Monday, February 16, 2009

A Long Look at Philanthropy (Part III)

Following on my previous two blog posts, I want to continue to make the case that the assiduous, sustained building of donor relationships is the most productive path to significant philanthropic results. I began this series of blogs (A Long Look at Philanthropy) by using higher education philanthropy as a case in point. I asserted that colleges and universities must have a structured, diligent and creative approach to developing relationships over a 50-year span, extending from the time new students set foot on campus until they have reached their late sixties and have made irrevocable estate commitments (the relationship, and the obligations that go with them, don’t end at that point but, if managed well over that time, they should be at a very secure and profoundly productive stage). In my first blog in this series, I argued that the most important period in that 50-year span was the undergraduate years. In the second of the series, I said the next most important period was the first five years after graduation. In this post, I will make the case for the 15-year mark as the third most important phase.

Research shows when donors give to their alma mater for the 15th straight year, the likelihood of their leaving a significant portion of their estate to that school increases by 80 percent. The amounts of their annual gifts matter much less than the persistence of their giving over that period. Indeed, those who give most generously of their estates tend to give more modestly during their lifetimes. They often lead more modest lifestyles, save at a higher rate, and leave more to others when they die. And, yet, many of their alma maters give them short shrift. Why?

The plain and simple truth is that most of us are too short-term in our thinking and our approaches. That we focus most of our efforts on securing large gifts is understandable, given limited resources, but not if it is at the expense of a far greater long-term return.

Reasons for this short-term focus include:

1. Institutions have immediate needs and fast-breaking opportunities
2. We are recognized and rewarded more for what we do now that what we make possible in the distant future.
3. We tend to believe that “a bird in the hand is worth two in the bush.”

But, if we are to inspire the philanthropy of current students, we must show them that they are the recipients of gifts from previous generations and ask, therefore, that they begin to think what they will pass on to future generations. By the same token, the leaders of institutions of higher learning must think of what they have inherited from previous generations and obligate themselves to giving to future generations. That will often entail initiating efforts that will not bear fruit during their tenures or even their lifetimes. If we invest in strengthening relationships with undergraduates or recent graduates, the real results will not be felt until 40 or 50 years later. But we owe that future investment to those whose made long-term investments in the past; we can do no less for future generations than was done for us. If we are wise and disciplined, we will do even more. We should, as the African proverb suggests, “plant trees under whose shade we do not expect to sit.”

To be more explicit and practical, philanthropy-seeking institutions need to place the greatest emphasis on donor retention. Donor acquisition is also of great importance but, as Penelope Burk has shown, many institutions make the mistake of trying to acquire more donors than they can adequately manage resulting in a loss of loyal, and potentially-loyal donors. We must do well by the donors we have before seeking more and the most fragile of those will be those that gave for the first time the year before. Donor retention strategies, therefore, should be particularly focused on the second annual gift, then the fifth annual gift, then the 10th, then the 15th. Universities tend to focus more on the “harvest” reunions such as the 25th and 50th, and too little on the earlier formative years.

And donor retention strategies should be much, much more than reminders and encouragements from the annual fund. They should be designed to listen to donors (telefund callers who solicit funds can just as readily solicit advise and opinions) and to engage them along the lines of their interests. Most of the messages to them and interactions with them should not be about fund raising. Engagement strategies should match the needs and interests of various age groups – career networking and counseling for young alumni, family activities for those with young children, “rethinking the curriculum” exercises for those who have been out for awhile or those who hire a large number of graduates.

This past December, Georgetown University received its largest gift ever as the economy was undergoing its worst contraction in 75 years. It came from someone who gave over a 54-year span. His first gift was $5. His largest annual gift was $1,000. His largest special gift was $100,000. He left $75 million to Georgetown. Just a few months earlier, it would have been worth $100 million or more. His name was Robert McDevitt. He lived a modest life and left $250 million to various universities, colleges and charities.

I must ask myself what I and my operation are doing today to recognize and develop the next Robert McDevitts. I must pay more attention to those modest but persistent donors. I must find better ways to reinforce their loyalty, to sustain their support, to balance our short-term and long-term efforts. If my team and I do our job, we will leave more loyal, appreciated donors to my successor than we inherited. We will have helped build a stronger sense of community and a deeper commitment to cause. Somewhere way down the road, Georgetown may receive another very large gift at another critical time in its history. If we’re still around when that gift comes in, my colleagues and I will have the comfort of knowing that we did our part in our time. If we are not, we will have left with satisfaction of knowing that we did not just take from those that came before. We will know that we tried to do our jobs in the right way for the right reasons; we will know that we tried to give at least as much as we received. We will have known that our efforts made a difference – even if we never knew when.

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