All Things Annual Giving

Evaluating Annual Fund Results (Part I): Distinguishing Major University Programs from Others)

It is very common for a Board of Trustees, or any Director, advisor, program officer, etc. to ask the question: how is our annual giving program doing?  The question can be answered on many different levels, including comparing goals to actual results, feeding leads to other areas of development, the quality of data that is being captured and how it is being used, the efficiency of the program in terms of the costs it requires to raise each dollar donated, etc.  Obviously then, some follow up questions are in order to make sure you're answering the question that's actually being posed.

But in addressing a large audience of development professionals working in many different types of institutions, another vital distinction that must be made before you can give a reliable answer is, "which type of institution is the annual fund supporting?"  As you may well know, the difference between the measures for success at a large, state university and a small, community based social service agency are like measuring the differences in measuring a fisherman's success in one of the Great Lakes versus the pond in your neighborhood.  Just as there would be differences in the size, number and type of fish caught in these disparate venues, the differences in how you can gauge success in an annual fund is dependent upon using the appropriate standards for your type of institution.

In this multi-part offering, we will first distinguish between the types of institutions who benefit from our services helping annual funds meet their goals, then we'll go back and look at the components for success within each type of institution.   Today, we're addressing the unique qualities that make major university annual fund programs so distinct and special.

First, let's note some similarities that exist with certain other types of institutions. For example, the difference between university campaigns and those of liberal arts and other colleges, exist primarily because of the combinations of multiple colleges within one institution.  Where a college of arts and sciences is connected to colleges of business, education, music, engineering, medicine, law, etc., a whole array of issues spring up that don't exist within a campus environment built around one college, even with its multiple degree programs. 

To begin with the obvious, at any state or private university, much of the annual fundraising will track the one thing that tends to unite the alumni of all of the university's colleges and programs - the fortunes of its athletic teams!  While it's true that gifts may increase to the smaller liberal arts or engineering college in a year when its football team wins national championships as well, the overall swings in giving from alumni are far less connected to athletic accomplishments as they are at Big State U. 

The university then has the challenge of creating a message that is shared by all of its units/colleges, and disseminated to their own alumni.  The hiring of a new President, the drop in state funding, a university wide grant for scholarships, etc., all overlap all of the colleges within the system.  To be comparable, a smaller college would have to have a consortium of colleges, all of which shared property, news, resources and/or staff, in order to be similarly affected.  And if this is the case, why not just create an institutional, university system with a mutual support system?

The support system is, in fact, one of the other distinguishing characteristics of the major university program.  When it comes to donor research, planned giving, data accumulation and sharing, etc. - each of the university's colleges can tap into the pool of information and talent that is available at the university level to help extend their own capacity for fundraising.  Smaller institutions just don't often have these resources available.  Similarly, there is the potential for sharing best practices and other information between the colleges and much camaraderie is often developed between the teams at different colleges within the same system. 

Large hospital systems often have many of the characteristics of a major university, but they have one clear distinction.  While hospitals can and do rely on grateful patients to support their projects, they are not "alumni" who have spent four years of their lives, building networks of friends, future business colleagues and other loyalties to their alma mater.  Of course, the hospitals don't have football teams either.   This means that the university can rely on networks of alumni groups to spread the word and build support, in ways other institutions can only imagine.  It is an enormous advantage and accounts for much of the certainty of success that can be anticipated for annual giving in higher education. 

In the next installment, we'll review how annual fund programs typically in other sizable organizations that have some inherent "success' traits: hospitals, private colleges, national cause organizations, etc.  The focus will be on how their unique "brands" help them stay on the radar screen of donors from year to year. 

For help in large universities or annual giving in any other nonprofit organization, visit BrianLacy.com then contact him to discuss your needs.  If your needs fall outside the traditional annual giving areas and involve broader development issues, go to Elusen.com to learn about other ways you can improve the fundraising system you have in place.

Using Effective Annual Giving to Meet Donor Expectations

I've often thought that nonprofit fund raising was about the closest thing you can find to pure customer service.  Instead of customers expecting a particular kind of performance from a particular type of product - or service - the range of expectations of donors ranges from the very stringent reporting attached to certain restricted grants, to virtually no expectations at all from many donors who give small gifts on a recurring annual basis. 

With this vast spectrum of needs to meet, every development professional has to be attuned to the individual donor's place on the continuum.  For major gifts officers, executive directors and others whose job it is to solicit larger gifts, this knowledge is a vital tool they use in every interaction they have with as many donors as they serve. 

It's also a tool that is regularly handed to them and used in additional ways by the annual giving team.  The former may be obvious, the latter should not be forgotten.

Let's say you have a donor who made annual gifts for 6-7 years in the range of $100-$1,000.  Finally, he gives you $5,000 in one year - and writes a note saying how much he appreciated the seating in your new auditorium.  Minimal research lets you see that he is a very successful businessman with long ties to your institution.  The major gift officer calls on him and he commits to giving $100,000 over five years to help ensure the quality of programming in the new auditorium.  Meanwhile, your VP of Advancement has handed down a directive to "consistently meet donor expectations using every development resource available".

As the staff person in charge of annual giving, what does this assignment mean to you? 

First of all, it means that you have very many donors' expectations that you are charged with meeting.  That means elderly Miss Jones, who likes to hear from someone often, the local grantmaker who gave you $5,000 last year but requires a quarterly report showing detail of the activities on which you've spent the money, and your major donor who has little time but extraordinary interest in your work. 

You have to somehow balance these in the message and the frequency with which you communicate with your donors.  Here are a few things to do:

1. Address all of the points that seem relevant to various groups of donors in your written communications. What do they care about?  No, the busy executive may not care too much about a new staff person you've hired to work on program in areas he doesn't respond to - but he won't penalize you for telling him.  At the same time, Miss Jones, the grant maker and others may be very interested to know these details.
2. Emphasize accomplishments - it's one way every donor can relate to what you're doing.
3. Set up the next ask - often you get "lucky" by happening upon something a donor really appreciates - but once you've got that donor on the hook, don't let him off - point out where you're going with your plans for next year and why it's going to be valuable to everyone in your audience.  Donors are largely mission driven - that's why they give to your organization.

Annual giving plays a much bigger role in meeting donor expectations than you might think.  The flow of communication that is an outgrowth of the necessary elements of an annual giving program covers the entire donor base and sets the tone of the overall message to be communicated in every donor contact.  Use the opportunities that present themselves to create high donor satisfaction in the constituencies you are able to reach.

News and Trends in Annual Giving

Below is a recap of news and trends relating to fundraising and annual giving from recent posts of articles and blogs on the World Wide Web. 

The expectations among colleges and universities around the country is for a decline of perhaps as much as 2% in donations from 2008 to 2009. Meanwhile, giving to church missions and ministries actually increased by 16% from the 4th quarter of 2008 to the 4th quarter of 2009 in a survey conducted by Cargill & Associates. 

Meanwhile, at venerated Princeton University, publicized estimates predicted a decline of 25% in the market value of endowment assets held by the University for the 2008-2009 fiscal year.  Considering the overall decline in the investment markets over the preceding 12 months, however, it could have been much worse.

This all comes on the heels of some exceptional long term fundraising efforts at colleges and universities around the country.  John Hopkins, for example is completing an eight year campaign in which they raised $3.7 Billion.  In all, over 250,000 donors participated in this campaign, making gifts averaging over $5,000 apiece.

One affect of the challenges in fundraising are the cutbacks many groups are facing.  As the Seattle Post Intelligencer article points out, the arts are felign the pinch in an especially heavy way right now.

Some thoughts then for 2009.  This does not have to be a down year for you.  Think about where the opportunites exist.  By laying out plans for a capital campaign for the future, you will enable your donors to think about a vision for what their giving can accomplish, and to evaluate how their gifts are best utilized.  Now is a time to be frugal on the one hand, but dream big for the future on the other. 

You can be successful this year, you just may need to be more creative than in the past. 

For assistance with data cleansing, matching gift programs and other annual fund and annual giving needs, contact Brian Lacy & Associates, or email Brian Lacy to discuss your needs. 

For assistance with capital campaign planning or management, or for additional information on News and Trends in Annual Giving, visit Elusen or email our publisher, Andrew Thompson. 

Will college donations drop in ‘09?
Bizjournals.com - Charlotte,NC,USA
Annual giving totalled $29.75 billion in the US last year, according to the Council for Aid to Education, a separate organization.

Giving to Churches in Uncertain Times
PR Web (press release) - Ferndale,WA,USA
According to company officials, Cargill Associates conducted capital campaigns and annual giving campaigns in churches of all denominations during the fall ...

University Facing Decline in Endowment
Town Topics - Princeton,NJ,USA
... fully meet an unanticipated increase of about five million dollars in demand for financial aid this year” stemming from the 2008 Annual Giving campaign. ...

Hopkins Raises 'Stunning' Amount
Washington Post - United States
By Susan Kinzie Johns Hopkins officials announced last night that they have raised more than $3.7 billion in an 8 1/2 -year fundraising effort, ...

Report: Arts groups innovate to survive in tough times
Seattle Post Intelligencer - USA
These are some of the conclusions of a new report by ArtsFund, the nonprofit arts fundraising and advocacy group in Seattle. The report is the result of ...

Using Online Giving to Improve Annual Fund Efficiency

by Andrew Thompson

Earlier this week, we discussed how your expense budget affects the efficiency of your program.  For years now, directors of development and annual giving programs have been striving to increase the volume of gifts that come via online contributions. 

Hopefully, your institution long ago made sure that visitors to its site had a clear and easy path to making a gift online.  Likewise, any donor making an online contribution should be inputting enough data that you will have the opportunity to continually cultivate a relationship with that donor pro-actively in the future. 

By no means, however, is that the end of the story.  In future posts, we'll explore a variety of ways that you can make your online giving program more effective, i.e. specifically to produce more revenue, but here we'll only touch on that point as we stay focused on the efficiency of your program.  You need no daily reminder that these are tough times.  But, these ARE challenging times in the world of fundraising, and you have to come to work every day with both a sense of urgency and the need for greater efficiency.

In doing so, improving revenue numbers will certainly help.  Remember, we're looking at the ratio of the cost it takes to raise every dollar as the method of defining efficiency.  Thinking in those terms really helps to properly frame the problem.  Ask yourself, which methods of fundraising bring in the most at the least cost?  Phonathon?  Direct mail?  Online giving?  In person visits? 

As a former planned giving director, I was constantly reminded to tell our team how efficiently we raised money.  At the American Cancer Society, we liked to say it costs 22-23 cents to raise a dollar, but less than 7 cents to raise "major gifts" and even less to raise legacy and planned gifts. 

Over time, however, I came to understand that there were many different ways of calculating these numbers, and thus, many different results as well.  So the question is then, how does online giving truly compare to other methods of raising money, and even more to the point, how can it be done in a a way that helps to produce a more efficient annual giving program?

Here are two important points to consider.

First, you probably already know that online giving can appear much more efficient than it actually is.  The blessing of having someone you did not solicit make a gift nonetheless, carries with it the burden of not knowing what s/he responded to.  It also means there is no group or category from which s/he emerged and can necessarily easily be placed.  

Thus, if you want to replicate the result, you have to spend time and energy figuring out what it was that got his attention and use it to target others who would do the same.  But because s/he was unique in this way, you will find yourself targeting more or less unique behaviors which can be very time consuming and inefficient. 

Achieving greater efficiency online demands an understanding that these attracted but unsolicited donors respond in much the same way as any other online customers.  Hence, the process of search engine marketing has been your ally and you can make it work even more to your benefit with proper optimization techniques. You will gain efficiency in online giving when you match the reasons these donors are looking to the messages they can find and will see when they are attracted to your site.

The second point to help you in this process is to always keep in mind that the efficiency is largely gained after the donor has made an online contribution rather than before.  You now have a tremendous source of new information and an opportunity to cultivate a long term and growing relationship with him or her because you made that first gift possible online.

Right at the outset, you have a unique chance to capture some additional funding with reminders that their gifts may be eligible for a match from an employer.  Immediately after a gift is committed, you can redirect the donor to another page where they can determine the eligibility and sign up instantly for the match.  I've worked with Brian Lacy and Associates on this in the past, and it is a tremendously effective way to improve giving results before you've even had contact with the donor himself.

Online giving opens a diverse array of giving options to pursue.  Carefully crafting your program to enable and improve your overall efficiency can solve many of the difficult problems you may face in a challenging economic environment. 

A More Efficient Annual Giving Program

by Andrew Thompson

In recent posts, this blog has discussed ways of boosting the actual dollars raised from your annual giving program which is, naturally, the most important way to improve results, and essential for future growth. 

Yet in these treacherous economic times, new revenue may be hard to find and it will serve your program well to also re-examine areas where you may be able to save costs.  No doubt you are watching your expenses much more closely this year and already thinking about ways of saving at the margins.  This can help you avoid the pain of reaching the point of cutting payroll or other major line items - cost cuts no one finds desirable.

A large directory of service providers might not need to be updated every year, and there may be  other reference materials that or non-compulsory continuing education courses that can wait until it's clear the revenues will support the activities.  These may be areas where you've already considered cuts or delays in expense.

But what about the macro-programmatic level of efficiency?  How do you improve (reduce) the ratio of costs to dollars raised?  In this post and the next, we'll examine this issue and provide a couple  suggestions for improving these numbers. 

For starters, you're wise to be looking at the program on a comprehensive basis.  In fact, have someone else look at it on a comprehensive basis for you.  For example, does your VP of Advancement have plans or room on the calendar to augment ordinary budgeting responsibilities to conduct this level of review?  Or should that be done elsewhere?  What about your internal or external auditors?  Can they provide you with a supplemental report?  Will it be timely if they do? 

Once auditors come into the picture, additional costs come along.  But let's not be penny wise and pound foolish either.  From years of managing budgets of all different sizes, one of the things that has become obvious to me is that when I am responsible for the budget myself, I am too close to the actual administration of expenses to step back and get a good, clear perspective on the range of possibilities.

For example, when I managed the same development budget for five consecutive years, a consulting advisor showed me savings on printing and materials and other promotional activities that saved me nearly what it cost to fund one full time staff person in my office.   We were also able to appropriately reallocate some costs to past and future years, as well as other fundraising activities that furhter improved my results. 

None of these savings had been possible in earlier years, but because of his acquaintance with all of our organizational practices, opportunities with outside vendors and the costs saving practices of other, similar development shops, he could recommend areas where I could save money immediately and show a much improved efficiency ratio without raising any additional money. 

You are well served to carefully re-evaluate your budget early on this year.  Down the road, the dividends will be tremendous.  In the short term, it may be the difference that keeps you from having to make some very difficult choices before the year closes. 

In the next post, we address the impact that improved online giving practices can have on the efficiency of your efforts.   With both pieces, you will have a well rounded perspective on way to enhance your own efficiency. 

Effective Alumni Relations Boost Annual Giving (Part 3 of a 3 Part Series)

Boost Annual Giving Results in This Flagging Economy (Part 3)

By Brian Lacy

NOT MERELY YEAR OF GRADUATION, BUT SCHOOL OR ANOTHER SMALLER UNIT

Focusing on alumni for just a second, remember to organize your annual giving not around years of graduation, but also according to the school or a smaller unit from which they graduated. Alumni can easily rebuff appeals from a larger entity they feel less affinity to, but will have a tough time refusing an appeal from the individual school or program from which they graduated. This is especially true for adult students such as those who attended an executive MBA program.

ONCE IS NOT ENOUGH

Interested in a no-brainer? Try repeating your campaign every three to five months. lf, for example, yours is a Big Ten school that just beat a competitor to become the national champion, repeating the annual fund immediately afterward so that a many delirious alumni and friends can give again, is a solid strategy.  Try to secure two gifts each year from your alumni.  More than 50% of annual donors will give at least twice a year if solicited well.

HIT THEM WHERE THEY LIVE

And no, it's not their wallet or purse, but their heart. A number of years ago, after I had  graduated from the School of Journalism at the University of Oregon, I received a call from a student. "Do you remember those typewriters you used in Basic News Writing?" (Remember, this was a long time ago.) "Well, we're trying to replace them. Can we count on you to help?" Of course I remembered those typewriters, and of course they could count on me.

WHY WAIT UNTIL THEY GRADUATE?

If the job of the Admissions office is to recruit young alumni, then the job of the college is to begin working with freshmen so that they understand their role as alumni. Rather than waiting until they graduate, begin involving current students now. While they might not be in a position to give, they are in an excellent position to ask. Put them on the phone. Many schools ask seniors to contribute their first gift while still a student. Teach a giving tradition to students. A program that gives students an opportunity to say thanks, and helps to create a stronger campus culture of philanthropy and community is very desrable.

INTEGRATE MEDIA

One excellent way to increase response is to integrate your institution's annual fund appeals across multiple media. Rather than relying just on postal mail or telephone, precede your annual fund campaign with some articles in the institution’s publications. A letter from the president that announces the campaign but does not make the ask. Use your Web site to reinforce and even expand key messages. Remember that integrating across multiple platforms will increase giving.

 

Enhancing Annual Giving in a Lagging Economy (part 2 of a 3 part series)

Boost Annual Giving Results in This Flagging Economy (Part 2)

By Brian Lacy

NOT JUST ALUMNI ANY MORE

Historically, annual funds were designed to raise dollars from alumni. The days of alumni-only annual funds are long gone. At many universities for example, parents of current students are an essential component of the annual fund strategy. It is not unusual to see an annual fund directed at a number of other populations beyond alumni including:

            Parents of current students and former students

Faculty and staff

Business leaders

Vendors that supply the institution

Community residents

If you can make the case that an audience segment benefits because of your institution, then you can legitimately include them in your donor list. Of course, you will need different giving appeals for each group. Also, from the annual fund perspective, it is very important to work with the richest possible definition of alumni. Include students who completed a certain number of hours.

MANAGE STUDENT INDEBTEDNESS

One common reason given by young alumni for not giving is that when they are paying off their college loans, they are somehow contributing to the institution. So student indebtedness is a major hindrance to young alumni giving. Helping students manage their debt level can go a long way to helping them become happy alumni donors.

DATA, DATA, DATA

There is no doubt that strong annual fund programs requires good data. You must know where you donors live including their phone number an email address, and you must also know their interests, inclinations, and giving history. It is surprising how many colleges and universities have lost contact with huge segments of potential donors. They often know little more about the donors beyond where they live. One constant rule for annual fund campaigns is “Knowing more donors, and knowing more about those donors will result in greater giving. Invest the time and money you must to build the donor base.

Enhancing Annual Giving and Annual Fund Even While the Economy Lags

Boost Annual Giving Results in This Flagging Economy (Part One)

For most independent schools, colleges and universities, the annual fund is the backbone of fundraising strategies, for a number of reasons:

First, the annual fund is the simplest and most common of all fundraising appeals, and as such, it's a good gauge of an institution's overall ability to raise dollars. After all, if a college cannot manage its annual giving program, it is likely to have a very hard time succeeding with more complex fundraising strategies like capital campaigns and major donor solicitations.

Second, annual giving is an important litmus test of alumni satisfaction - if giving is up, or steady, it's likely that alumni are reasonably satisfied. At the same time, a publicized malfeasance, the firing of a beloved football coach, or a change to the institution's name--can negatively impact giving if not handled correctly.

Third, alumni participation is also a key criterion that foundations evaluate when considering your grant request. Their reasoning is simple: if alumni don't support the school, why should we?

Finally, many independent schools and private colleges need the dollars generated through alumni giving to bolster their annual operating budget.

For these and other reasons, a strong annual fund program is essential. So, let's explore some options for enhancing your annual fund response. While some ideas will be simple and others more complex, at least one or two is certain to help you reach and even exceed your annual goal.

However, before we can discuss how to enhance your annual giving, two elements of a mindset need to be clear:

First, a successful annual fund is not automatic. Too many colleges and universities look at the annual fund as a spigot that they can turn each year (open the valve and cash comes out). This kind of attitude will, over time, lead to a decline in giving. The annual fund is best considered as an expression of a larger relationship. If the relationship is solid and of benefit to donors, then the fund dollars will come.

Second, the institutional need or desire for these dollars does not automatically equate to a donor giving. Many studies have indicated that donors are asked to give to nonprofits more than 400 times each year.  The myth that people don't give because they aren't asked is indeed a myth.  The real reason most people don’t give is the need isn't compelling. Donors must understand your need, both logically and emotionally. Donors give out of a sense of involvement.

Come back soon to read some ideas for strengthening your annual giving effort.

Replace Foundation Grant Losses with Good Annual Giving Programs

By Brian Lacy

While not directly a concern of most Annual Giving professionals, I recent ready about a disturbing trend that is gaining steam.  Obtaining grant funding in 2009 will be more difficult than in the past.  The economy is causing many foundations to restrict support to existing grantees.    Further, several foundations have closed their doors because of the Madoff scandal.  If your grant revenues go down in 2009, do the most you can by maximizing annual giving and ensuring you have all of the elements working at your institution and then these efforts are optimized.

Just a few of the foundations with disappointing news for 2009 are:

Frueauff Foundation: Due to the continued weak economy and market, the Frueauff Foundation is not

USPS New Postal Service National Change of Address Link Rule

Direct mail marketing remains one of the most powerful and economic ways to reach a target audience— delivering your message directly to your prospects through the U.S. mail for pennies. The beauty of direct mail marketing is that it’s a medium that works regardless of budget—big or small.

Effective November 23, 2008 the United States Postal Service now requires address lists for standard mail to be cleared of incorrect addresses every 95 days, rather than every 185 days as previously required.

The new ruling, announced earlier this year, is meant to decrease the number of undeliverable mail pieces processed by the post office. The rule has been expanded to Standard (nonprofit discount rate) mailings. It originally only applied to First Class mail.

In order to meet the new “Move Update” standards, a mailer must update its addresses using methods approved by the Postal Service. The method recommended by most is the National Change of Address (NCOA) update method.

To comply, mailers must update their mailing lists to account for recipients who have moved every 95 days at minimum. For example, a mailing entered on Nov. 23 must bear names and addresses that were updated no earlier than August 20.

Nonprofit organizations that do not update addresses they mail within 95 days, verified by submission of a Certificate of Move Update Compliance (PS Form 6014), may be charged First Class postage on their entire mailing.

Contact Brian Lacy (or by phone at 860-478-9291) for assistance with inexpensive NCOA Screening and other data cleansing services.