June 2003 - Issue 18

Using the Internet to Avert a Crisis in Higher Education Fundraising

By Vinay Bhagat, Founder and CEO, Convio

A potential crisis is burgeoning in higher education fundraising.  According to a recent study published by RAND’s Council for Aid to Education, private gifts to colleges and universities have declined for the first time in a decade and a half and alumni giving is down 14 percent. Participation rates among young alumni also are falling. Experienced advancement professionals know that although annual giving -- in particular, contributions from young alumni -- typically accounts for a small part of total revenue when compared to major gifts, ensuring high levels of participation and retention are critical to build a strong base for future mid-level and major giving.  The drop in alumni giving is a very, troubling development.  However, today’s advanced Internet tools can help reverse the trend. 

Reaching Alumni Through the Internet

Alumni involvement and participation are highly correlated to a school’s effectiveness at maintaining relationships and sustaining relevancy.  But being effective is becoming tougher.  Recent graduates are living in very different economic and societal conditions compared to previous generations.  Lives and careers evolve faster.  People move with greater frequency.  Tracking alumni and remaining relevant is an increasing challenge.   Additionally, in a weak economy, competition for philanthropic dollars is intensifying. Ensuring that your institution garners and retains support requires sustaining “mind-share” with constituents.  That calls for regular, personalized, timely and relevant communications.  Meanwhile, budget cuts for most schools mean less money for those communications and fewer human resources.  Schools must innovate to find ways to do more with less.  

The good news is that the Internet represents a low-cost, highly effective mechanism to reach alumni.  Alumni are online in large numbers and starting to prefer online contact.  According to a survey by a prominent, private, West coast university, more than 90 percent of alumni, including people up to the age of 60, have Internet access.  A survey by a top, private East coast university showed that recent alumni overwhelmingly prefer online communications to paper.

Online Services Are a Good Start , But …

In the last few years, many schools have started to use the Internet to communicate and build relationships with alumni.  Many alumni relations groups have added services to their Web sites to give alumni a reason to stay in contact.  The most prevalent service added has been the online directory which encourages students to update their contact information, marital and employment status, etc.; a directory also helps classmates find each other and seek mentors.  Some schools have gone further, adding tools for career services and lifetime, school-branded email, providing former students with permanent email addresses associated with the school.  In fact, some schools now are providing current students with permanent email addresses, hoping that they will keep them, stay connected to the institution and not become "lost" alumni.  In tandem, development functions also have added the capability to accept online donations.  

Introducing online community services has been a good first move.  However, it barely scratches the surface of the Internet’s potential for supporting higher education advancement.  After all, email communication volumes eclipsed postal mail in 2001, making the Internet the most frequent touch point for an organization with its constituency.  In today’s e-world, colleges and universities need to develop a strategic approach to fully utilizing the online medium.

Each online interaction with a constituent -- through email and Web site visits -- is an opportunity to learn more about that individual’s interests and build a more complete profile about him or her.  Subsequently, a school can use the information in that profile to personalize communications, which ensures relevancy and advances relationships. Personalized communications will help schools avoid getting lost in the increasing barrage of generic emails cluttering people’s inboxes.  Yet, very few schools engage in such personalization today.  According to a survey of attendees at the 2002 conference, "Constituents in an E-world" (hosted by the Council for Advancement and Support of Education), only 10 percent of schools reported offering a customizable Web view (i.e., tailored, profile-based Web content for each constituent).  Most institutions simply are not yet applying a systematic strategy for online profiling and personalization.

Schools Must Personalize the Online Experience

A few institutions are starting to do more.  The University of Texas’ alumni relations group, the Texas Exes, asks alumni to complete information about activities they were involved in at school (see fig. 1). 

Fig. 1 Online information gathering about sports interests by Texas Exes

Georgetown University’s Office of University and Alumni Relations asks constituents what topics they would like to hear about through email (see fig. 2).

Fig. 2 Email subscription choices offered by Georgetown University

Schools can also build profiles through tracking online interactions.  For example, constituents open emails, click on specific email and Web site links, and respond to online surveys.  If a school’s email newsletter includes an abstract of an article on planned giving with a link to the full version of the article on its Web site, the school can track who clicks through to read the full story, gaining valuable information about those constituents.  They likely are good prospects for planned giving appeals, and development officers now know to target them.  They can be easily identified and treated as a distinct marketing segment.  A development officer also can contact an individual constituent and see from the profile exactly what interests and motivates him or her, enabling easier, more focused and more effective follow-up with strong prospects.

Clearly, not all valuable information is collected online.  Offline donor databases include a lot of valuable information such as year of graduation and donor classification (segment) which schools should use to further personalize the online experience.  For example, knowing how someone has directed his or her contributions allows a development officer to target him or her with specific appeals.   In order to effectively use online tracking information in conjunction with constituent profile data stored in your offline donor database, there must be integration between the two systems.

Integration with Local Chapters and Groups Is Critical

A particularly acute challenge many schools face is having little knowledge about relationships developed at the local level through chapters and affinity groups.  Consider this typical situation.  The local chapter of my most recent alma mater, Harvard Business School (HBS), uses Outlook to send me emails and the online tool Evite.com to sign me up for its events.  But the central office at HBS isn’t privy to tracking information and does not know whether I open my local chapter emails and/or sign up for local events.  Given that our reunion only occurs once every five years, surely knowing who regularly attends local events might be a valuable insight and aid in screening for development.  Schools must address this problem by extending online relationship management capabilities to clubs and chapters, specifically enabling these important regional organizations to post event information, register attendees and send local communications.  This enables a school to track interactions through email, attendance at events, membership dues payments and more at a central level.

The next part of the strategy is using collected data effectively to advance relationships.  One strategy is to segment constituents into groups for targeted marketing.  A perfect group to segment and target with specific communications would be alumni who have participated in activities and are highly engaged but have not yet contributed.  Targeted marketing through segmentation drives a higher response rate.  Communications through emails and Web content should become increasingly personalized and targeted based upon constituents’ profiles and interests (see fig. 3).   Web content is based upon a constituent’s interests and in this example, his or her profile as a member of the class of 2001.

Fig. 3 Personalized Web content

Through an extended constituent relationship management approach, central advancement offices also can support the marketing of chapter events in emails and on the Web site.  The multi-chapter, nonprofit group Easter Seals has extended relationship management capabilities to its chapters.  As a Texas-based subscriber, the emails I receive from the organization contain information on both national and Texas events.   (see fig. 4).

Fig. 4 Personalized email newsletter including
localized information from Easter Seals

Coordinate Online and Offline Activities to Optimize Fundraising

Schools frequently use strategies that include matching gift appeals, competition between classes, and major events such as reunions to drive higher response rates in mail-based appeals.  Yet, most schools are more passive when it comes to online fundraising efforts -- waiting for donors to come to their Web sites.  Furthermore, online fundraising forms are generic and not configured to specific appeals.  Schools should run online appeals to match their offline appeal strategy.  For instance, by running a matching gift appeal concurrently with an online campaign, a school’s Web site could dynamically display information about how many more gifts are required to achieve the matching gift.   Schools should also take a more active approach to online appeals, sending out email in conjunction with postal service mail.  In order to avoid double soliciting constituents, there needs to be tight integration between your online appeal (email) system and your donor database.  Schools practicing such integrated fundraising will generate a higher response rate than with mail alone.  Schools should also offer more giving options online including the ability to make monthly contributions, memorial and honorary gifts, and specific gift designations.

Schools pursuing a strategic approach to the Internet for building relationships can expect stronger results both online and in their programs in aggregate.  Although it is early in the Internet “revolution” for higher education fundraising, the data to date indicates that schools can significantly improve alumni participation, donor retention, response to acquisition appeals, and fulfillment on pledges when they integrate the online medium into their programs.