The Rise of Non-Profits Over 1.16 million non-profits competing for donated dollarsThe 2009 report presented by the National Center for Charitable Statistics, number of 501 c 3 organizations risen 31% from 1999-2009
A Lack of Written Communications Plans Nonprofit Marketing Guide indicates that 70% of those interviewed had no formally approved marketing or communications plan
Changing Face of Wealth - Younger Donors Younger Donors are becoming more significant as they assume influential roles in their workplaces and communities The Center on Philanthropy at Indiana University posits that donors between the ages of 18-30 are: • More marketing savvy and more cynical than predecessors • Less trusting • More service-driven • More interested in playing active and consequential roles advocating causes in which they believe
2010 Study by Engagement Strategies Group Many donors of this generation consider the cost of their tuition as well as the perceived overall wealth of the college or university that they attended to be perfectly valid reasons for lack of supportChanging Face of Wealth- Younger Donors
Changing Face of Wealth- Younger Donors “Donors of the Future” by Growth Design (2009) • Holding institutions accountable for their decision-making • The timeliness of their decisions • Partnering and engagement opportunities they offer - expected with organizations that they support
• Increases in the earning power of women, ability to give, and impact • Women outnumber men on college campuses across the nation • 60% of all master’s degrees awarded in the 2008-209 academic year went to women • 30% increase of women with college degrees since the late 1970’s 2008 Center for Educational StatisticsChanging Face of Wealth - Women
Changing Face of Wealth- Women Current IRS “Personal Wealth Tables” 43% of nation’s top wealth holders (those with assets exceeding 1.5 million) are women Women have moved from “influencer” role to: • Being significant forces • Being established professionals, financially independent, and offering support ON THEIR OWN TERMS. • Viewing giving as Millennials: student- focused and supporting issues that impact the world • Being inclined to focus efforts and resources on helping others • Being disposed to give in relational ways through personal involvement in activities
Influence of Technology Most critical factor that successful fundraisers will need tomorrow 77% of U.S. population now connected via the internet Digital media is critical: few fundraisers have embraced social media, mobile applications, and other online spaces as a communications hub Use to: • Inform thinking • Shape fundraising strategies • Measure success of online initiatives
Meet Jennifer• 35 years old• Vice-President of Sales• Officer in Student Government• Honors College with a 3.9 GPA• Full pay student• Not engaged with her college
Meet Jennifer• Future leader of her company• Married to an attorney• Volunteer of the year• Gives 10% of income to charity• Engaged with 3 networking groups• Serves on a number of community boards• Has great feelings towards her college but not engaged• Will inherit significant family wealth• Gets 50 pieces of mail per week from non-profits• No home phone• Never been asked to engage
Meet JenniferJust because Jennifer isable to give does notmean she is motivatedto giveHow do we understandwho Jennifer is, whatshe cares about, andhow to reach her?
Research Objectives• Develop a motivationally-based segmentation model• Uncover the motivations that drive the different types of relationships• Prioritize which alumni segments provide the best opportunities for colleges• Provide recommendations on how these different alumni segments should be managed to optimize their individual likelihood of donating• Develop a predictive model and applied tool to easily classify alumni into segments based on a minimum number of questions
A MotivationalSegmentation ofCollege AlumniSegmentation Method and Analysis
Questionnaire DevelopmentSecondary ResearchOver 250 research articles concerning college donating and charitable givingwere reviewed to identify current issues, trends, and alumni motivations. – The following variables were identified in the literature and provided guidance for the questionnaire design. Demographics College Experience College Relationship Charitable Giving • Age • Type of college • Personal identification • Personal values • College prestige • Pride • Gender • Perceived need • Religious values • Professors • Income • Campus/facilities • Benefits from giving • Political orientation • Marital status • Activities • Uniqueness of college • Tax benefits • Employment • Grades • Obligation or duty • Networking • Education level • Time to graduation • Professional benefits • Life satisfaction • Tuition • Current involvement • Ethnicity • Trust • Perceived need • Scholarships/grants • Religious affiliation • Family legacy • Prioritization • Academic major • Recognition • Residence • Gratitude • Placement • Student loan balance • Social experience
Sample Characteristics Who answered the questionnaire?• 2,050 college alumni participated in a web-based survey during July, 2011.• Participation criteria were established to correspond with known college population estimates – Female: 56% – Advanced Degrees: 31% – Institutional Type: 65% Public – Married: 59% – Employment Status: 25% Retired – Ethnicity: 87% White/Caucasian – Average Household Income: $74,285 – Religious Orientation: 67% Christian• Sample estimates across numerous variables of interest in this research are consistent with statistics found in the US Census or other published surveys. – These findings provide us with confidence that inferences drawn in this sample are valid for the overall college alumni population.
Segmentation Alternatives A Priori SegmentationA priori segments are usually based on college major or demographicvariables. However, descriptive variables such as these are known for beingpoor predictors of behavior. Do they donate Does he donate because they because he is a are married? man? Does she donate because she is over 65? Does he donate because he majored in History?
Segmentation Alternatives A Priori SegmentationSome researchers discourage a priori segmentation because it producessegments in which members often have very diverse motivations. As a result,members of a segment respond differently to marketing programs. = Alumnus with gratitude to the college = Alumnus who wants peer recognition = Alumnus who enjoys donor privileges Males Alumni Alumni with Segments different motivations Females are mixed within segments defined by gender.
Segmentation AlternativesPost Hoc SegmentationPost hoc segmentation indentifies groups of people who share motivations andare likely to respond similarly to a marketing program. Segment membersmight vary in demographics but have similar motivations. Gratitude = Male = Female Males and females Hypothetical are mixed within Alumni Recognition segments sharing Segments the same motivations. Privileges
Segmentation AlternativesTailor Strategies to What Motivates Alumni Colleges using post hoc segmentation develop strategies specific to the motivations of their alumni segments. Fundraising programs become more successful because they target what motivates different groups of alumni. College Different Fundraising Messages Gratitude Program Hypothetical We’ll put your name on a brick! Recognition Alumni Segments Privileges
Segment ProfilesThree College Alumni Donor Segments Segment Size Champions • Strongest advocates for the college. • Value the professional and social benefits • Most likely to donate and the largest average donations. Friends • Proud graduates who regularly donate to the college. • Much more committed to other philanthropies. • Very satisfied with their lives. Acquaintances • Had a passing relationship with their college. • Minimal attachment as students and even less now. • Provide little to no financial support.
Summary of FindingsImplications – Colleges are better at managing relationships with Champions than they are with Friends. – Colleges ineffectively manage the Friends segment. – Colleges spend as much money contacting Acquaintances as they do either Champions or Friends. This is a waste of scarce resources that would be better spent enhancing programs targeting other segments.
Summary of FindingsIf a College could identify the proportionof individuals who are Champions whodon’t give and Friends who give to non-profit organizations but don’t give to theircolleges, they could realize opportunitiesfor: • Additional Prospects for Major Gift Solicitations • Additional Prospects for Planned Giving Opportunities • An opportunity to increase Annual Fund Participation RatesIf a College could identify Acquaintanceswho will likely not give to their college oruniversity, they could spend limited andprecious resources on Champions andFriends.Overall impact= Smart Marketing (BetterROI, Better Results)
Segment ProfilesAverage Donation Size Among DonorsThe average donation from Champions is over 75% greater than donationsfrom Friends and over eight times larger than donations from Acquaintances. Average Annual College Donations 2006 – 2010 (among alumni who donated) $400 $354 $350 $300 $250 Mean $197 $200 $150 $100 $45 $50 $- Champions Friends Acquaintances Sample Size = 708 Note: Alumni who only donated in 2011 are excluded in order to provide complete years.
Segment Profiles Total Charitable GivingFriends donate substantially more to charities than Champions donate.College donations are part of Friends’ giving program rather than the focus.Earning a larger share of Friends charitable giving budget could provideconsiderable rewards for colleges. Q56. Please estimate the total dollar amount of your donations to charitable organizations during the past year. $3,000 $2,750 $2,500 $2,000 $1,603 Mean $1,500 $1,300 $1,000 $500 $- Champions Friends Acquaintances Sample Size = 2050
Segment Profiles A Relationship Goes Both WaysChampions are more likely to have areciprocating relationship with their college in Reciprocatingwhich they give and receive. Relationship Donating to my college is more important to me than donating to any 3.5 other charity. 3.1 I feel like I can influence 3.0 policy at my college. I enjoy the social opportunities donating to 2.5 my college provides.Mean Response 2.0 Financially supporting my 2.0 college is a priority to me. I have maintained 1.5 1.4 relationships with faculty from my college. I like having others know I 1.0 contribute to my college. My college is one of my 0.5 favorite charities to support. 0.0 Champions Friends Acquaintances Sample Size = 2050
Segment Profiles The Benefits of Donating Champions believe that donating to charities can advance their careers. Professional Benefits • My involvement in charitable organizations 3.0 may someday lead to 3.0 advancement in my career. 2.5 • People I met through charitable giving have turned out to be helpful 2.0 2.0 in my career.Mean Response 1.7 • Making new business contacts is a strong 1.5 benefit from charitable giving. • My employer expects me 1.0 to donate time and money to charities. • Other people will think 0.5 more highly of me if I donate my time and 0.0 money to charities. Champions Friends Acquaintances Sample Size = 2050
Segment Profiles Life is GoodFriends are very satisfied with their lives.Research finds that happy people are more Life Satisfactionconfident, outwardly focused, and willing to help • I am very satisfied withothers. my life. • My life has turned out 5.0 worse than I expected. 4.5 (Reversed) 4.5 4.0 3.5 3.2 3.2Mean Response 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Champions Friends Acquaintances Sample Size = 2050
College Donation Behavior• Largest average donation • Frequent donor • Very small percentage• Most frequent donor • Much smaller average have ever donated to the• Motivated by external donation than Champions college reinforcement such as • Internally rather than • Contacted as frequently recognition, gifts, and externally motivated to as other segments for privileges donate college donation requests• Also intrinsically • Motivated to help college • Very unlikely to be motivated to give solve important human influenced by any college• College not in will and problems fundraising campaign have no plans to include • College not in will and • College not in will and their college in their will have no plans to include have no plans to include their college in their will their college in their willChampions Friends Acquaintances Key Take-Aways… Donation Behavior
Charitable Giving• Value external • By far the largest donors • Donate the same percent reinforcements for giving to non-college charities in of income to charities as such as professional dollars and percent of Champions networking , public income • Do not value external recognition and tax • Much more passionate rewards for donating benefits about human welfare • Internally motivated to• Feel good when donating charities than they are donate to charities to charities toward their college• Religious beliefs often • Internally motivated to contribute to donating improve the world behavior • Religious beliefs often contribute to donating behaviorChampions Friends Acquaintances Key Take-Aways… Charitable Donations
Demographics• The only segment with a • Female majority • Lowest income male majority • Highest income • Least likely to hold a• Youngest segment • Oldest graduate degree• Most likely to be • Most likely to be married • Most likely to be agnostic employed full-time • Most likely to be retired or atheist• Second highest annual income• Most ethnically diverseChampions Friends Acquaintances Key Take-Aways… Demographics
Why Target? Most college fundraising programs are not tailored to address different market segments. As a result, colleges make similar investments using similar strategies targeted to all alumni regardless of their likelihood of responding to particular fundraising efforts.
Champions are the most important segment for collegesTargeting Priorities to target and manage. – These alumni donate the most frequently and make the largest average donation. They are the foundation for alumni giving programs. • Although we did not focus on major gifts, financially able Champions have the passion that drives alumni to make major donations. – Champions are the low hanging fruit for fundraising programs. Colleges who already have proactive alumni relations programs are likely enjoying at least some success with these alumni through self-selection.
Friends are the second most important target for colleges.Targeting Priorities – Like Champions, Friends donate frequently, but their average donation is much smaller. Friends provide outstanding opportunities for revenue growth. – Friends donate much more to charities than any other segment but only devote 7% of their charitable giving budget to their college. – Even small improvements in the proportion of Friends’ total charitable budget being allocated for their colleges would provide substantial rewards. Friends are already in the habit of giving to their college and other charities. – Colleges need to do a better job of persuading Friends that their college deserves more of their support relative to other charities which they currently support.
Messaging • On the surface, it appears that all segments responded similarly in regard to the donation appeals that they most prefer. • Namely, messages communicating tax benefits, giving back to the college, and solving an important human problem generated the most enthusiasm. • However, there are important nuances that should be noted within each segment.
Messaging Champions – Champions agree with Friends and Acquaintances that messages based on tax benefits, giving back to the college, and solving an important human problem are the most compelling. – In contrast to other segments, Champions also find messages based on donor recognition, special donor benefits, improvements to facilities, and personal satisfaction to be nearly as compelling. – The key is that Champions have complex relationships with the college that are not dependent upon any one benefit. Colleges should not ignore benefits such as recognition and donor privileges. These appeals provide opportunities to strengthen relationships with Champions. – Removing these benefits could endanger a college’s relationship with Champions since these alumni already enjoy and expect to receive these benefits.
MessagingFriends – The most compelling appeal for Friends is that the college needs help to solve an important human problem or create opportunities for current students. – Friends do not seek more contact with the college or value recognition for their gifts. – Appeals to Friends that focus on external reinforcement for giving are likely fail. Similarly, messages that do not identify benefits or focus on helping people are also more likely to fail. Finally, Friends are not motivated to increase their college donations to support abstract academic research. – Fundraising messages directed toward Friends should prominently feature and focus on the college’s accomplishments that improve the world in general and help people.
MessagingAcquaintances – No comments are provided since Acquaintances are unlikely to respond to fundraising requests regardless of the messages being used.