By Josh Keniston, Research and Product Director
Ice bucket challenges and crowd-funding platforms have dominated non-profit headlines and social media feeds for the last few months. A new generation is using technology in unprecedented ways to raise awareness for causes they care about. Hidden behind the buzz, however, is an important take-away that higher education leaders must understand in order to attract the next generation of donors —it’s not just how this generation gives, but rather why they give.
Eduventures’ Alumni Pulse research, which combines survey data with giving records for over 70,000 alumni, indicates that donor motivations are changing. Most notably, young alumni are far less likely to give out of a sense of loyalty than their parents or grandparents. Only 27% of Millennials cite “obligation” as a top motivator for giving, compared to 50% of Baby Boomers (see Figure 1). Instead, Millennials are more likely to be motivated by the impact that they believe their gifts will make.
Source: Eduventures’ Alumni Pulse Dataset
This shift in philanthropic preferences, paired with factors like rising student debt, the changing demographics of enrolled students, and questions about the value of a college education, has resulted in far fewer alumni giving back to their alma maters. The average participation rate for undergraduate alumni is now less than 10%, five points lower than it was almost a decade ago (see Figure 2).
Source: Voluntary Support of Education survey results, 2001-2013.
In the near term, this decline in participation will be offset by top benefactors who continue to increase their giving. However, unless colleges and universities find new ways to inspire alumni giving, this trend has negative longer-term implications when this new generation of alumni donors enters its peak earning years. Development leaders need to consider two fundamental questions:
- Will alumni who haven’t given continuously over the years still consider making a transformational gift later in life?
- What strategies can higher education adopt to effectively engage this next generation of donors?
With these questions in mind, Eduventures recommends the following:
1) Focus on impact. As alumni become more concerned with the impact of their gift, higher education will need to behave more like other successful non-profits by creating a strong brand reputation and demonstrating the impact of gifts. This requires both academic and fundraising leadership to work in tandem to create strategic, fundable initiatives that make a visible impact on the world. The role of the fundraiser must extend well beyond the funding strategy to ensure that all initiatives can be funded and will produce compelling, measurable impacts.
2) Strengthen major gifts. As participation rates continue to decline in coming years, even greater pressure will be placed on major gift programs to secure large gifts from constituents of all types. Gift officers will need to become more effective relationship managers and storytellers, cultivating a wide range of donors by illustrating the unique impact an institution can have. Taking a systematic and data-driven approach to evaluate current productivity and prioritizing initiatives will go a long way to shore up this important function for years to come.
3) Move beyond alumni participation. Rather than focusing on alumni participation as a tool to influence U.S. News and World Report Rankings, higher education leaders should begin looking at broader engagement measures. Introducing metrics that track alumni and non-alumni giving and engagement will provide a more holistic view into the long-term health of your development program.
As always, we look forward to hearing any questions and comments that you may have.
Contact a member of our team to learn more about alumni giving trends.