How Penn State Fundraisers Shifted Strategy in 2020

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0:00:11.8 Speaker 1: Welcome to Office Hours with EAB. On today’s episode, the head of Penn State University’s fundraising team joins EAB’s own advancement expert, Jeff Martin. The two talk about the challenges university fundraisers have faced over the past 12 months, they give us a peek into the future of virtual events, and offer tips for managing fundraising teams and gift proposals, going forward. Thank you for listening, and enjoy.

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0:00:44.4 Jeff Martin: Welcome to the podcast today. We’re here on Office Hours with EAB. My name is Jeff Martin, I’m a Senior Director with EAB who oversees a lot of our advancement research, and I’m joined today by my colleague and partner from Penn State University, the Vice President for Development and Alumni Relations, Rich Bundy. Rich, thanks so much for joining me today.

0:01:08.2 Richard Bundy: Hi, Jeff. I’m happy to be here. Thanks for the invitation.

0:01:11.6 JM: Excellent. So figure we can jump right into it. It’s been a pretty tough year so far, for a lot of university, college and university advancement teams. My team did a little bit of work a month or two ago, looking at how the first part of fiscal year ’21 has gone, and while there were some bright spots by and large, it’s been very tough, the median institutions saw nearly a double digit drop in total dollars raised, big retrenchment in major gifts, lots of donor declines, etcetera, etcetera. I’d love to hear your perspective on this. What are you all seeing at Penn State?

0:01:53.3 RB: Yeah, well, you’re absolutely right that it’s been a challenging year, really, at risk of overstating the word that’s been too used this past 12 months, unprecedented for folks who are in the industry. And Penn State’s experience, I think, has been like most of our peer’s. A little bit of a mixed bag, we have some bright spots, and we’ve tried to find those bright spots to help keep morale up and keep momentum in our campaign. But yeah, our experience has been very similar to what we’ve seen nation-wide, our commitment number is significantly down from where we were this year… At this time last year. And you referenced the research that you did at the midpoint of this fiscal year, we were… At the time, we were down about 9.5% year to year. That has continued to go down. We’re down now about 30%, pains me to say that. But for some perspective, last year was the all-time record fundraising year for Penn State, and we managed to do that even though the final quarter of last year was really bumpy. We’ve maintained progress in our campaign, we’re still on track, on time and on pace for the campaign, as we’ve pivoted to a new reality for fundraising. So we are actually on pace to meet the target fundraising goal that we set for the institution this year, even though it’s a 30% decrease from where we were last year at this time, because we built into our planning for FY-21…

0:03:39.5 RB: A delta between the most successful year of fundraising and fundraising work from remote pandemic. And many of our other data points reflect that, so we’re… Like most institutions, we’re down a little bit in donors, but we’re actually ahead of schedule for what we predicted for the year this year, down compared to last year. And as your own research pointed out to us, one of the real bright spots for us is a significant increase in the number of $25,000 and up proposals, and a very significant increase in the number of those proposals that have been funded by our donors. So we think there are some bright spots there, and maybe some lessons for us as we move into what we hope will be a post-pandemic fundraising paradigm here in the weeks to come, months to come.

0:04:35.8 JM: Yeah, I think it’s a smart approach to go into this, as you said, unprecedented fiscal year with a more modest fundraising goal, something more achievable. Funny enough, in our research, we didn’t find those to be all that common. We asked few months ago, I guess it would have been towards the start of the fiscal year, actually, we asked Chief Advancement officers within the membership, how many of you have presidents and boards that are expecting the same fundraising performance as last year or higher fundraising performance compared to last year? Three quarters of Chief Advancement officers said that they were being held to the same or a higher standard. At the time, we then followed up and asked, “How many of you are actually expecting to increase fundraising?” And it wasn’t more than a third, which is tracking now, with what we’re seeing performance looking like. Of course, so much of that total dollar success has to do with very big guests, what we would call principal guests. They’ve come to comprise a bigger and bigger share of total fundraising revenues, especially across the past decade, although you could play that back. Honestly, any number of years, you’d see the trend obtaining…

0:05:58.1 JM: I’d love to hear a little bit how you all have fared and how you’ve seen your colleagues at other institutions as well, when you’ve had the chance to catch up with them. How you all have fared at the so-called top of the giving pyramid?

0:06:11.5 RB: Yeah. That’s one of the areas where we’ve seen the greatest decline in year-to-year activities, so I mentioned that we’re about 30% behind where we were last year at this time, that equates to about $100 million in fundraising that we haven’t been able to replicate from year to year. But within that $100 million, just two gifts last year account for about $66 million of that total, and so we’re doing extraordinary work in that $25,000 to $10 million range. It’s the $10 million and above where we have not been able to reproduce last year’s gifts. And it takes a lot of million-dollar gifts to make a $66 million gift, so that has been… In many ways, that has been the main point of deviation from last year’s. Our donors have continued to be very generous, but at the highest level of philanthropy, we just haven’t seen that replicated again this year.

0:07:22.3 RB: I really shouldn’t speak for my peers at other institutions, but I can share anecdotally that I’m hearing the same kinds of things that our donors at the high end… Some institutions are still getting those gifts, but fewer of them. And at institutions like ours where they’re a little bit fewer and farther between, maybe we’re not getting them this year. I will say though that we’re having some very good conversations with donors about gifts that are in that range, and so we’re still having productive conversations, but I think that there’s still enough uncertainty out there despite all of the wealth creation and all of the positive signs that we’re seeing nationally, at this juncture. I think there’s still some hesitation to make that kind of a commitment in such an uncertain environment.

0:08:14.4 RB: So I’m cautiously optimistic that if we continue on the trajectory that we’re on with the pandemic, that some of those gifts will start to fall our direction again.

0:08:27.0 JM: There seems to be so much competition from other non-profits, healthy competition. There are lots of very worthy causes out there right now related to diversity, equity, inclusion, and justice, related to the pandemic response. How have you and how have your fund-raising teams navigated through this environment in which there are so many compelling urgent causes that donors could lend their support to?

0:09:02.2 RB: Well, so you’re absolutely right. The growth of non-profit sector has been extraordinary over the arc of my career, and we are seeing increased competition from all sectors of the industry. I like to think actually, that we’ve learned… We in higher education have learned some things from our colleagues particularly in the social services organizations, where they have to be, for lack of a better word, a little bit scrappier than we do in higher education, especially if you’re a small non-profit and you’re raising your operating budget, there is an inherent urgency there that perhaps we don’t have in higher education. And so if you wanna look to innovators in the non-profit sector, many of the neat things that I’m seeing, the exciting things that I’m seeing, are coming out of the smaller…

0:10:09.8 RB: Again, scrappier non-profits. When we can apply those tools at scale, they’re really terrific in the higher ed setting, but not all of them can be applied at scale. And so I think to answer your question about how do we keep urgency in the higher ed space, I think what it really boils down to, in my mind, is the core message, the case for support that we’re able to make. And I think about how donors who support higher education look to us to answer the pervasive questions that are affecting society right now, or to be involved in answering those questions. And to the extent that their philanthropy can provide meaningful support to those queries, those investigations, that critical research, that’s the sweet spot for us, that… Particularly if you’re at a… And I mean no disrespect to smaller universities, but when you’re at a big comprehensive institution like Penn state, that we have a lot of bandwidth where we can tackle some of the really big questions that face society, and donor support actually is the jet fuel to allow us to do that.

0:11:41.1 JM: That’s something that my team has spent a lot of time investigating, long-term shift in donors giving out of what you might call a sense of loyalty to their alma mater. Now they’re giving because they wanna change the world, and something. And they’re giving to the institution they give to, not solely because they have some prior affiliation with it. Honestly, in many cases, it’s more because that institution is the vehicle through which they will effect that change. And for a university like Penn State, as you said, you just have so much bandwidth, so much… You’re such a power house of answering some of those big questions of moving the ball forward…

0:12:30.6 JM: On the research on the education and access that will really have the impact that donors want. One thing I’m curious about, fundraising from donors who give out of a sense of loyalty, is a very different game than fundraising from donors who wanna get their hands a little bit dirty, wanna get into the nuts and bolts of a project, wanna see the vision for how something is going to have that transformative impact on society. How has your talent strategy shifted as donor’s needs have changed? Working with a donor, when they need to interface with eight different departments on campus and some of the smartest researchers in the world, from the position of fundraiser, it must be an incredibly complex and complicated endeavor.

0:13:27.3 RB: Yeah, it is. And I think that’s actually one of the challenges of such a big place as Penn State. Again, no disrespect to smaller institutions, but we’re one university geographically distributed across 24 campuses in the Commonwealth of Pennsylvania, and our development operation is responsible for fundraising for all of that. And our College of Medicine, and athletics, and our museum, and… The list goes on and on. I think that one of the strategies that we’ve employed successfully in the current campaign that we’re in is the creation of an office of strategic initiatives where we hired… These were internal hires. Both of the initial positions were senior fundraising professionals who we essentially took off of the playing field as fundraisers, and instead said, “Now what we want you to do is to apply the knowledge that you have as a fundraiser, to bringing together the various parts and components of the institution, around these complex, multidisciplinary ideas.”

0:14:50.5 RB: And we have a set of strategic priorities in the campaign that don’t neatly fit into a college or a campus or an academic discipline because they draw from expertise in multiple areas, and it takes somebody who can be the facilitator of those institutional conversations to help put a proposal or put an idea in front of donors that is cogent, that doesn’t require you to talk to eight different people in eight different departments to get the core of the idea, but where we’ve distilled it into something that is accessible to our donors. And so they’re working on some of the central initiatives, the defining initiatives of this campaign for Penn State.

0:15:42.3 RB: We have an initiative called Invent Penn State, which is the economic development aspirations for Penn State as we work to grow the economic strength of the Commonwealth of Pennsylvania. We have an initiative called Energy University, which recognizes that Penn State is ranked among the top energy institutions in the world, with expertise from traditional oil and gas, fossil fuels, all the way to batteries and renewables, and everything in between, and… Plus all of the related pieces around law and policy. And so how do you bring all those disparate pieces together and put a compelling vision in front of the donor? It’s been a successful test run for us, and I anticipate that we’ll actually grow that area as we hopefully have additional resources to do so, because I think the challenge is that space society are not quite as neatly defined by academic disciplines as they may once have been, and we’re gonna need to bring together variety of thinking around solutions, to creative solutions to the challenges that face us.

0:17:02.3 JM: I think that’s such a smart approach. Of course, the challenges you’re facing from your position in the advancement office mirror those faced by the academy itself. I know there are lots of conversations around, “How do we attend to, respond to 21st century challenges when we have a very traditional organizational structure on the academic side?” I think your innovative approach of the Office of Strategic Initiatives is rethinking the sorts of roles you have in your office, a really smart part of your talent strategy, and thinking about the talent you have on your team. Of course, no advancement office can operate without talent, without the resources coming from the institution, without fundraisers out in the field. I have to say, I’ve been dismayed to see through our research, that while so many senior institutional leaders, presidents and the like, are saying advancement is a cornerstone part of how we will recover from this pandemic, from this recession, it is a key revenue driver for us. At the same time, more than four out of five institutions cut their advancement budgets across this fiscal year. It was just shy of half, had double digit cuts in place. I’m curious, the conversations you all are having in the leadership team at Penn State, how are you thinking about resourcing advancement in what’s honestly a very difficult time for any institution’s budget?

0:18:47.0 RB: Yeah, it’s a great question, and I just have to say how fortunate I feel that we’re not one of those institutions that took a major budget reduction, the Development Alumni Relations Program at Penn State participated in the exact same percentage project reduction as the rest of the institution.

0:19:08.9 RB: And we were able to essentially cover that budget reduction with a couple of strategic retirements where we restructure it ever so slightly and didn’t have to refill a position, or where we had some salary savings because of vacancies for a period of time. We have been in a bit of a hiring… Not a freeze, we’re calling it a hiring chill, and that has allowed us to save some money, and of course, not traveling this year, not having events like we normally do this year means that… We anticipate that we’ll have a pretty significant carry forward, most of which will return to the university to help in other areas that may have been hit a little bit harder than we are. Longer term, we’ve articulated in the strategic plan that we’ve developed for the advancement function at Penn State, a pretty ambitious goal to increase our frontline funds and staff by 50% in the next five years, the goal is to get the number of prospects under management and 12,000 to 18,000 by 2027 or…

0:20:30.1 RB: We think we have the resources, we think we know where the resources are already in our institution to cover that without having to take a dollar from someplace else, but it’ll also require us to think a little bit differently about something, so we’re ever mindful of opportunities to achieve efficiencies and to explore how technology might allow us to do things differently more effectively, I think most of my peers are starting to have conversations about what does it look like when we begin to return to our offices and perhaps a subset of our employee base decides that they’d really rather continue to work remotely, maybe we don’t need all of that office space that we currently have, and can we save some money there and re-invested in other priorities? So the budget puzzle is always complex, but I consider myself extraordinarily fortunate that the message from our board and from the president and provost is that development is important, it will be critical to how the institution emerges from this challenging time, and they’ve matched rhetoric with action.

0:21:58.1 JM: That’s wonderful to hear. You know, your comments about coming out of the pandemic, maybe we’ll think differently about the way we organize our workforce raises for me, the question of what else will we think differently about when the pandemic started, essentially everything we know about advancement just had to get thrown out the window. Advancement thrives on in-person relationships, going out, visiting with major gift prospects, having big events, reunions, homecoming, happy hours for young alumni, etcetera, etcetera, and all of that was just impossible, just overnight had to stop and advancement had to re-write the playbook, lots of virtual engagement for alumni of virtual commencement and homecoming and the like, cultivation occurs for most institutions exclusively on Zoom or Teams or what have you, nowadays. So basically, every rule of the road currently is different, but it won’t have to be in certain time period here, if I could tell you the exact number of months I could probably… I don’t know, make it killing on the market. But I’m curious for your thoughts, what do you see snapping back to business as usual? Because it worked. If it’s not broke, don’t fix it. And what do you see as perhaps forever being different about the way Advancement does its work?

0:23:36.9 RB: Yeah, Jeff, I think that that’s a huge question. And I’d be lying if I told you that I had answers to the question, I have some hunches and things that I kind of mull over in my mind, when I’m reflecting on our own path back into our offices, I don’t call it back to work because we’ve been working really hard for the last 12 months, I call it back to the office, but there’s so much that we don’t know it, so I think, for example, that part of the success that we’ve had in the last 12 months with fundraising has been predicated on the fact that our donors are also locked up in their homes right now, by and large, and so as unsavory as it might be here, as unsatisfying as it might be to have a virtual donor engagement, that our donors are also kind of a captive audience right now, and it’s a little bit easier to get access to them than it usually is when we’re having to fly across country to see that one donor in Southern California. What I don’t know is what that will look like when things start to loosen back up again and people return to some semblance of what normal life used to look like. Will our donors still want be open to having a Zoom conversation, or will it return to everybody expecting personal visits, and how are you gonna handle the donors that aren’t comfortable having strangers in their homes or businesses now, or development officers who aren’t quite comfortable getting in an airplane yet? So I think there’s a lot of uncertainty around that.

0:25:20.6 RB: I do speculate that… One of the things that we’ve seen that has been kind of a bright spot for us is greater participation in some of our virtual programming, Alumni Association programming, principal gift gatherings with the social hour with the president and his wife, those kinds of things. Folks that wouldn’t normally take the time to travel into rural Central Pennsylvania to sit down for an hour with the president, they will dial in from their homes in Colorado and Washington state, and in fact, we had an alumni event a couple of months ago where one of the participants was a commander in the Navy and Zoomed in from his ship in the Persian Gulf, which I thought was actually a terrific example of how we have an opportunity, I think, to blend in person and virtual programming so that we can be attractive to our audiences wherever they’re at, and I think that that’s gonna be one of the lasting legacies here, we won’t be able to go back to having the on-site event that nobody can dial into because there’s gonna be a cohort of people who expect that, but some of the other things, I just don’t know what it’s gonna look like.

0:26:45.3 RB: In preparing for this conversation, we had a quick side bar about… At one point, I had frontline fundraising staff scattered across eight time zones, because they had decamped to various places, and it started to raise questions, in my mind, they were still being very effective in meeting their metrics, but across eight time zones, they weren’t even on the same work day anymore, which started to raise these kind of philosophical questions of, Do they have to be in the office, and what is the work day anymore, and do we care if they spend 40 hours a week doing their job, if they still get their job done? I think these are the really big questions that employers, not just in the non-profit sector, but everywhere employers are gonna have to grapple with because I think we as a society have shown maybe maybe some of those old traditions around work have been fundamentally broken in the last 12 months.

0:27:53.3 JM: A provocative thought, I probably would be more inclined to bet with you than bet against you. So Rich, I know this year has been very tough in many, many ways, but I’ve also heard there have been quite a few silver linings, so many advancement teams having to do so much differently, lots of them just stumbled upon things that worked really well. Silver linings that they didn’t expect to find. I’m curious, have you seen any of these silver linings in Penn State?

0:28:28.9 RB: Yeah, absolutely, Jeff. And one actually quite recently that I’ll mention, so anybody who knows anything about Penn State knows that we have the largest student run philanthropy, I think in the world, called Dance Marathon, or we call it Thon, which is under normal conditions of 46-hour dance marathon. 17,000 students packed into our basketball arena, and it supports children with pediatric cancer and their families, and so normally there are also patients and their families in the event, but of course, in the middle of a pandemic, you just can’t do that. And so our Thon student leaders pivoted this year to a fully virtual dance marathon, which sounds like it would be impossible to pull off, but they pulled off the impossible 46-hour live stream that started two weekends ago on Friday evening where they broadcast dance and skits and student organizations, doing appeals, and they had a talent contest with our student athletes, and it was just terrific programming, it’s actually fun to just sit at your computer and watch it, but where it was…

0:29:49.6 RB: From a development perspective, where I thought it was really terrific is they significantly enhanced their crowdfunding donor drive activities and increased their presence on social media in an enormous kind of way, and the result was that on Friday evening from 6:00 PM until midnight, the first Friday of Thon, online gifts were up 78% over the previous year, which set an all-time record for one day of online fundraising at Penn State, and the next day they cleared a million dollars in online gifts, so they broke the record the second day in a row, and a lot of these gifts, as we understand it, came from Penn State alumni who didn’t wanna see our students and their art work fail.

0:30:44.2 RB: So back to my earlier comment about Penn Staters double down, they did again this year, and at the end of the day, on Sunday evening, they announced that they’d raised $10.6 million for pediatric cancer.

0:30:56.5 JM: That is really incredible. At the conclusion of our time here today, I’m curious for the folks on the line, I’ve worked with you for many years now, plus a couple of institutions, and I’ve known you to have a very insightful approach to Advancement strategy and fundraising engagement in general. I would love to get a sense from you. What do you think is maybe the most important piece of advice that you would offer right now to those who lead advancement teams?

0:31:37.6 RB: I think the most insightful bit of advice that I can give right now, and I’m not even really sure how insightful it is, is that our donors are craving their connection to our institutions, and whether we’re still remote or in some hybrid posture or back to everybody being on our campuses and our staff traveling again, the quality of that engagement is gonna be critical in terms of keeping, growing, attracting and retaining, not just donors, but our volunteers, our advisory boards, and so I think there needs to…

0:32:24.2 RB: We all need to be thinking very critically. Not just about, “How do we get people back out in the field and checking the box on their metrics for a personal visit again”, but really “What is the quality of the engagement that we’re offering to our stakeholders?” And it can’t be one size-fits-all. We know that particularly in higher education, where your volunteer and donor alumni stakeholders can spend 75-80 in their life span relationship with the institution, that we have people at every phase of life, we’re gonna need to be much more facile to what different demographics with different generations want from their institution, and then work really hard to provide that.

0:33:18.5 JM: All said. Well, Rich, thank you very much for joining me today for this conversation. I know I’ve learned a lot, so thank you. And everyone listening and at home, I appreciate the time. Take care.

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0:33:38.9 S1: Thank you for listening. Please join us next week when EAB’S-Caitlin Maloney and Ron Yanoski explore the future of remote work on college campuses. Until next week, thank you for joining us on office hours with EAB.

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