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Outgrowing the Annual Fund

Keep the largest donors happy with special cultivation, solicitation, and stewardship techniques

By Laura C. Jackson


They're among your campus's best donors: loyal, committed supporters who give — and give well — to your annual fund every year. In response to your most basic direct-mail appeal or phonathon pitch, they send hundreds or thousands of dollars to help your institution cover its operating expenses. Then they patiently wait to hear from you next time.

So what have you done for them lately? If you're like some campus annual fund programs, not much.

Despite good intentions, annual fund staffs often don't have the time or resources to show these donors proper care and concern. Worse yet, these supporters can easily fall through the cracks between the annual giving and major gifts programs.

"Campuses often make the mistake of decapitating the top of their annual fund," says Lori Yersh, executive development director for constituent-based programs at McGill University. "Annual fund staffs think these donors need special attention, but in the major gift pool they're low-level supporters, so they attract little time and attention."

The best place for these donors is in the upper echelon of your annual fund. These donors are similar to frequent fliers who've logged 100,000 miles on a single airline, says Yersh, who's also an annual giving consultant with Grenzebach Glier & Associates. They're your platinum club, and you should offer them all the perks of membership to maintain their loyalty to the annual fund and groom them to make a major gift. But developing the right kind of program requires time and commitment.

Defining the Big Fish

Each campus will have a different definition of who's at the top of its annual fund, depending upon average gift size, giving club levels, and so on. But in general, annual gifts of $1,000 to $10,000 are on the edge of major gift territory. Donors in this category are usually alumni and trustees, although parents, friends, faculty members, and a small number of businesses may contribute at this level as well.

Alumni who make gifts of this size most likely graduated in the 1950s, '60s, and '70s. "High-end annual fund donors are usually people in their 40s and mid-50s who are hitting their peak earning years and starting to wrap up debt," says Richard Bundy, executive director of development for the College of Agriculture with the Iowa State University Foundation. They might make annual fund gifts for years before deciding on — or being asked for — a larger gift.

Some young alumni also have this capacity for giving, however. The Peddie School's Young Alumni Leadership Group, for example, is a group of 94 graduates of the '80s and '90s who together have made commitments of more than $650,000 over five years. Most are working in high-tech or financial services firms.

Don't Let Them Get Away

Once donors are capable of consistently making large annual fund contributions, many fund raisers think it's time to move them over to major gifts. But there are good reasons for keeping them in the annual fund solicitation stream:

It provides a valuable source of current-use dollars. Strong support for day-to-day campus expenses is extremely important. A $100 million gift from the Annenberg Foundation in 1993 gave the Peddie School a large endowment, "but the annual fund has been woefully behind," Development Director Anne Seltzer says. "It's important to keep growing the annual fund because it supports projects across campus such as art supplies or laptops for every student. We use those funds to run the school." Between 25 and 30 Peddie donors each give $10,000 or more to the annual fund each year.

It ensures they have regular interactions with the institution. "We value contacting them by phone annually to keep them up to date on events, reunions, and developments that have taken place since we last talked to them," says Scott Hayter, director of development and alumni relations at the University of Durham in the United Kingdom. At his campus, more than 150 alumni and some parents make annual gifts of at least £240 (US$384), and the campus considers any gift up to £10,000 (US$16,000) in one year an annual fund contribution.

It sets the stage for major gift cultivation. Maintaining a relationship with your best annual fund donors also makes it easier to ask for larger annual gifts or capital support, Yersh says.

"Once you've established their role as top supporters, it's easier to say, 'At X amount you can become a member of the Chancellor's Circle. Will you join us?' It gives context for the ask."

Ideally, you'd like your top annual fund donors to make a major gift and continue their annual support. (For more on how to do this, see Making Peace between Annual and Major Gifts.)

The Upper-Echelon Ask

Keeping these donors in the annual fund doesn't mean soliciting them with the same telephone call or letter you use for the hoi polloi. These top-tier givers deserve a more personal message that highlights their role as leadership donors and emphasizes how important they are to the campus.

In the past few years, more annual fund professionals have been visiting donors at the $1,000 or even $500 level, says Fritz Schroeder, executive director of annual, regional, and alumni programs at Johns Hopkins University and author of Annual Giving: A Practical Approach.

"Because the competition for discretionary funds is so great, campuses are doing this to make themselves stand out," he says. "And as more campuses engage in enormous campaigns, they feel pressure to build a prospect base and a stronger flow of high-end annual revenue, so they use face-to-face visits as a discovery tool and growth strategy."

"At many campuses, people have the idea that only major gift officers should visit donors," says Ray Satterthwaite, director of faculty development and major gifts at Queen's University in Kingston, Ontario, and former director of annual giving at McGill University.

"I believe that having annual fund staff talk to our high-end donors face to face could raise their sights. Remember, donors may not be able to give $100,000 now, but if you visit them they may move up from $25,000 to $50,000 to $100,000. If you don't visit them, it'll be harder to get them there."

If such a visit is out of the question, a personal letter or telephone call can work well, especially if you go a step beyond your usual techniques. Yersh recommends using a SWAT team of your best student callers to solicit these donors. Callers should acknowledge the donors' previous leadership giving and ask them to continue their valuable support.

Can a telephone call really be enough to solicit four- or five-figure gifts? At the University of Durham, a 1999 phonathon call from a student led to an annual gift of £120 (US$192) as well as an additional gift of £12,000 (US$17,113) to the Student Opportunities Fund — the priority initiative of Durham's annual giving program.

Cultivation and Stewardship

Making the ask is only half the battle, however. Once you have these donors on board, keep them there by giving them consistent attention. Consider these strategies:

Personal messages. In the fall, Seltzer writes a newsy, two-page letter to the Peddie School's top annual fund donors who live overseas. Although the letters may include some standard text, each one also highlights the individual donor's hobbies or interests by, say, mentioning details about the school's athletics program or sharing the title of an interesting book. "If these donors are giving us $10,000 a year and they live in Hong Kong or Switzerland, they should hear from us regularly," she explains. They also greatly appreciate a handwritten note from a chair, dean, or other administrator.

Special events. Seltzer doesn't ignore her best domestic givers, of course. She invites top annual fund donors living in Boston, Florida, and other areas with concentrations of alumni to cocktail gatherings and other regional events with the school head.

Also consider inviting these donors to departmental events, lunchtime lectures, or special programs that highlight top faculty. Several years ago, when Internet technology was still new, Yersh projected arts, science, and cultural Web sites onto a screen at an art gallery to give donors a first-class tour of the World Wide Web, for example. "Find ways to feed their minds and showcase the university," she says. "Keep an ear to the ground to uncover unusual things that would interest them."

Gift clubs. Campuses often use gift clubs to maintain leadership-level giving and inspire new gifts. But trying to find a role for gift clubs is more challenging these days, says Johns Hopkins' Schroeder. Originally, these may have been literally cigar-filled, elite gatherings of the closest institutional friends who had access to campus administrators and faculty. Today, however, a gift club is often just a name assigned to a level of giving and its associated benefits. "As gift club rosters have grown and the IRS has increased its scrutiny of the impact of benefits on the tax deductibility of gifts, it's become harder to create that intimacy," he says.

But the IRS has yet to put a value on access. Let your top annual givers know they're in a special group that has the ear of the campus CEO and board. Send special newsletters and mailings just to them. And invite them to state-of-the-campus events to hear updates from your institution's top leaders.

You can even invite gift club members to attend weekend getaways with your campus's top brass. They would have to pay their own way, of course, but in return they'd get to socialize with their peers, faculty members, trustees, and the campus CEO.

Volunteer opportunities. Consider these donors for openings on campus boards or committees. Or have them speak to students, mentor new graduates, assist with prospect identification and research, or even solicit other prospects. While campuses often reserve these opportunities for major donors, offering them to loyal, high-level annual donors can help cultivate them for future major gifts.

All these ideas can work at your institution, but be careful not to start something you can't finish. Let Mrs. Jones know, for example, that if you have to send her a letter next year instead of making a personal visit, you hope you can still count on her leadership support for the annual fund.

Make a Major Move

At some point, you'll want top donors to make major gifts while maintaining their annual support. A donor might suggest strong interest in a project, or perhaps campus leaders will decide the donor is ideal for a capital gift solicitation based on prospect research, suggestions from other alumni, or other factors.

ISU's Bundy used special events at his previous job, at the Eli Broad College of Business at Michigan State University, to encourage top annual donors to make entry-level major gifts. He would invite up to 30 supporters to join the dean at a reception or dinner at a country club, restaurant, or the home of a prominent donor. After dinner, the dean would talk about a number of upcoming college projects and highlight the importance of getting leadership support from the attendees. Bundy and the dean would also find an opportunity to speak with each donor individually during the evening.

"Later I'd follow up with a thank-you call or letter and ask the donor to consider making a gift in response to the dean's message," Bundy says. "To give each one a personal touch, I'd highlight something the person discussed with the dean that night. Then I'd spell out our specific gift request and payment options." These events were extremely successful: About 80 percent of those who attended agreed to increase their support.

Growth Strategies

Increasing the ranks of your top-level donors is often just an ask away. "Some people have been giving the same gift for 30 years," says the Peddie School's Seltzer. "If you tell them what's going on and ask them to consider a larger gift, a lot of them will do just that. If you make the case, they're apt to give."

Your current crop of top donors can also help. Asking them to serve as annual fund chairs or volunteers, for example, makes them feel good and lets you reach more people without increasing your staff.

Challenge gifts can be another successful strategy. Tell your alumni that a chair, trustee, or major donor will match all annual fund contributions greater than a certain dollar amount. Campaigns are also a natural springboard to larger annual gifts. "Let donors know you're trying to grow your annual fund" during the campaign, Yersh says. "Use the campaign to generate excitement."

Institutions are coming up with new ways to attract interest in high-level annual gifts, such as annual scholarships, in which a donor commits to a scholarship gift every year for four years to assist a particular student. In return, the student sends an annual thank-you letter and other types of communications to the donor via the development office. At the end of the four years, the contributor can start again with a new student.

As you begin spending more time with those at or near the top of your annual fund scale, you'll find that this is an area of tremendous growth for both the campus and the annual fund staff. Junior-level development officers get the chance to meet and establish relationships with donors without having the pressure of bringing in a six-figure gift right away. And the campus taps into a gold mine of committed alumni and friends who support the institution now and are likely to do so in the future.

"When you do the math, it's easier to get $1,000 from one person than $100 from 10 people," says Schroeder. "This doesn't mean you should drop your direct mail or phonathons, but putting more energy into top-level annual gifts can pay off greatly because your donors have demonstrated their potential and their commitment to the campus."

About the Author Laura C. Jackson

Laura C. Jackson, a former CURRENTS editor, is a freelance writer in Upper Marlboro, Md.




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