Universities and other higher education institutions work hard to provide their students with meaningful experiences and memories that will last a lifetime. At the end of each year, education professionals say goodbye to a class of students while also gearing up to welcome a new one. These graduates are now alumni and represent a major asset for your school.
If you help fundraise for a university, you know that alumni giving is a top priority. Alumni are the only people who understand what it’s like living on campus and have experienced the joy of learning from some of your most inspirational professors. That’s why they’re the best people to reach out to for university fundraising efforts.
However, alumni giving is not that easy. With your alumni base spanning multiple generations and current trends impacting the fundraising environment, there’s a lot of factors and nuances to be aware of when engaging with them.
We at DonorSearch often work schools and other education institutions to better reach their donors and maximize fundraising. In this guide, we’ll be talking about top trends that are affecting alumni giving, as well as some tips to follow. Follow along with us from the top or click to the section that most interests you:
- Why is Alumni Giving So Important?
- Trends and Statistics in Alumni Giving
- Alumni Fundraising Best Practices
- How Can Prospect Research Maximize Your Alumni Giving Efforts?
1. Why is Alumni Giving So Important?
Universities are places where young adults learn from each other and embark on exciting adventures. This is all possible because of the resources universities have, like access to some of the best professors, top-notch campus facilities, and exciting social events.
However, in order to make this all possible and ensure that students can take advantage of such opportunities, you have to prioritize your university fundraising. And there’s no better group of supporters to fund these efforts than your alumni.
Where does Alumni Giving Revenue go?
As you gear up your university fundraising strategy, it’s a good idea to review exactly why your school even needs the additional revenue in the first place. Before we dive into alumni giving tips, we’ll be going over where alumni giving revenue usually goes:
- Operating budget. The operating budget consists of the forecast of the revenues and expenses expected for future periods. A lot of alumni giving revenue actually goes to this general operating budget, which works to ensure that the college stays running.
- Scholarships to current students. Often, alumni gifts are used specifically to help current students. Some students can’t attend university at all without some sort of scholarship opportunity!
- Unique and meaningful programs. A lot of alumni giving revenue actually goes to create and upkeep programs. Alumni most often recall student programs that had a major impact on their college career. From study abroad opportunities to connecting students with real-life professionals, these programs genuinely elevate the entire university experience.
- Campus renovations. Students can only be as happy as their environment lets them. With alumni gifts, universities can provide sprawling libraries full of educational tools and other campus facilities to optimize the learning experience.
Where your alumni giving funds go will depend on your university’s current standing, whether it’s financially, student population size-wise, or other variables. When you determine what would benefit most from fundraising, you can more effectively formulate your ask.
Additionally, you can even let your donors designate which part of the university their gift will fund. For instance, many want to specifically renovate a building or create a study-abroad program.
How to Calculate Alumni Participation Rate
In order to determine how well your alumni giving is going, you should look at your alumni participation rate. The higher your alumni participation rate, the better your engagement efforts are and the more you’re fundraising!
To calculate your alumni participation rate, first determine your total alumni donor count. Then, divide that number by the number of overall alumni on record. For instance, if you have 100,000 overall alumni and 10,000 are donors, you have an alumni participation rate of 10%.
Alumni Giving Factors to be Aware of
It’s easy to think that all alumni would want to give back to their alma mater. Fundraising is based on donor relationships, and strong connections set the foundation for long-term giving and engagement. Because alumni went to your university, there already is a foundation there. However, alumni are also aware that their school will often turn to them for money and don’t like feeling like a bank. You have to develop personal relationships and consistently engage with each on a one-on-one basis in order for them to give back on their own.
With small colleges usually hosting around 5,000 students, and public universities hosting over 30,000 students each year, that’s a lot of people who experience what your educational institution offers. Though your student population represents future fundraising opportunities, it’s hard to determine the best way to reach each one.
There are a few common alumni giving factors that can help you start shaping your engagement efforts. For instance, consider the following:
- Wealth standing
- Age and gender
- Political preferences
- Past giving history
- Current trends and environment
Because of the wide range of alumni your university likely has, these alumni giving factors can help you differentiate your approach to each group. Make sure you invest in capable fundraising software and an alumni donor database to ensure that you’re collecting and keeping track of these metrics.
Additionally, it helps to keep track of current alumni giving trends. University fundraising has been going on for a long time, so it makes sense that it’s evolved over time. Read on to learn about these trends and alumni giving statistics and how they can help your fundraising efforts.
2. Trends and Statistics in Alumni Giving
As you already know, alumni giving depends on multiple donor factors and current trends, so it makes sense to keep up with both. The better you understand your alumni giving data and how that works with the current alumni fundraising environment, the better you come up with relevant insights and actionable decisions for future fundraising efforts.
Let’s go over a couple of alumni giving trends!
Trends Driving Alumni Giving
1. Alumni fundraising participation and donor acquisition rates are dropping, making higher education institutions rely on major gifts to reach their university fundraising goals. (source)
Alumni fundraising participation and institutional donor acquisition rates are starting to drop. This has forced universities and other educational institutions to rely on major gifts to reach their yearly goals. To increase your major gifts revenue, a focus on donor relationships is required. This means more consistent engagement and personalized outreach efforts.
Take some time with your team to go over your alumni donor data carefully and figure out the best ways to continue those relationships.
2. New Tax Cuts and Job Act mean taxpayers no longer benefit from tax breaks, which could lead to less giving. (source)
Often, people like to give to charities because it also comes with some pretty attractive tax benefits, like deductions to income taxes. However, because the Tax Cuts and Job Act passed, there are now far fewer taxpayer benefits for charitable giving. While we like to believe that most gifts come from the good of our donors’ hearts, that’s not entirely realistic.
To counteract this trend, you might want to increase engagements with your alumni to more often express your university’s needs as well as increase your appreciation for them.
3. Alumni giving seems to correlate with how well our stock market is doing. (source)
According to the annual report from the nonprofit Council for Aid to Education, in 2017 there was an increase of 14.5% of alumni giving compared to the previous year. The report attributes the funds, in part, to the strong stock market during that time.
It makes sense that a strong stock market correlates with your alumni giving efforts. A healthy economy likely means more of your alumni are in a positive financial standing. Consider keeping track of the stock market as a way to determine your alumni giving strategy.
4. Focusing on younger alumni to establish giving habits early. This way, even if they can’t give a lot now, the relationship is established. (source)
According to the 2020 Consumer Report, Millennials will have a spending power of 1.4 trillion by the year 2020. You can only imagine that it’ll increase in the years to follow. Soon, from the years 2022 to 2035, Generation Z will reach prime working years and also make up a sizable chunk of the world’s spending.
Though it might make sense to focus on alumni engagement with older donors with more financial stability, it’s also worth it to think about your younger ones. As soon as a student graduates and officially becomes an alumni, it’s a good idea to start the relationship and establish giving habits from the get-go.
Along with these top alumni giving trends, you’ll be learning some interesting statistics on donor retention and major gifts that can affect your fundraising approach.
Alumni Retention Statistics
- 93% of alumni organizations choose not to offer their alumni any benefits, or they see little or no engagement from the few benefits they do offer. (source)
- 74% of donors/members appreciate some form of personal “thank you” for their gift or membership. (source)
- 78% of alumni prefer to access their alumni benefits online, compared to 22% who want their benefits sent by mail. (source)
- 75% of alumni would engage more with their alumni organization if they made their benefits information mobile-friendly. (source)
Your alumni donor retention rate refers to how often alumni continue giving to your university. Alumni who give year after year usually have strong, solid relationships with their university. According to these statistics, it’s clear to see that not all alumni are the same and require different engagements or benefits in order to develop those relationships.
Alumni Giving: Major Donor Statistics
- 67% of wealthy donors identify their biggest challenge is finding a good cause to support. (source)
- 61% of wealthy donors appreciate a personal note of thanks. (source)
- 50% of wealthy individuals now engage/give online, as compared to 15% just eight years ago. (source)
Major donors make up the majority of nonprofit fundraising revenue. According to the Fundraising Effectiveness Project, about 90% of charitable contributions come from only 15% of donors. Stable and strong relationships with those alumni are necessary, especially if you want your institution to be the recipient of their next gift.
3. Alumni Fundraising Best Practices
After reviewing key alumni giving trends and getting a comprehensive look at some of the important statistics, it’s clear that relationship building personalized to each alumni is key. However, as your alumni base grows, these types of engagements seem almost impossible to tackle. Continue on for some tips to help!
Alumni Fundraising Ideas and Tips
What can you do to increase alumni participation rates and get those donations up?
- Consolidate your database. Make sure you’re collecting the right alumni data and regularly reviewing your database. A good idea is to integrate all your fundraising tools with your constituent relationship management (CRM) system and ensure you’re intaking biographical data, philanthropic indicators, and wealth markers.
- Segment and customize your engagements. You already know that each of your alumni is different and that the way you engage with them should reflect that. Start with segmenting your alumni by similar traits (for example: age or college major) and customize each engagement to that segment. This way, when you send out emails, it’ll only consist of relevant information.
- Start prioritizing social media. Keep up with your youngest alumni and start developing those social media engagements. Take a look at your alumni database and get an understanding of which platforms they’re already actively using. Concentrate most of your efforts there for the most fruitful engagement. Ask your current students to help run this account for a more intuitive touch! After all, they’re going to understand these platforms best.
- Vary your engagements to more than fundraising asks. Your alumni don’t want to feel like a bank. Whether it’s through your website, an email newsletter, or through your social media posts, make sure to include content besides expressing your need for gifts. Talk about recent university accomplishments to increase that feeling of school pride or advertise fun alumni events so that they know they’re still a part of the community.
- Customize your online donation form to include a recurring gifts option. A way to increase alumni participation and your donor retention rate is to encourage recurring gifts. Whether it’s on a yearly or monthly basis, recurring gifts are a more consistent form of support. Alumni will especially appreciate the option when they want to give more but don’t have the funds currently. With a recurring gift of a smaller amount, they can end up donating their original gift and even surpass it.
- Conduct prospect research. Many nonprofits and other charitable organizations turn to prospect research to better understand their donors and engage with them. Prospect research is often used to identify high impact donors and prospects to increase engagement by determining each individual’s affinity to give and capacity to give.
Alumni giving can seem daunting at first, but doesn’t have to be with the right tools. Make sure you have a capable donor database as well as integrated tools to collect all of that important data. This can help determine the top alumni giving factors that affect your university fundraising. From there, begin formulating various donor engagement strategies in order to reach your alumni with more personal and genuine approaches.
To take your data to the next level, investing in prospect research can exponentially help. Learn which of your alumni might have the greatest impact and increase your alumni giving.
4. How Can Prospect Research Help your Alumni Giving Efforts?
Prospect research is a strategy used by many universities that want to better understand their alumni. Using your your alumni database, prospect research will screen each past student based on personal details, giving histories, wealth markers, and philanthropic motivations.
These data points represent key metrics that make up an alumni donor. For instance:
- Affinity to give. This helps determine how likely someone is to give. Prospect research will screen alumni for philanthropic motivations, such as past charitable giving, personal relationship to cause, involvement with other nonprofits, and political giving.
- Capacity to give. This helps determine how much someone might give. Prospect research will screen alumni for wealth markers, such as past giving amounts, real estate ownership, stock ownership, and business affiliations.
With prospect research, you can more genuinely understand your donors and figure out the best next steps to alumni engagement efforts. Because of the large size of most university alumni bases, your best bet is to invest in a capable prospect research tool. Let’s dive into the numerous ways dedicated software can streamline the process.
Using a Prospect Research Tool
Prospect research can be done manually, but it would take an incredible amount of resources and time. Seeking a capable prospect research tool now will only help you in the long run.
The best tool will automatically filter through each of your alumni, no matter how many there are, and compare that data with the nation’s largest philanthropic database. From there you can compile a screenshot of each alumni’s potential and better determine next actions.
With a top-notch prospect research tool, you can increase alumni giving with:
- Major donors. As you know, alumni participation has gone down and major alumni givers are making up a larger chunk of annual alumni giving. It makes sense to want to start those relationships early on and then continue to cultivate them. This way, the next time that alumni want to give, your university is at the top of their minds. Alumni who are most likely to become major givers are those with both a high affinity and high capacity to give. Prospect research is used heavily to identify potential major donors early on so fundraisers can prioritize those engagements.
- Matching gifts. Corporate matching gift programs are essentially giving out free money. However, not enough fundraisers are taking advantage of it, and not enough eligible donors even know about it. With an estimated $4-7 billion in matching gift funds going unclaimed each year, don’t forget to pursue this channel. Prospect research can help identify your alumni’s employers, and with the help of a matching gift database, you can easily determine if their gifts can be matched.
- Donor-advised funds. Donor-advised funds (DAF), the fastest growing form of philanthropy today, is a type of philanthropic giving where someone deposits contributions into a dedicated savings account for charity. The catch? They don’t always choose a recipient right away. Prospect research can identify alumni who have DAF accounts. This way, you can start developing that relationship early on. When they have to choose their recipient, you could be first in line.
- Planned Giving. Planned gifts are essentially a gift that is arranged in the present and then given at a later time. Often, planned gifts are granted once the donor has passed away. Though prospect research cannot predict who is preparing a planned gift, it can highlight key donor traits that might indicate a planned gift is possible. For instance, it can look out for metrics such as age, whether they have children, how affected the alumni were by the school, past giving history to school, and more. From there you can begin to nurture those relationships. Even if a planned gift is never given, it doesn’t hurt to properly show appreciation to loyal alumni donors.
Alumni giving is based on a lot of factors and trends, but at the core is your alumni donor data and alumni relationships. As long as you carefully craft personal alumni engagements and actively work to meet your donors’ needs, you’re set up for success.
Want to learn more about university fundraising and how prospect research can help? Check out these additional resources:
- Prospect Research: The Ultimate Guide. Deep dive more into prospect research and the best ways to approach it. Learn more about your donors and increase fundraising in no time.
- How Salesforce Event Management Can Impact Higher Education. Does your university often host fundraising events in order to increase revenue? Does your university also depend on the CRM Salesforce? If you answered yes to both, check out this article.
- Top Higher Education Fundraising Software for Universities. Not sure which fundraising tool is best for your university? This article is perfect for jump starting your research!