Why We Hung Up on the Telefund
In September 2016, Stanford University made a surprising decision: We eliminated our phone program for fundraising, the result of a dramatic rise in negative responses to our calling. In 2011, for every eight people who answered our calls and made gifts, only one said, "Never call me again." By 2015, the ratio was 3-to-1. From complaints in our general inbox to offhand comments in meetings with alumni, we knew that our calls were alienating prospective donors—and that we were compromising tomorrow's gifts with today's annoying asks.
Colleagues at other universities have said that only an institution with a significant endowment like Stanford can afford the risk. We believe that the opposite is true.
Stanford, like most colleges and universities, relies on the collective generosity and long-term support of its alumni, parents, and friends. Donors see the attention given to large endowed gifts and wonder if their more modest gifts matter at all to the university or would be better directed to a smaller organization. These are the majority of people the telefund solicits.
We questioned whether our fundraising calls were helping these donors feel valued—and heard. Were we really engaging our donors, particularly our more modest donors, in a way that would nurture their long-term relationship with the university?
Our calls, it seemed, were bothersome …
At peak times, our call center was employing approximately 100 students, who were completing about 55,000 calls a year. These phone calls were responsible for 9 percent of our total annual dollars and 14 percent of our undergraduate alumni donors.
To evaluate the effectiveness of this program, we first wanted to measure our donors' level of satisfaction—and annoyance—with fundraising calls. An evaluation of our data confirmed that smartphones had changed the game, as people relate to smartphones differently than they relate to landlines. (Our landline phones don't interrupt us when we are away from our home or office, for instance.)
Digging into the data further revealed that for every three prospects who made gifts, one prospect requested to be put on the "do not call" list. This 3-1 ratio was even more troubling because it likely underrepresented the irritation factor: It only showed those prospects willing to even pick up the phone and voice their displeasure at being called.
We also wondered about those people who were still making gifts. Were they doing so in spite of their annoyance? Or did they actually like giving by phone? To better understand this, we looked at the gift amounts made when donors responded to a phone call one year but made gifts through other channels (in response to a mail or email solicitation, for example) another year. We hypothesized that someone inclined to give by phone would be more generous when solicited that way than by, say, email.
To our surprise, an analysis showed that when prospects moved from a non-telefund channel one year into the telefund channel the following year, their average gift decreased (even though student callers are trained to start with an upgrade ask). Additionally, when donors made a gift online or by mail after contributing through the telefund, the gift amount increased dramatically—suggesting they preferred giving another way.
Taken together, these data confirmed our intuition that the telefund program was damaging the university's long-term relationships with our most valuable audiences. This was apparent both among prospects who were so irritated by the telefund that they opted out, as well as among those willing to give but choosing to invest less generously in Stanford.
Our analysis found that some "phone loyal" donors still continued to make gifts by phone and had not responded to other giving options. But they accounted for less than 6 percent or approximately 500 donors coming in through the telefund each year. The other 94 percent were willing to migrate in and out of channels. Ultimately, we faced a tough choice. We realized that continuing the telefund program to reach such a small group of donors—a cohort that appeared to be shrinking even further over time—did not make financial sense.
"But what about your participation rate?"
That's the most common question we've heard since announcing our decision. We gave this factor serious consideration yet kept asking ourselves, "Why do we care so much about participation rates in any one year?"
Yes, participation rates help us, as fundraising professionals, understand how successfully we are engaging our alumni. Annual giving is not only an important pipeline for major and principal gifts but also for meeting the immediate needs of our institutions.
A more honest answer, however, might be this: We care because some annual college ratings sweepstakes have defined participation rates as a measure of alumni satisfaction.
Ideally, each institution—and the groups that represent philanthropic associations—would develop its own metrics to evaluate alumni engagement and satisfaction. Any number of factors could be counted: survey results, event attendance, membership in an alumni association, magazine subscriptions, or website visits. The potential criteria are as broad and diverse as our institutions.
Instead, the hegemony of third-party rating systems has brought homogeneity to how advancement professionals measure engagement. We've allowed the rankings of certain publications to determine how we measure the depth and breadth of alumni support. Over time, our profession has accepted participation rate as a proxy for engagement—and used it to measure the health of a major gifts pipeline.
This is problematic because it assumes that a specific behavior—fiscal year consistency in giving—accurately indicates alumni support. In fact, it may more accurately measure the class size and diversity of our undergraduate populations, the socioeconomic background of our students, the philanthropic culture and history of our institutions, and/or a myriad of other factors.
Thus, an imperfect measure has become an entrenched gauge of success for an annual giving program. Setting goals around participation is like setting CEO compensation around share price—it incentivizes short-term gains instead of creating long-term value. Just as a company can drive a share price through short-term strategies like a stock buyback, annual giving programs can increase short-term participation rates through strategies such as premiums, challenge gifts, or even an aggressive calling program. While many of our peer institutions are under pressure to reach ambitious participation goals, we think it's time to acknowledge that these tactics often have a short shelf life and, in the long term, don't cultivate philanthropic behavior.
Taking a risk
Ultimately, the data—and our alumni—told us that the telefund program was no longer effective or welcome. It was still responsible for nearly 15 percent of our annual fund donors, but it was also driving away a number of prospects who had either never given or had stopped giving (some because they were called so often). Just as a corporation might make an investment that depletes cash in hand in order to drive future returns, we decided to risk a short-term drop in our participation rate to raise our long-term measures of donor engagement and satisfaction.
Colleagues at peer institutions have asked how Stanford leadership reacted to the suggestion of ending our call center program. We are fortunate to have university leaders committed to a donor-centric advancement operation. They had questions—How many donors prefer telephone contact, how many donors would we lose, and how would we win them back?—but were willing to listen to our arguments and evidence. They understand the potential risks but supported our recommendation. They know that we will be monitoring our success and hope to recoup the majority of former phone donors within two fiscal years. If our new engagement path fails to connect with donors and prospective donors, we will alter our plans.
‘We hear you'
When it was time to announce that we'd ended the telefund, we wanted to show our constituents that we'd been listening. After all, a telefund program's strongest asset is that it facilitates human connections. We needed to create a similar connection when communicating the news to donors.
We settled on a creative concept that used self- deprecating humor and an informal tone. Through a playful "change of policy" notice and casual FAQ list delivered through an integrated marketing campaign using mail, email, and a website, we apologized for being tone-deaf. Then, as in any relationship, we followed the apology with a request for forgiveness. We promised to do better—and to stop interrupting dinner.
This approach was not without risks. With standard institutional communications, we risked being boring. With a more human and humorous approach, we risked being offensive. But if we could do this in an authentically "Stanford" way—a little bit nerdy, a little bit quirky—we would reach those constituents most likely to deepen their engagement with, and support of, Stanford. By taking this chance, we treated our annual donors like major gifts donors: We were willing to risk a "no" in order to make a bold ask.
The results validated our strategy. The mail piece, which incorporated a gentle ask, generated a 2 percent gift response rate. The website landing page, which was linked to in the email, gained more than 4,000 unique visits. The emails provoked more than 100 positive responses from alumni who applauded the announcement. Several alumni mentioned how much they enjoyed the creative approach.
What comes next
It will be a few years before we know whether we're on the right path. For now, we are investing our telefund budget in new staff and new marketing programs. We hope to appeal to those who formerly gave through the telefund as well as to those who may have been alienated by our calls.
Because 70 percent of telefund donors were making renewal gifts, we are investing in efforts aimed at retaining donors, such as a new loyalty program that will recognize and encourage consistent giving. Additionally, we are devoting staff time and expertise to direct appeal channel analysis. The goal is to refine our messaging, segmentation, and channel selection on a targeted basis, reaching not only former telefund donors but all audiences with messaging and solicitations relevant to their interests.
We are also investing in digital programs that facilitate targeted campaigns like Giving Tuesday and improved email strategies that will benefit all school- or unit-based annual giving programs, in an effort to reach donors who were unresponsive to the phone program, improve response rates, and encourage more loyal giving. We are expanding our social engagement and social solicitation efforts. Along the way, we'll be evaluating results, refining strategies, and making adjustments. We expect some trial and error but feel confident that by centering our strategies on our donors, we'll build a program that's stronger than ever.
We believe that this was the right move for Stanford, but each institution is different. Consider all options when evaluating your annual giving programs, from expanding your telefund to modifying it—to, maybe, ending it. We rarely applaud fund directors for taking actions that produce medium- or long-term benefits. But this process has taught us the importance of focusing on the needs of our donors. When we do so, we can take calculated risks, which may cause short-term pain but, ultimately, produce long-term gains.
And if we're wrong? Well, perhaps you can look forward to a follow-up article in this magazine titled "Hello? It's me again."
About the author(s)
Martin W. Shell is vice president and chief external relations officer at Stanford University. Reporting directly to its president, he leads Stanford's offices of Public Affairs, University Communications, Special Events and Protocol, Office of Development and the newly formed Office for Community Engagement. In this position, he aligns the work of Stanford's externally facing teams to design, implement and maintain strategies for service and engagement regionally, nationally and globally, including collaboration with local partners to address sustainability, affordability and other challenges specific to Silicon Valley and the Bay Area.
Prior to this position, Shell served as vice president for development at Stanford for 13 years, setting the development agenda, establishing goals and overseeing the fundraising operations across the university. Before becoming vice president in April 2005, he served for two years as associate vice president for development. While associate vice president, he had oversight responsibility for major portions of the university development program, including a number of the school and unit development offices.
He also served as the executive vice chair and lead staff member to "The Stanford Challenge," the university's $4.3 billion fundraising effort launched in October 2006. "The Stanford Challenge" ended in December 2011, securing $6.2 billion in gifts and pledges from nearly 167,000 households—at the time it represented the largest overall dollar amount ever raised in a five-year public campaign period by an institution of higher education. During his 13-plus years as vice president for development, Stanford University has raised more than $12.5 billion in cash or cash equivalents according to figures compiled by the Council for Aid to Education.
Shell joined Stanford in 1998 to become senior associate dean for external relations and later was appointed chief operating officer at Stanford Law School. Prior to his move to Stanford, he was associate dean for development and alumni relations at the University of Pennsylvania Law School.
For 10 years, he was a member of the Development Committee of the American Bar Association's Section on Legal Education and Admission to the Bar and served as the committee co-chair from 2001-2003. In 2003 he co-chaired the Section's Jackson Hole Conference for Law School Deans and Development Officers. He currently serves as a trustee of Hendrix College, and is a former CASE Trustee. He has served as a trustee of the Castilleja School in Palo Alto and the Oakland-based NGO, Coaching Corps. He also holds the CASE Crystal Apple Award for Excellence in Teaching.
Shell has been an advancement officer for more than 30 years serving institutions of higher education in Arkansas, Pennsylvania and California. In addition to this work, he also was an executive with a public utility company, a press secretary to a U.S. representative and a newspaper reporter.
Amy Wilson is director of direct marketing and The Stanford Fund at Stanford University.