5 defining challenges of the next decade

Expert Insight

5 defining challenges of the next decade

Advancement is closing out the 2010s on a high note. Fundraising returns are strong, principal gifts are more plentiful than ever before, and institutional leadership has continued to invest in fundraising and engagement. Indeed, EAB’s ROI benchmarking initiative shows a 10% increase in advancement investment between 2016 and 2018, with a 16% increase in development investment.

10%

Increase in advancement investment from 2016-2018
Increase in advancement investment from 2016-2018

While the current age is a bright one, advancement leaders face significant challenges if they are going to sustain their performance in the decade to come. Across over a hundred interviews with chief advancement officers, associate vice presidents, and director-level staff, my colleagues and I identified the five defining challenges that advancement will face across the coming decade.

1. Maximize fundraiser efficiency

The impressive returns advancement has seen in recent years mask an underlying imbalance: Most of advancement’s revenue comes from a small segment of major gift fundraisers. Our analysis indicated that, on average, the top 25% of MGOs raises 6.5 times as much as core performers who are in the middle 50% of performance. (Source: EAB FY2018 Fundraiser Productivity Benchmarking dataset)

Across our research, we found that fundraisers who struggle to meet goals typically exhibit three characteristics: They try to reinvent the wheel with every new cultivation plan, thereby creating inefficiencies and slowing their personal productivity; they get lost in the long time horizon of a two-, three-, or four-year cultivation cycle, often losing momentum midway through; and they say “yes” to their partners within advancement and across the institution to the point where they spend a minority of their time doing what they were hired to do—cultivate and close gifts from major gift donors.

Reinventing the Wheel on Strategy

Strategy playbook rewritten for every cultivation cycle

Results

  • Uninteresting cultivation steps
  • Customized collateral for one-time use

Lack of Clear Immediate Goals

Trial and error used to reach overall performance metrics

Results

  • Winding paths from qualifications to gift
  • Results hide inefficiencies throughout workflow

Non-Fundraising Activity Creep

Asks across campus reduce valuable fundraising time

Results

  • Inadequate time spent on road
  • Academic leaders assign all external-facing tasks to MGOs

If advancement leaders are going to continue growing their returns across the 2020s, they are going to have to bridge the profession’s startling performance gap.

2. Rightsize investments in digital transformation

Having a cohesive digital strategy has never been more critical—or more costly. The advancement tech sector has boomed in recent years, and, in many ways, this has been a double-edged sword for advancement leaders. On the one hand, they have more technology options to choose from than ever before. On the other hand, their tech budget can easily grow out of control.

The most effective advancement leaders determine the business strategy they want to pursue before selecting a tech product to help them get there. Across our interviews, we heard advancement leaders say they are pursuing three distinct strategies with the help of digital innovations:

  1. Improve the constituent experience by migrating engagement onto digital platforms
  2. Make better decisions across the enterprise by leveraging big data
  3. Streamline operations and reduce costs by using AI to automate workflows and processes

Advancement has a tight rope to walk across the 2020s. We must move boldly into a digital future while at the same time avoiding overinvestment and costly flops.

3. Navigate the participation-pipeline tradeoff

Prioritizing donors

Annual giving professionals have been given what amounts to an unenviable task: bring in as many donors as possible while simultaneously cultivating a small number of them to move closer to major giving.

While this hybrid mission proved difficult in the past, it’s growing near-impossible today. Overall philanthropic inclinations are dropping, with fewer middle-income Americans and Canadians alike giving to charitable causes. At the same time, high-net-worth prospects are fielding calls from countless nonprofits. That competition has raised the bar for what will move a donor to a higher giving level.

Achieving either of these aims—higher alumni participation or a more robust pipeline of future major gift donors—requires focus, time, and quite a bit of investment.

“Few institutions have the staffing and resources to do both participation and pipeline at all, not to mention well.”

Lacie LaRue
Executive Director of Development Strategies and Pipeline Programs
University of Oregon

In short, advancement leaders must make tradeoffs. And across the next ten years, they will have to determine just how many resources they are willing to invest in driving up donor counts and participation rates—and whether they’re willing to accept the depleted pipeline that the transactional, small-gift strategies this work entails will bring.

4. Scale—and sustain—principal gift success

Private financial wealth across North America has never been greater—or more concentrated. Across the past decade, the number of households with $25M or more in net assets grew by 65%, far out pacing every other high-net-worth tier. Source: Alexandre Tanzi, “The U.S. Now Has More Millionaires Than Sweden Has People,” Bloomberg, March 13, 2019.

With more prospects than ever before to cultivate, many advancement leaders are finding that their principal gift operations are being pushed past their limits.

Advancement leaders are rethinking how they structure principal gifts in response to this prospect population growth. At some institutions, they are staffing up support for the chief advancement officer and other key institutional leaders to extend their reach and free them to focus more on prospects. Other institutions are enfranchising major gift officers, many of whom have limited development experience, to own principal gift cultivation in an attempt to get in front of more prospects. With more “at bats,” they figure, they will invariably close more gifts. Proposal volume and throughput is their top priority.

Irrespective of the model, the decade to come will likely bring with it a necessary rethinking of how we’ve done principal gifts in the past.

5. Realign core mission and revenue growth

Advancement has been a top revenue driver for colleges and universities in the past ten years .

Rapid-fire productivity has led many institutional leaders to set their sights sky-high when determining campaign goals. In fact, campaigns that are slated to close in the next ten years aim at goals that are, on average, about 94% higher than the campaigns colleges and universities closed between 2015 and 2019.

These elevated expectations are creating a lot of pressure on advancement to deliver, and some institutional leaders have begun to worry that this pressure is warping advancement’s incentives and behaviors.

“There is a countervailing force that says, ‘How much of that $3 billion campaign actually speaks to the core mission of the university?'”

Darrow Zeidenstein
Former VP for Development and Alumni Relations
Rice University

Across the next ten years, advancement will have to reconcile its astronomical growth rates with a need to tackle critical institutional challenges that speak directly to the core of the university—increasingly unsustainable finances, lagging graduation rates, and a student debt crisis.

Chart a path forward

The path forward looks hazy, at best. These challenges will complicate the work of even the most visionary advancement leader. EAB’s current work on “Competing in Advancement’s Era of Big Bets” focuses on institutions that are taking crucial steps to get ahead of these challenges today.

My colleagues and I are currently gathering chief advancement officers and associate vice presidents for a series of roundtables on these challenges. Join us at an executive roundtable to learn more about our work on the era of big bets.