Eight Important Trends Impacting Development in Higher Education

higher edu trendsDr. Loren Anderson, whose career has spanned three institutions, seven development campaigns, and almost $500 million in fundraising, shares his observations on development trends that are impacting higher education.

During his 20-year term as President of Pacific Lutheran University (PLU) in Parkland, Washington, the university gained national stature in global education, sustainability, and helping students explore their passion and purpose in life and their role as world citizens. Dr. Anderson holds a B.A. degree from Concordia College in Moorhead, MN; an M.A. in speech from Michigan State University; and a Ph.D. from the University of Michigan in communication theory and research. 

As a spokesperson for private higher education, Dr. Anderson served as a member and board chair of the National Association of Independent Colleges and Universities and of the Independent Colleges of Washington. He served as a board member of the Council of Independent Colleges, the American Council on Education, and the Institute for the International Education of Students. 

1. Donor pyramids are taller and narrower.

The 80-20 donor pyramid of giving that once described development campaigns has given way to a 90-10, sometimes a 95-5, model. This change reflects the concentration of wealth and donor capacity in our society. For example, The 50 donors on The Chronicle of Philanthropy’s annual list of the most generous Americans gave an average of $61 million in 2011, compared with $39.6 million the previous year. Collectively, these philanthropists gave $10.4 billion to charitable organizations in 2012.

In the past, donors who would make a $100,000 gift would be likely to make the same contribution over the next three to five years. “Now there are fewer larger long-term pledge gifts and more smaller one-time gifts,” indicates Dr. Anderson, “We are also seeing a decline in middle range gifts in the amount of $25,000 to $200,000.”  

Establishing significant relationships with those donors who have the capacity to make very large gifts is thus more important than ever. “Organizations need to focus and carefully prioritize major gift work, as the success of development campaigns increasingly depends on this small and very generous group of donors,” says Dr. Anderson.

2. Fewer donors are willing to make large 3 to 5 year pledges.

The dramatic economic swings of the past two decades have impacted donor confidence in the future and, as a result, more major gift donors are choosing to make one-time significant gifts – rather than a three to five year pledge. This is especially true for donors who fund their contributions from annual earnings, as opposed to accumulated assets.  

As Dr. Anderson notes, “this trend toward one-time gifts and away from multi-year pledges, contributes to the taller/narrower donor pyramid described earlier, as the mid-major gifts in the $25,000 range and up become more difficult to find.”  

3. Donors are reserving their significant gifts for institutions and organizations with whom they have truly significant relationships.

Donors are increasingly concentrating their significant giving to those organizations they feel most strongly about, as opposed to spreading their giving across a larger number of nonprofits, a trend which commentators have attributed to shifts in the economic climate and philanthropic culture. 

“Nonprofits used to expect that donors who gave once would give again, but that has changed as philanthropy has become a more important part of our culture,” he explains. “People with resources are used to being approached by many organizations and they must make choices. They’ll quite naturally choose the organizations they know best and feel most closely toward.”  

4. Donor designations are more frequent and more precise.

“Donors increasingly want to designate their gifts to a specific project or cause,” explains Dr. Anderson. “Instead of supporting the next capital project, they want to see the impact their support has for beneficiaries like individual students or children.”  

This trend changes the structure of campaigns. Campaigns can really package a series of individual projects like a building, endowment, and scholarships. Nonprofits and their development teams need to review their campaign planning and let donors choose specific projects as opposed to making broad appeals.

5. Women are playing a much larger role, as donors and as leaders.  Couples are making joint decisions about their philanthropy.  Charities are behind the curve.

Women are more involved in the world of philanthropy as board members, volunteers and development professionals. Most importantly, the number of women donors has increased. A study by the Lilly Family School of Philanthropy - Women Give 2010 - found that women at all income levels have the desire and capacity for giving and do give frequently. For instance, of 2,500 households headed by single males or single females, the women were more likely to donate and almost always gave more.

Couples’ philanthropic decision making has also changed. “It used to be that Bill would take Joe to the golf course, and Joe would decide what he and his wife are going to give,” says Dr. Anderson. “Today, couples make philanthropic decisions together, which means nonprofits have to appeal to the values and interests of both persons.”    

6. A new "investment culture" increasingly shapes our attitudes (and behavior) toward philanthropy and our expectations regarding charities.

An increasing number of donors make decisions using a model that considers the “return” on their philanthropic investment. “The attitude that we have about investing for financial return has influenced our attitudes about giving,” says Dr. Anderson. Organizations need to develop stronger cases for philanthropic support, maintain transparency around their budgets and institute professional reporting standards that demonstrate their efficiency and effectiveness.  Donor expectations for more detailed reporting require charities to rethink their management systems, financial management and investment programs.    

7. Volunteer involvement in development work is decreasing while the reliance on professional staff is increasing.

According to the Federal Agency for Service and Volunteering in 2011, the number of volunteers reached its highest level in five years, as 64.3 million Americans volunteered with an organization, an increase of 1.5 million from 2010. But finding effective fundraising volunteers is a growing challenge. “People who will roll up their sleeves and become directly involved in development work are few in number” says Dr. Anderson.  He predicts a continuing trend toward the use of development professionals in lieu of a reduced role for volunteers.  

8. In higher education: loan payments are displacing alumni contributions for a whole generation of younger alums.

Students and their parents struggle with student loans, which recently exceeded a combined total of $1 trillion. In a sluggish economy and job market, loan payments have taken priority over donations. Dr. Anderson feels the philanthropic community has not been sensitive to these trends. “Every time we ask these young graduates for a financial gift, we are asking them to do something they cannot do,” he says, “We are, in a sense, training them to say no to us.”

Dr. Anderson advocates rethinking our approach to young alumni, who very often want to donate their time and expertise as volunteers. Examples may include speaking or helping students find internships. “We need to develop a tradition of saying yes,” he explains, “so that when these alumni are ready and able to give financially, a relationship, and a tradition of “giving” had already been built.”

For a more in-depth look at the higher education industry trends and changes please follow Campbell & Company’s blog and our webinar calendar here.

The Campbell & Company Higher Education Team understands the context in which higher education institutions operate, and create a structure and process within that context, tailored to your community, that allows philanthropy to grow. For 37 years, we have successfully partnered with a range of higher education institutions, including large public universities, mid-majors, private liberal arts colleges and community colleges. We also draw on our staffs’ experience to develop initiatives for specific higher education segments including Historically Black Colleges and Universities and professional schools.

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