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Annual giving’s profile is on the rise

By Dan Allenby


Paul Garland for CASE



My career in annual giving began nearly two decades ago when, fresh out of college, I sat down at a word processor to write a cover letter for a job running a student phonathon program at a university in Washington, D.C. My father, who worked in university development, noticed what I was doing and offered me two pieces of advice. First, he cautioned, never start a cover letter with I because it will make you appear conceited. Second, if you want to work in development, annual giving is a great place to start. I took his advice, and I also got the job.

Back then, annual giving departments played a role similar to farm teams in baseball: They were filled with young professionals eager to be drafted into a more important role in the major (gifts) league. The development landscape was different too. The Internet was in its infancy. Caller ID didn't exist, which made prospective donors available (and vulnerable) to telemarketers. Direct mail was simple and relatively cheap. Annual fund case statements typically focused on the need for unrestricted support. Give back was a good enough message to motivate alumni giving. The annual fund was an afterthought in most capital campaigns, and with the possible exception of elite institutions with a history of philanthropy, alumni participation simply wasn't that important.

Fundraising factors

Today, people use the web to voice their opinions, promote causes, and raise money. Online giving is growing as audiences organize themselves around individual, rather than institutional, interests. Cellphones are supplanting telephone landlines. As direct mail programs have become more personalized and customized, they also have grown more complex. Campaigns are much more sophisticated in their messaging and outreach. Meanwhile, our donors have more demands on their time and attention and are harder to reach than ever. They also demand more return on their investments. They want to see the impact of their gifts. As a result, they're more interested in giving to restricted funds.

Concurrently, tuition has skyrocketed, leaving many recent graduates burdened with debt and relatively unsympathetic to their alma mater's call to give back. The number of nonprofits also has grown, increasing the already stiff competition for people's philanthropic dollars. Coupled with a weak economy, it seems highly likely that these two factors have contributed to the steady decline in the rate of alumni participation over the past several years. According to the Council for Aid to Education's 2011 Voluntary Support of Education survey, less than 10 percent of contactable alumni contributed to their alma mater last year.

To get a handle on the state of annual giving today, in March I surveyed the annual giving programs of 262 two- and four-year higher education institutions, foundations, independent schools, and nonprofit organizations, primarily in the United States. I wanted to learn more about their makeup, performance, and strategic priorities. In addition to gaining a better picture of the professionals who work in the field—more than 70 percent are women; their average age is 39; and they have, on average, eight years of experience in annual giving—the survey revealed that direct mail still rules the day, despite an explosion of information technology and new media. In fact, 94 percent of respondents rated it as their most important method of outreach. More than 62 percent said it was the primary driver of donors and dollars to their programs last year. Most also view email as a higher strategic priority than call centers, which may be an indication of the effect that cellphones are having on the telemarketing industry. Board giving and staff outreach also ranked among top strategic priorities.

Focus on the future

The case for annual giving is much different today. The concept of unrestricted gifts has lost luster with many alumni. Now, institutions highlight the value of annual gifts as that extra something, the ″margin of excellence,″ that allows them to invest in those areas that will have the greatest impact. They also emphasize donors' ability to direct their contributions to the programs they choose. Today's donors want to know where their money is going, what it's doing, and how it's making a difference.

This is happening at a time when annual giving is becoming a top priority for educational institutions. Presidents and trustees understand the importance of alumni participation rates. They recognize that building a broad base of support is necessary for the long-term good of their institutions, and they're also aware that alumni participation factors into the calculation of U.S. News & World Report's annual college and university rankings. As a result, more campaigns are comprehensive, include annual giving as a campaign priority, and make growth in the alumni participation rate a key objective.

Annual giving programs are also focusing on donor stewardship to retain and, ideally, increase the number of donors each year. Many are making donor retention a priority. Some have even launched loyalty societies to create an incentive for donors to give consistently and to recognize those who do. According to Blackbaud's 2011 Index of Higher Education Fundraising Performance, the median overall donor retention rate increased slightly to 62 percent. Institutions performing below that rate have some thinking to do.

In order to acquire new donors, many annual giving programs are paying more attention to recent alumni, stressing participation over contribution totals, and lowering initial ask amounts. They're also looking to senior class gift campaigns as a way to educate students about philanthropy and its effects on the institution long before they become alumni. For instance, Boston University's 2011 senior class gift campaign became one of the most talked-about activities on campus when our dean of students pledged to jump into the Charles River in his tuxedo if the class reached its participation goal of 2,011 donations. They met the goal and Dean Kenneth Elmore did indeed jump into the murky Charles on a sunny but chilly May afternoon.

Yes, annual giving has changed a great deal in the past two decades. It's more complex and more important, and advancement programs are making greater investments in the staff, productivity, and success of their annual funds. But I think annual giving remains the same in a very important way: It's fundamentally based on the relationships that people have with the institutions that are important to them. It's our job to steward these relationships and to remind people of the impact that philanthropy has on our organizations, as well as the impact that our organizations have on the world. And I'm happy to report that my father's advice remains true today, with one slight modification: Annual giving is still a great place to start, but it's also a great place to end up.

About the Author Dan_Allenby_headshot Dan Allenby

Dan Allenby is the assistant vice president for annual giving at Boston University and founder of The Annual Giving Network. He blogs at AnnualGiving.com.

 

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