Pipeline Development in the Donor Investor Era

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Much of advancement leaders’ attention has shifted to the status of their pipeline as they look to mitigate the long-term impact of COVID-19 on their shop’s productivity. Many are finding that too often future major gift prospects are overlooked by frontline teams. This neglect undermines long-term revenue goals.

One example of a tactic is to create a gift registry list with items donors can “purchase” through their tax-deductible gifts. Birmingham-Southern College has been able to generate excitement about mid-level giving, especially among young alumni, through offering specific giving opportunities that allow donors to know exactly where their money is going.

This webinar provides strategies for elevating the mid-level donor experience and realigning the engagement value proposition.

This is an auto-generated transcript, so please excuse any errors.

Hello, everyone, my name is Dr. Jenna Dell and I'm a researcher on our advisory services team, and today I'm going to walk you through our research on pipeline development in the donor investor era.

Well, we don't yet know the long term financial impact of covid-19. We do have insights from the last economic downturn and out of that last recession came an influx of wealth. You can see that represented here on the left hand part of the slide from 2008 on the number of millionaire households continue to grow. And as you can see on the right, we also saw a spike in New economy enterprises. Many of them were founded by young entrepreneurs. One of the most notable, of course, is uber, which is now worth over $55 billion. And we're likely to see a similar emergence of innovative businesses due to covid.

On the left, you can see an example of young entrepreneurs that made it big out of the last recession, WhatsApp was created by Jan and Brian, who are in their 30s. And then just five years later, they had a massive wealth event when they sold it to Facebook. If you're not familiar with whatsapp, it's a free messaging platform that many people, including myself, use to connect with friends and colleagues internationally. Shortly after selling their platform, Jan O'Brien made a mega donation of 846 million to the Silicon Valley Community foundation, and that's a typical story of entrepreneurs that founded companies out of the 2008 recession. But our issue in higher education is that we still focus our efforts on a much older demographic.

As you can see on the right hand part of the slide, the median age of a new top 100 donor to higher education has gone up since the 1970s. And is now around the age of 68. If we don't change. Now if we fail to include our younger donors like Brian and Jan and our cultivation strategy, we're going to continue to lose out on millions of dollars. We've been talking about millennials for a long time, and in advancement in particular. But now they're starting to grow their wealth earlier and more quickly. By 20, 30, millennials are expected to have $20 trillion dollars, not including real estate. The average age of ultra high net worth individuals is getting younger and younger, and in fact, in the past five years alone, it's dropped 11 years from age 58 to 47. Therefore, we need to make sure that we're on the radar and a trusted partner of these future major donors. So if and when that wealth event happens, we already have that relationship.

Of course, this is easier said than done, as many of you know, in recent years, we've gained ground with our younger donors, which you can see represented on the top half of the slide. But we're actually losing ground with our donors are in their 30s and 40s. As a quote at the bottom highlights, this lack of mid-career engagement means that we end up right back where we didn't want to be missing wealth events showing up late, knocking on doors and hearing you haven't spoken to me in 15 years. But why does that issue exist? Why do we have that 15 year engagement gap?

During our research, we heard about four main issues that caused our mid-career alumni to drop off. We heard that we provide low value programming that doesn't fit into their lives or that we offer uncompelling appeals that are one size fits all. And easy to the delete. We also heard that in personal relationships make it too easy for our alumni to ignore our yearly phone calls or that even we sometimes ignore constituents who raised their hands. From the perspective of our alumni, it seems as though we're treating everyone in our annual giving program the same. This means that the teacher and the social worker at the top are getting the same one size fits all appeal and programming as the child of wealth.

In the future, we need to pull out these donors who are rising stars and likely to be major gift prospects. And then create an active pipeline strategy with bespoke engagement and targeted appeals. This is especially important post covid so that our prospects remain engaged. As with most things, this is easier said than done. How do we prioritize those folks in our donor pool? And that's why I've included the three most promising personas when it comes to rising stars. We have the corporate climbers anticipated inheritors and emerging astronauts across the next three slides.

I'll go into more detail on each of these and we'll start with a corporate climber. When I think about these individuals, I think about those who are working for a large established firm, these individuals are risk averse, and they want a stable path to the C-suite because of that desire for achievement focused and great networkers. These are alumni who will make it big in their companies in the future, but they're also doing well early on in their careers. For example, the average salary of a fourth year big law employee is over $300,000. And it's not just that these young alumni are making more money at a younger age, they're also rising through the ranks faster. Harvard Business Review noted that top managers at fortune, 100 companies are younger, more female and making it to the top faster.

Moving on now to the anticipated inheritor, these are children of wealth who are likely already on your campuses and can make a large impact in the future. On the left, you see that inheritors are mission driven. They're fluent in philanthropy and they're hard to impress. They've already watched their parents and their grandparents distorted by charities for years. These individuals are set to inherit 60, $8 trillion by 2030. You'll notice that this number is larger than the $20 trillion on the previous slide. And that's because this number includes total assets like real estate. What's interesting about this generation of inheritors is the movement towards redistributing their wealth with a focus on social justice. From the New York Times article, on the bottom right hand of the slide, you see an organization called resource generation, and this is a group of young inheritors who are giving away all of their trust funds and in some cases, all of their inherited wealth.

Moving on to our final persona, the emerging entrepreneur, this person is working constantly, all day and all night to build a successful company or a product. They're innovative. They're constantly pressed for time because they put their needs, their business needs above everything else, and they're discerning. In a few years, they're likely to sell their product or their company to Google or Facebook. As you can see, 68% of Forbes next list of billion startup companies are run by individuals under the age of 40. This young group of entrepreneurs is no doubt going to be successful, and they're planning to donate more to philanthropy than their older counterparts.

Now we're going to walk through the best ways to work with these future major donors. Usually that starts with engagement and moves towards cultivation. But with covid-19, we've heard from many of our partners that it's been difficult to engage cold prospects. So instead, we're going to spend our time focusing on accelerating those already within our pipeline towards major gifts. And to do that, we need to start at the mid-level donor experience. And first, going to share some data about our future major donors and when it comes to this next generation. 67% of high net worth individuals want to use their wealth to benefit society. That's great news. It was only 39% in prior generations. This dedication to making an impact is paired with a need for personal connection and long term commitment. You can see from the quote on the right hand part of the slide, what future major gift donors want is not too far off from what we need our major gift donors to be. However, right now, we have a disconnect in what our future major donors want and what they receive, they're giving at low levels. Now because of their current wealth. And so they're being cultivated for the amount they gave last year. They're not getting what they're looking for, instead, they're getting mass emails, a call or a text from a student, perhaps a personalized mailer. They're not getting those long term opportunities, they're not seeing the impact of their philanthropy or feeling ownership over it, and they're not developing those personal relationships. So how do we fix that disconnect, how do we get that experience to be more similar to what they want?

We found three key takeaways to elevate that mid-level donor experience and accelerate their giving. So across the next flight, I'll go into a little bit more detail on each of these, and we'll start with dealing with instilling a feeling of ownership over impact. Of course, impact is not new, it's something that we focused on for a long time, a baby, which is one BP told us impact is now table six. It's no longer sufficient on its own. Donors want to feel like what they gave to would not have been possible were it not for their gift that they and they alone were responsible. This isn't something you'll get from a crowdfunding campaign. For example, I could see somebody being really excited that they were the ones to purchase the new costumes for the school mascot. And of course, they want a selfie with it at some point in the future. To help create a sense of ownership, fundraising products are a great way to bring the major gifts feel down the pyramid, fundraising products are more like purchasing a good or a service because of their explicit price tag. We've profiled them in the past by sharing with the University of North Florida is doing with student scholarships and with the University of Michigan's economics department with their mid-level gift brochure. Listen to the explicit price tag.

The other key components of a fundraising product is the upfront communication of the gifts and the clear stewardship and the natural upgrade options. I'm going to share a few, 20, 20 versions of fundraising products. With covid-19, fundraising products are having a bit of a moment here. And you can see two examples from Purdue. And from Caltech, each of these institutions created a fundraising product pages to encourage donations on the left. You can see that Purdue is fundraising to keep their students and their University community safe as they return to campus by asking for PPY. And so far, they've raised over 1.9 million. They'll check, on the other hand, is fundraising to support research on breathalysers and other technology. Right now they're fundraising for 11 specific covid-19 projects.

And the non covid example comes from Birmingham Southern, they've taken the idea of fundraising products and applied it to an Amazon model, and by that I mean, they've applied fundraising products to each division on campus. What I really like about this is that it provides donors a way to know their exact impact, which is what they're asking for. The way it works is donors go online to a gift registry page. And then can choose to donate by purchasing the item like a computer or a programming kit. This is a great opportunity to engage our academic colleagues in reaching our fundraising goals. Communicating up front where their dollars are going helps donors to feel ownership and a mid-level, just like a major or a principal donor might feel when their name is on a building. And what stands out about the strategy is the built in stewardship aspect. It's clear that donors love this initiative, a clear impact is what has and will continue to encourage donors at Birmingham southern to naturally upgrade their donations. It also helps that in the age of budget cuts and hiring freezes, that these dollars are budget relieving and in some cases, budget additives. Now they're working on making their page more mobile friendly, and we'll go deeper into their data for targeted outreach to prospective donors.

Now we're going to move into the second section on going beyond one and done getting these are folks that you want to build extended giving relationships with. Many of you short term transactional gifts as a way to increase participation because they become popular with our gen Z and millennial clubs, without giving Dave any of your challenges or annual solicitations, we might not hit our alumni participation goals. It also could be that we could be risking that long term loyalty. As one VPE suggests on the right, I'm starting to worry that we're teaching poor long term giving habits to those at the bottom of the pyramid, that impulse giving instead of sustained investment is the way they can be involved in our organization. And that's really concerning because when you look at it are our middle pipeline donors are signaling that they want to be more involved. We know this because many millennials are interested in months of giving and are planning to make a sustained commitment to the organization, they support. As one of the naysayers, mumfie giving the arguments and giving we're not giving them opportunities to show them those lifelong giving relationships can look like.

At Georgia College they're addressing the need for long term giving opportunities, and they're doing that by lowering the threshold for sustained investments for their young graduates by using shared endowment. Guess this gets more donors to experience a major gift donation. Affinity groups at Georgia College can give just $400 along with four other friends, to be part of an endowment, and this gets them started with sustained giving and give them a taste of what a major gift is like. You might imagine how this could be really popular with athletes, sororities, fraternities and lots of other affinity groups. And it's the same amount of work because staff are still completing only one impact report. What I really love about this program is that it gives alumni a chance to create an endowment that will have a long term impact, and they're taking those rising stars to get in the habit of paying off their endowment year over year. Finally and also cultivate young alumni leaders there for leadership positions within these affinity groups, and they start with the president. The president is the person who pulls the group together. The vice president serves as the fundraising chair. A secretary works on social media, and there is an event, a person. Might be surprising, but young donors across Georgia College have been signing up to the five year sherard endowment program, 50 alumni have now had a major gift experience. And that's exactly what they were going for. The vp at Georgia College notes about the bottom on the slide that they're excited about, adding very young donors to the list of people who have now experienced a major gift donation. Well, Georgia College is lowering the threshold for endowment entry.

We're now going to take a look at the College of Charleston and they're using planned giving to engage alumni where less than 15 years out of school. This is a great strategy to begin a lifelong relationship with a college supporters. Circle society asks young donors to promise 5 percent, 5% of an asset like their 401k to the college. During the first year of the program, the Charleston team targeted invite's for those young loyal donors and cheerleader for even those that are active on social media. Once they become members, young donors receive exclusive offerings like a presidential lunch or a family. Tickets to athletic events. They're in the early days of this, but so far it's been a huge success. Within the first year, the program gained 17 members and received over $800,000. And bequests. It's popular with donors and their 20s and 30s, and in fact, one donor even gave a 450,000 donation at the age of 29. Jenny al-said says, who oversees the program, that it helps young alumni to plan for their future and include the College of Charleston in their long term decision making. Shifting now to an idea that resonates with those emerging entrepreneurs. Pledges have increasingly become common. And they're a great way to get in the door early with those emerging entrepreneurs, especially because these folks might not have time to give back to us in other ways. On the left, you can see some institutions that have fondas pledges which typically ask a young entrepreneur, promise 1% of their company shares to the institution. And in return for letting advancement in the door, early entrepreneurs to access to things like networking events, recruiting events and professional mentoring opportunities. In this final section of elevating the mid-level donor experience, we're going to touch on one on one relationships. We know how important that is for major. In 2020 personalization is a baseline expectation these days. 73% of customers expect companies to understand their needs. Just a few years ago, we thought that level of personalization would be creepy and intrusive. But again, now the expectation, especially for high net worth individuals under the age of 40 five, 67% feel positively about the way their information is being used for tailored outreach.

To provide personalization that young donors want, a lot of schools have moved towards digital gift officer rules. This is a formal, permanent position with about 1,000 assigned prospects, and this allows them to surface future major donors and keep them warm by scaling personalization. On the left, you can see the small excerpt of schools that have digital gifts, officer roles, and on the right, you can see that they leverage a multichannel approach, personalized email, Skype or Zoom conversations, texting and social media engagement. Even if you have digital gift officers, I know it can be challenging to know when you need to hand over the relationship to an in-person gift, officer califate shared with us that to them. It's worth investing in because you're more likely to be successful with a preformed prospect versus a cold call. A state digital gift officers are just the beginning of their pipeline program, when a future major donor enters the case ecosystem, they're engaged by a digital gift officer. And typically one of two things can happen. The first is that donors want to give and they have capacity. They're then hand it off to a qualification officer for an in-person meeting. If after the in-person meeting they're still not able to make that major gift, then they'll go back into the digital gift office or pool. The second scenario is that donors want to give but don't have capacity. And if that's the case, then they'll just stay in the digital gift office or pool. Each year, digital gifts officers are expected to elevate at least 100 connections to qualification officers and keep a closer eye on the rest of their portfolio and note when they appear close to being ready for that in-person handoff. In case you're wondering about these two positions and how they work together, I've included the details here and we'll leave them for later review. Well, I'm really excited about what Kansas State is doing. I also acknowledge that adding 10 people to everyone's team is just not realistic. And it also doesn't solve all the challenges we have around stewardship and test giving tasks are a part of the trend where everyone sees themselves as a donor investor. 70% of first time donors used hesketh to learn more about a charity and its impact. It's no wonder that our future major gift donors are using this to make sure they're comfortable with a major donation. We heard from one director of prospect research quoted on the right that her team is hearing things like, I like the idea of transforming a particular program, but I want to see how well you perform. I want to know how big the impact will be before I make a major donation.

Miami University in Ohio has transitioned to having their stewardship team be the relationship owner, after all, pledges of $25,000 and up have been made. This ensures that they're leaning into the task and building long term relationships that demonstrate impact. You can see on the slide, the gift officer does the cultivation and solicitation, and then the donor is handed off to the stewardship team. When we talked to Miami earlier this year, the team was comprised of nine subject matter expert with plans to add 5 in person or excuse me, in unit subject matter experts when possible. Of course, after the pledges complete, the stewardship team doesn't hold on to the donor, they're released back into the gift officers pool. Donors at Miami University have loved this program. You can see on the bottom portion of the slide, 90% of donors and 20, 19 felt that they were well informed on the impact of their gifts. And better yet. 71% of donors gave again and 2020 moving donors to the stewardship team ensures that donors are getting that individualized attention. They want even between gifts.

I know I've covered a lot. So far in this first section of elevating the mid-level donor experience, so I provided on the slides, some discussion questions for you to take back with your team, as well as next steps to drive cultivation in the short term and in the long term. This next section will focus on realigning the engagement value proposition.

As many of you know, alumni engagement is at an all time low. Some of us have seen spikes in engagement because we've covered. But we expect that when people go back to their typical activities, they won't make time for us. Pre covid 80% of alumni said that they didn't feel very connected to their Alma mater and 60% have never been to an alumni event. You can also see on the right hand part of the slide how volunteering numbers have started to drop off at one private research institution. And just five years, they've lost nearly 70% of their alumni volunteers. And of course, this is important. This is one of the ways that we've historically engaged our future leaders. Across our research conversations, we often heard how much our alumni tune us out, but as Dexter Bailey from Cal tech pointed out, alumni were building their wealth before the age of 40. Don't necessarily have that much time to worry about what their Alma mater is up to. However, they do have needs related to their professional development.

To realign our value proposition in alumni engagement for the professional needs of our future major donors, we've laid out three ways to help drive that value. These strategies will help you keep up the momentum and engage future major gift donors who have engaged with you yet, or have recently engaged during the pandemic. We'll start with bridging skills gaps. We all know that our alumni need and want professional development. 56% of workers age 30 to 49 say the ongoing skill development is essential to their careers. And as ucla's executive director, Mike jilli says on the right, we're well positioned to capitalize on this need for skill development. We already know that they value education and specifically our education to drive alumni value. We need to connect the dots between alumni and our continuing education offering. One school that's helping their alumni build skills they need is the University of Michigan. They have their alumni education gateway, which is an online platform that connects Michigan's alumni to 3,000 short courses, podcast conferences and more across the eight subject areas you see here. What we love about Michigan's education gateway is that it's open to all of their alumni and it's flexible, so this allows every alumnus to find something that fits their needs, everything from a 16 week course to a 30 minute podcast. If you don't already have a robust online education platform, University College London is doing great work to online engagement events, development potential, their leadership series workshops at UCL works to find and engage rising star alumni. Ucla, UCLA pivoted their engagement investments to focus on rising star alumni through targeted invitations and a competitive application process for their small roundtable master classes. We love how UCLA has targeted high potential alums for their engagement efforts and can imagine how powerful this event could be if they were able to further segment who exactly received the invitation.

In this next section, we're going to drill down on how to source top talent. In recent years, our technology tools have started to cover the basic talent needs of our alumni. Our job boards, networking events and mentorship connections can mostly be replaced with high tech platforms you see on the left hand part of the slide. This influx of technology has disrupted what we can add to the career services space. That was a sentiment that one VPE of Alumni Relations points out on the right hand part of the slide. Despite all of these tools, though, it's harder than ever to find top talent, it can take up to four months to fill a vacancy, which could translate to around $12,000 for the company. When we spoke to a colleague in recruitment about how advancement could contribute to this space, she noted that any employer would appreciate finding top talent at a faster pace. And our job here is just aren't cutting it for our alumni who are looking to hire talent. Job fairs attempt to connect students with employers, but they often fail for many of the reasons that you see here on the left. It could be that students didn't prepare for the job fair and only stop the free swag or that student skills really don't match the needs of the employers. On the right hand of the slide, there are a few ways that we can make our job fairs more useful for our employers. For example, we could provide them with a resume, but prior to the event, that helps them preselect which students they want to speak with. University of South Florida at Sarasota humanity is curating student attendees through a reverse career fair, and this helps alumni find top recruits faster. The key elements that make the reverse career Fair Work are that students ran the booths and employers are the ones to walk around to meet them. This, of course, flips the traditional career fair on its head and allows the staff to curate student attendees. So that employers don't have to. Once the students are selected, employers are invited based on which companies can benefit from the talent available and the right, you can see that while only 43% of students were selected to have a booth. 70% of those got at least one job offer.

And now in our final part of today's presentation, we'll focus on accelerating venture growth. We all know that any alarm would appreciate having a boost for their business or for their venture. Starting a business. I think is difficult at any age, only 0.7% of entrepreneurs will successfully get venture capital funding and are young rising stars not only have to go up against those odds, but they also likely lack savings and might even have student loans to pay off. Because of these challenges, many institutions have stepped up and created efforts to help fuel alumni businesses and included just a few of the ideas we came across here in our research from small business centers that provide entrepreneurs with consulting and analysis to an alumni make or market, which is essentially a private two page platform to business incubator programs.

Right now, though, I'm going to take a closer look at our last topic, which is Wayne state, they're helping entrepreneurs secure a large venture investments. Traditional ways of brokering venture connections don't always guarantee somebody a foot in the door. So Wayne State has created a pitch practice event to help future major gift owners successfully get in front of investors. First, advancement and key stakeholders select a hot industry. And then advancement staff work to identify relevant alumni ventures and active investors, both groups are then invited to partake in a pitch practice event in the region they've identified. The key to success here is that future major gift donors increase their chances of receiving funding due to the high caliber of investors. Advancement staff only invite investors that have recently committed at least a million to other ventures. Their last pitch practice event led to 40 brokered relationships, which continued beyond the event. But what I really want to focus on here is the conscientious effort that Wayne State is making to become a critical partner in the success of their rising star alumni. As Peter shared with us, their goal was to compliment the business objectives in a way that's tangible and makes the alumni feel that the only way they could do or achieve something is by having a relationship with the institution.

Again, that was also a lot in this second section, so I'll leave these questions and next steps for your later review. Thank you for joining us today. And feel free to follow up with any questions you might have. Take care.