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Dialing for Donors

Data mining is driving increasingly sophisticated fundraising machines, helping schools identify high-wealth alumni and predict when and how much they might give.

Courtesy of Arizona State University

When times get tough, grown children often turn to their parents for help--for some extra cash, even somewhere to stay. For colleges and universities, that role is filled by alumni donors. In 2011, with education budgets slashed across the country, giving accounted for 6.5 percent of college expenditures, according to the Council for Aid to Education. This money pays for everything from new buildings to scholarships and guest lecturers, and impacts almost every corner of campus. It's ironic, then, that the programs run by the advancement group--fundraising, alumni relations, prospect research, and advancement services--often find themselves on the outside looking in when it comes to the data needed to do their jobs. 

"It's almost where you didn't want to talk about it, as if we wanted to keep [fundraising] separate from the academics and all the other great things our institution does," recalls Sally Boucher of her time as director of development at James Madison University (VA). In her current role as director of research for WealthEngine, a prospect-research company, she's seen advancement offices wait long periods--years in some cases--to gain access to something as simple as lists of new students.

"Not having that data in a timely way to plan and execute is a detriment," she says. "You could have had two years where you were getting gifts from the parents while the student was there, and working with the freshman and sophomore classes to start educating them about the importance of the university community--to help build that culture of philanthropy."

Just as universities are discovering the power of data to increase efficiencies in every facet of their operations, schools' fundraising departments must also have access to timely data to do their jobs: identifying prospective donors, predicting how much money they might give, customizing the message, and calculating the best time to make a pitch.

And the value of the data goes far beyond simple numbers such as net worth. Even seemingly irrelevant data have value, because--taken together--they can help schools determine how engaged an alumnus is with his alma mater, and help fundraisers strike an appropriate chord. "The number of data points we collect on an individual is more indicative of his likelihood to give than necessarily the intrinsic value of the data point itself," notes Brian Bradley, enterprise applications manager for the Arizona State University Foundation.

When it comes to dialing for donors, a data strategy can be divided into three components: collection, analysis, and implementation. While no silver bullet exists to address all three together, colleges and universities are achieving impressive results from alumni data mining by pursuing a number of solutions.

Data Collection
"Never…was so much owed by so many to so few" were Winston Churchill's famous words during the Battle of Britain. He could just as easily have been talking about alumni giving: For the most part, universities owe a big debt of gratitude to a relatively small number of donors. Indeed, according to the Council for Advancement and Support of Education, 63 percent of all donations come from just 1 percent of donors at institutions that raise $80 million or less each year. And that number just gets higher as the dollar amounts increase. The holy grail for fundraisers is to identify that 1 percent and then find ways to connect with them.

Believe it or not, many high-wealth alumni do not flaunt their riches like Donald Trump. Tracking them down requires hard work and some sleuthing. At Villanova University (PA), for example, Chris Connors, director of prospect research, and his team used to keep up with alumni through news alerts fed by information provider NewsBank as well as Google Alerts. More recently, however, Villanova has hitched its wagon to Equilar Atlas, a data-based wealth-networking service. When Connors first tested the service, he immediately discovered several alumni in prominent positions of whom he had been unaware.

Introduced in fall 2011, Atlas is like a "LinkedIn of the rich and famous," says a laughing David Chun, CEO of Equilar. The data behind Atlas has been accumulated for 12 years through the company's flagship service, Insight, which provides executive-compensation benchmarking. Unlike LinkedIn, however, Atlas focuses exclusively on people within public companies.

Atlas provides schools with a number of lead-generation services. First, it creates a list of prospects who have an affiliation to the institution. Universities can also use information from Atlas to fill in details in their own alumni databases.

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Second, Atlas provides publicly available financial information on those same individuals, such as when their stock options will vest. For fundraisers, this kind of information is golden. If an advancement officer can get in front of alumni just before they reap a major windfall--and take an equally big tax hit--some of that wealth might flow to the school instead of the IRS.

Third, it helps schools publicize the successes of their graduates and keep their communities informed about others with whom they might cross paths in the corporate world. At Villanova, for example, information from Atlas provides fodder for alumni publications and the university website, as well an opportunity to send out congratulatory letters to graduates when good things happen in their careers.

"It is a fire hose of information," says Chun. "There are literally thousands of filings every minute that are submitted to the SEC. Trying to find the information you want is virtually impossible--or you need a tremendous amount of resources to do it. What we've done is taken that fire hose and turned it into a drinking fountain that people can actually use."

On a daily basis, Connors' Villanova team goes through an alert from Atlas to update its donor and prospect database, and to pass along information that might be of value to development staff. These alerts consist of a variety of bulleted news items highlighting events such as alumni stock sales, stock awards/vesting events, as well as newly identified alumni.

For Connors, whose job also encompasses soliciting business and foundation support, Atlas has helped him develop a better sense of the corporate lay of the land. Portraits of company executives, for example, tell Connors "what their backgrounds are and what kinds of connections they have in the Philadelphia region." Frequently, the service identifies companies at which two or more corporate officers have connections to Villanova, which can help the university in its efforts to identify possible corporate supporters.

Connors feels that Atlas has made his outfit more efficient. "It's taken a lot of information that we would have had to gather in different places and brought it under one roof," he notes. "Atlas has reduced the amount of time we spend on finding this information."

Data Analysis
Predictive analytics--using existing data to predict the probability of future behavior or outcomes--is nothing new to institutional fundraising. According to a survey by WealthEngine, 38 percent of schools use some form of it. But why aren't more schools taking advantage of it? They have the data, after all. Colleges and universities have been collecting information on their alumni for decades: giving histories, demographics, ties to the school, and financial records. Plus, explains WealthEngine's Boucher, many schools have access to homegrown resources--particularly faculty members who teach statistics--that can help put a predictive-analytics program in place.

For schools that don't have the wherewithal to develop an in-house program, it's possible to utilize a vendor solution such as Blackbaud's Target Analytics or the Reeher Platform, or to engage the services of specialized consulting firms such as Grenzebach Glier and Associates and Marts & Lundy.

The University of Cincinnati (OH) has been using the Reeher Platform for five years as part of a $1 billion fundraising campaign. "The biggest difference is that we're working faster now," said William Mulvihill, executive vice president of the UC Foundation, in a 2011 interview.  "We had about 250,000 [alumni to approach], and the Reeher Platform allowed us to focus our resources on 10,000 key prospects."

Each night, Reeher brings in all of the historic transaction and constituent information (address, degree type, activities, etc.), no matter what the data source--Ellucian (formerly SunGard Higher Education) Advance, Blackbaud's Raiser's Edge, or something else. The software then uses statistical techniques to come up with an estimate for the dollar value of a gift that a particular alumnus might make. As part of the algorithm, the platform takes into account whether alumni are regular, first-time, or non-donors. It also takes into consideration annual fund and major gift donations.

"Once the factors are identified, we put them in rank order, based on the expected value of their gift," says company president Andy Reeher. "The factors are unique to each customer, and the scores change over time as people behave differently."

Predicting donor behavior is just the beginning, however. Schools still have to initiate contact, make a compelling pitch, and close the deal. For the system to work, managers and staff have to believe in the process, follow through, and keep working the list. "It's really a story about management discipline," notes Reeher. "It's not a story about magic data or reports that are splitting the atom. It's about a combination of tools that are very easy to use and a management group that is consistent in their application."

To promote this discipline, the Reeher service also includes coaching and training for senior users through on-site visits, webinars, and conferences. In addition, it shares success stories from within its client network, helping customers implement approaches that have worked elsewhere.

It's an approach that has certainly benefited Cincinnati. Since the system was implemented five years ago, the number of development officers who raise more than $1 million a year has grown by 65 percent. And the level of fundraising has skyrocketed, too, from an average of $65 million a year to more than $100 million. Tellingly, the number of alumni who have made a gift of more than $1 million has jumped from 72 to 450.

Obviously, schools devote a lot of resources to courting the top 1 percent of donors. But they can't afford to overlook the other 99 percent, whose collective contributions can total tens of millions of dollars. While many alumni can afford to give only a few hundred dollars, they too want to feel as if they are valued and that their money is going to support aspects of the university that they like. To achieve that goal, Arizona State University's Annual Giving operation is using data mining to create customized pitches on a mass-market scale.

While the views from the windows of ASU's call center are stunning, the center itself is fairly typical of such facilities nationwide. Since 1996, ASU students have worked the phones seven days a week during evening hours, when prospects are mostly likely to take a call. To manage the process, the university uses Ellucian Advance, a donor-database product, and SmartCall, which allows alumni data from Advance to be segmented into calling groups.

What's different is just how precisely ASU segments the donor population. "Really it's about the way we use the software, and the levels we've taken it to," explains Bradley. "We do far more segmentation than we used to in order to personalize the messages to the donors."

According to Shad Hanselman, director of annual giving, the university tracks a host of criteria, including giving history, the number of years donors have given consistently, the amount they've given, and the amount of their latest gift. It also segments the list by role--alumni, parent, or friend. Donors are further categorized by their specific college, so that callers from that same college can make contact.

Based on these segments, the script used by callers is fine-tuned. For example, Hanselman explains, "We know that alumni from the College of Education are very different from the College of Business on how they like to be approached and what they like to hear about." Likewise, the organization uses different messaging for each generation and a different way "of relating back to the university."

In many ways, ASU's approach is reflective of a cultural change: Not only are development officers more attuned to the possibilities of slicing and dicing data, but donors themselves are more receptive--some would say expectant--of a customized approach that draws on a wide variety of touch points with the institution.

"No longer can you send out one message and have it apply to everybody," asserts Hanselman. "[Our approach] is taking a lot of the ideals of major gifting programs, really getting to know the person and speak with them on their level, and then applying that to mass-market communication."

And if a single message is no longer enough, neither is reliance on a single medium. At ASU, the evening phone call is just the beginning of a conversation that spans everything from snail mail to e-mail, Facebook, and Twitter. Because there are now so many ways to reach donors, the university is careful to ensure that all contacts--regardless of the medium--are carefully choreographed. An overarching theme in ASU's fundraising plan is to avoid "being intrusive."

"We've realigned our strategies," notes Bradley. "We're making more effort to organize our contacts overall, so we don't burn people out now that we have all these additional communication channels."

Mobile Giving
These days, social media is a given in institutions, says Sally Boucher, director of research for WealthEngine, a prospect-research company. While this doesn't mean people have totally figured out how to use it for fundraising, "in terms of relationship management, they're doing a nice job in creating a community."

"Mobile giving," however, is an area ripe for better understanding. "More and more people are getting more and more of their information via their smartphones," Boucher points out. "A lot of young people are ditching the whole idea of using a laptop computer and are getting to the internet via their smartphone." If schools want to be where their alumni are, they need to have a website and e-mail messages that are mobile-optimized.

Schools also need to figure out how to draw mobile users into the giving community. "It's scary ground to be on," notes Boucher. "Even if you have someone's mobile number, you don't really have permission to start texting them. You can send them an e-mail, but you can't really start engaging with them via their mobile number until they give you permission. That's what colleges and universities need to explore over the next few years, so that when everybody has their technology with them--and you can reach them anywhere, anytime--you know what you're doing."

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