. It has since grown to include a second program manager and has taken on, among other responsibilities, the campus-wide giving society.

Best practice research and an audit of campus-wide practices conducted in 2004 indicated that a significant gap existed in the area of financial reporting on endowments. Many campus units included the market value of endowments in annual reporting to donors, but they used different sources to obtain the data, and some were expending significant time tracking-down the figures each year. They also used different terminology when communicating the information. Importantly, the College of Letters & Science, the largest of the campus’s academic units and the beneficiary of a significant proportion of endowed funds, was not doing this type of reporting. Donors supporting multiple endowments were, therefore, subject to receiving partial or inconsistent reporting.

The challenge posed to the campus to report the financial performance of individual endowed funds was exacerbated by:

  • The sheer scale—there are 3,300+ endowments that support the campus.
  • The campus’s endowments being managed by two separate fiduciaries—the Regents of the University of California and the UC Berkeley Foundation. The accounting for Regental funds is the purview of the University of California Office of the President and only a limited amount of data is routinely transmitted from the Regents’ general ledger to the campus’s general ledger. The accounting for funds held by the foundation is done on the campus but until February 2006 was supported by a legacy system-of-record that was not integrated with the campus’s financial system.
  • The fact that the requisite data resided in three separate systems controlled by different organizations, and the lack of a data warehouse solution to bring the disparate sources together. Descriptive and biographic data regarding donors and funds reside in the advancement database, while data pertaining to fund balances reside in the regental and foundation accounting systems.
  • Lack of well-maintained business procedures for linking people to funds for stewardship purposes. The linkage was done at the inception of the fund but was not consistently maintained as donors died or as organizational contacts changed. Further, the fund/person linkages were only actively used for the approximately 250 endowed scholarships being reported on by stewardship; the contact linkages for other funds were largely neglected.

Program Goals and Objectives: Agreement was reached that the program would be designed and implemented following the conversion of the foundation’s accounting system to the campus’s financial system and that it would be in place to report on 2005-06 fiscal year-end results. The donor stewardship goals of the program were to:

  • Demonstrate the university’s fulfillment of its fiduciary responsibility by providing annual reporting on the financial performance of individual endowed funds and the regental and foundation endowed pools.
  • Provide reporting on all endowed funds for which we could identify living individual donors, organizational donors, or other persons appropriately associated with the funds such as heirs.
  • Allow for the “householding” of funds so that each mailing address would receive only one envelope, thereby addressing the common donor concern regarding the lack of coordination in mailings and the desire to be environmentally sensitive regarding the use of paper.
  • Provide enough financial data to allow the reader to understand the changes in the fund balance from year-to-year without overwhelming him with accounting/financial terminology.
  • Because many people would be receiving this type of information for the first time, provide background information regarding Berkeley’s endowment, its management and its returns.
  • Share stories of the “endowment at work” to augment stories in development publications with broad distribution, the scholarship and fellowship reporting done by stewardship, and individualized qualitative reporting done by some campus units.

The following business objectives were also considered in developing the solution:

  • The business processes which resulted in getting the reports in the mail had to be manageable. Staff were not available to prepare, print, and mail large volumes of reports. Further, the process had to be scalable to accommodate projections for growth in the number of endowed funds.
  • The solution had to accommodate the fact that some households/organizations are linked to multiple funds and that some funds are linked to multiple households/ organizations. Further, it had to rely on a standard protocol for taking into consideration donor mail preferences recorded on the advancement database.
  • While the program would be centrally managed, the decentralized prospect management environment required that front-line fundraisers have the ability to opt-out specific fund/person linkages.
  • The need to use only audited financial data in reporting to donors while at the same time mailing reports in what recipients would perceive to be a timely fashion. Both the regents’ and the foundation’s fiscal years end on June 30th, but audited financials are not available until late October. As such, report preparation could not begin until early November. To the extent that some recipients hold the University to the same standard of timeliness that is imposed on public companies, rendering the report within a month of data availability was desirable.
  • The final product had to adhere to university relations’ high standards for the design aesthetic of print materials sent to donors.
  • There had to be a streamlined mechanism for tracking this stewardship activity that was transparent to the campus-wide fundraising community. The campus does not yet have a digital document solution for retaining material associated with its fundraising activities and the decentralized environment compels the distribution of multiple copies of donor correspondence.

The Solution: The solution had three principal components—1) the development of business practices for maintaining linkages between funds and people and for recording opt-out situations, 2) the formation of a multi-disciplinary team to develop a data model that would bring the disparate data into one place, and 3) the decision to outsource the preparation and mailing of reports to a vendor with variable printing capabilities. It also had an overarching “mass-customization” philosophy that relied on using technology to tackle the scale issue.

The first step toward developing business practices was to educate the campus units regarding the fact that this data even existed and how to locate it in the advancement database. This was accomplished through a series of meetings between stewardship and campus units, and was complemented by the development of two look-up utilities—a report of fund/person linkages by fund and a report of fund/person linkages by person. All fund/person linkages in the database were audited/updated over a six week period. In many cases campus units had more current/extensive fund contact information than what existed in the advancement database. In subsequent annual reporting cycles, fundraisers will be provided with an audit report and instructions for reviewing linkages and reporting updates to stewardship for input.

During this review campus fundraisers were also given the ability to opt-out specific fund/person linkages for reporting. Units were told that they could not opt-out all of the funds benefiting their units and retain the responsibility for reporting, which may have been the preference of units who had been reporting fund financial data. The arguments against allowing this were campus-wide consistency and operational efficiency. The ability to opt-out was allowed, however, in cases where sensitive strategies regarding existing funds or new gifts were underway. The opt-out situations will be part of the annual audit going forward.

The data model team was comprised of programming staff who support the advancement database and those who support the campus’s financial system, as well as accounting staff from the Regents, the Foundation and the campus controller’s office. Among the tasks that they accomplished were:

  • The identification of specific sources for the financial data and mapping of the detailed regental and foundation data into seven standard reporting fields for all funds—beginning market value at July 1st, gifts received, administrative costs, income, realized/unrealized investment gains/(losses), payout and other transfers, and ending market value at June 30th.
  • A methodology for householding funds based on fund/person linkages, for determining the mailing address for the household/organization based on known mail preferences, and for tracking each household/organization through the process to ensure the integrity of each package mailed. These issues were particularly crucial for individual, rather than organizational, donors. Among the resulting business rules were these two for persons with spouses/partners: 1) address the mailing to both even if only one is explicitly linked to the fund, and 2) use the preferred mailing address of the person in the household with the lower constituent record ID, which is generally an indication of the stronger relationship to the campus. In establishing these rules it would be impossible to meet every person’s preferences in terms of individual versus joint mailing, but it was determined that this would be the approach least likely to cause donor relations problems.
  • The development of a simple Excel data file that concatenated data from the three sources—the advancement database and the two accounting systems—and supported all of the requirements for householding, variable data printing and the return of the resulting letters and reports for electronic storage. Each row in the file represented a fund/person linkage, and contained four types of data fields—1) fund descriptors such as type (regental or foundation), number and name, 2) person descriptors, including the household and constituent IDs, contact type (e.g., donor, family/friend of donor, group representative, etc.) and name data, 3) household mailing data reflecting donor preferences, including the salutation appropriate for use by the vice chancellor for university relations, the signatory of the cover letter, and 4) fund financial data.

The decision to outsource fulfillment was the key to meeting the objectives of timeliness, scalability, design aesthetic and activity tracking. We were able to identify a vendor who could offset print the folder in which the cover letter and fund reports were presented and the mailing envelope; variable print the envelope, personalized cover letter and fund reports; and ensure that the right contents were stuffed in the right envelopes by coding all variable print pieces and employing documented business procedures for fulfillment. Further, the vendor was able to prepare PDFs of each cover letter and fund report produced. The PDFs were named according to a schematic that enabled attaching them as contact reports to the web-enabled front-end of the advancement database. This made the actual contents sent to the recipients available electronically to the entire campus fundraising community without have to make a single copy of a report. Of course, the campus had specific and stringent data security and privacy requirements that the vendor had to meet. In addition, in order to ensure the accuracy of the reports we worked with the vendor to implement a sampling process for checking PDFs of draft cover letters and fund reports before they were printed. The sampling was stratified based on the number of funds associated with the household—e.g., every tenth package for households with one fund, every fifth package for households with two funds, etc. For households with six or more funds every package was checked.

The Results: The following statistics were associated with this effort:

  • This package was mailed on December 1st to 1,568 households or organizations affiliated with 1,587 funds.
  • Because some households/organizations are affiliated with multiple funds, and because some funds are affiliated with multiple households/organizations, a total of 2,071 individual fund reports were created.
  • Of the total number of households/organizations, 1,282 received reports for one fund and one household received reports for 23 funds. Various numbers of households received reports for two to 22 funds.
  • From the time that the packages were proofed according to the sampling procedures to the time they were printed, stuffed, posted and mailed, a mere 36 hours had elapsed.

The results of this program have been:

  • No errors in reporting financial data have been identified/reported.
  • Donor feedback has been overwhelmingly positive. We have received dozens of phone calls, emails and letters thanking us for the reports. Some donors have told us that they had forgotten that they had established the fund, so this has given us an opportunity to re-connect with them and talk about their current philanthropic goals. In some instances donors have indicated that we are the only institution they support that is providing this level of transparency. This is perhaps the most gratifying donor quote: “I was very pleased with the results showing excellent management of the funds. My children now feel better about my decision.”
  • We have received several incremental gifts adding to the principal of existing funds. We have also been contacted by donors to quasi-endowments who are interested in expediting use of the monies.