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Tap into young donors’ future capacity

November 12, 2020

67%

of young high net worth individuals want to use their wealth to benefit society (up from 39% in previous generations), according to a survey from The Economist Intelligence Unit
of young high net worth individuals want to use their wealth to benefit society (up from 39% in previous generations), according to a survey from The Economist Intelligence Unit

Young alumni are passionate about helping others in transformational ways, but they don’t always have the funds to make a major gift donation today. While many young alumni will soon be major gift prospects, advancement often ignores these individuals with potential, and they go unengaged. This oversight leaves alumni with the impression that their alma mater is not invested in a relationship with them and jeopardizes their future major gifts to the institution.

Instead of discounting young alumni, advancement needs to help young donors set their sights on the horizon—what they can give in the future, instead of current capacity. Shifting the focus to life-long giving opportunities allows advancement to steward young alumni for their future wealth.

Planned giving

$800K

raised through the College of Charleston's planned giving society for alumni less than 15 years out of school
raised through the College of Charleston’s planned giving society for alumni less than 15 years out of school

With 66% of young entrepreneurs planning to include charities in their will, College of Charleston decided to create a planned giving society for alumni less than 15 years out of school. Leadership annual gift officers at the College of Charleston are trained to discuss estate planning, and they ask young donors to pledge 5% of an asset, such as their 401k, to the college.

For young donors unaware of estate planning, leadership annual gift officers help them prepare for their future and how to include the college in long-term decision making. In return for their promised donation, young alumni are stewarded and have their full pledge amount count towards fundraising goals. Pledge amounts at the College of Charleston are updated every five years to accurately estimate the gift size.

Initial results for the program are promising. The leadership annual gift team at College of Charleston raised $800K, even amid the pandemic when fundraisers are approaching the topic of planned giving cautiously.

Founders’ pledges

For many young alumni, starting businesses or ventures means that the early years of their careers are rife with challenges. Recognizing that entrepreneurial alumni focus their time and money on their work, UC Berkeley and other institutions like the University of Waterloo have started pledge programs to support young entrepreneurs and set the institution up for a gift in future years.

Pledge programs are non-binding agreements to support the institution by promising future equity in a firm when a liquidity event takes place. After pledging their future support, participants gain access to exclusive opportunities, from talent recruitment for their business and networking to start-up support from faculty and mentors.

Pledge programs offer a win-win by providing young alumni support while giving advancement a pledge gift and knowledge on future major gift donors’ interests.

Planned giving and pledge programs set up institutions to steward young donors for their future capacity. Building life-long relationships early means that advancement will have a strong foundation for future major gift conversations. 

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Advancement leaders are always hunting for cohorts of alumni who have the greatest likelihood to donate. But all too often, seemingly promising segmentation approaches don’t reveal actionable differences in giving rates. See the alumni segment at the College of Charleston that has nearly a 2x higher giving rate, even decades after graduating.

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