Alumni Giving

At many colleges, it starts even before graduation day. It may begin as a request for a “Senior Gift,” or as a gathering to enlighten each senior about the importance of alumni giving to the school. Regardless of how it is first introduced, the immediate goal for a college is to quickly get graduates into the habit of giving back to the school. The ultimate goal is to sustain that generosity for a lifetime. A true indicator of the love for and loyalty to one’s alma mater is the extent to which one is willing to support it financially. It also happens to be a reliable indicator of excellence. As it turns out, graduate giving is a very good barometer of how alumni view their colleges. Those schools with high levels of alumni giving also tend to do quite well on most of the attributes we measure.

This chapter examines the few causal factors that can help explain why alumni give (or do not give) to their schools. As virtually every college struggles through today’s difficult economic environment, knowing what can be done to increase the level of alumni giving is valuable learning. And, since the annual percentage of alumni giving ranges from a high of 60% (Princeton) to the low single digits at many schools, it is clear that some college understand this better than others. Let’s take a look at what can drive such wide disparities.

What prompts alumni to donate to their colleges?

When colleges get it right, they produce graduates who are successful in their chosen path and have an affinity to and love for their alma mater. One of the best ways graduates can demonstrate that loyalty is by donating to their school. There are many reasons alumni give back to their college: to show appreciation for the education and development the school provided them; to provide others with a similar experience; to stay connected to the college community; and even to reap the social and emotional benefits associated with being a donor. Regardless of the reason for giving, a large number of alumni participate in their college’s annual fund drive and colleges track very closely the level of giving each year. For a host of reasons, it is a very important measure to many colleges. Not only does alumni giving help increase financial support for the college by virtue of the actual donations themselves, it is also a signal to other charitable institutions that this particular college is well loved and supported by its graduates. Some education-focused charitable organizations even match a portion of alumni donations. The percentage of living alumni who donate to a college can also serve as a good indication of alumni satisfaction with the direction their college has charted for the future. Thus, many colleges keep a close eye on this number as it changes (upward, hopefully) year to year.

As you might expect, there is wide variation among schools in the percentage of graduates who provide donations each year. Before getting into some of the key drivers of alumni giving, it is worthwhile to note a few important dynamics within the numbers. First, you will notice that most of the schools with very high percentages of alumni giving are private institutions. Often, graduates from large universities that are funded publicly are less likely to give to their university because it already receives governmental funding. It is actually quite interesting to see those public institutions that are still able to achieve a relatively high percentage of alumni donations. Something is going on in these unique universities that is worth understanding. Another dynamic you will notice is that small, private colleges dominate the Top 50 list for alumni donations. This can be partially attributed to the fact that small, private institutions (as we have seen throughout the analyses in The Alumni Factor) engender a very high level of alumni loyalty and affinity – it’s simply easier to generate this goodwill when you are dealing with a smaller number of students in a highly selective institution. A separate but related point is that many smaller, private institutions (unlike publicly funded ones) truly rely on the money received from alumni donations to fund operations and to increase their endowment. Given that necessity is often the mother of invention, many of these smaller, private schools have become very effective at raising money from alumni. In fact, fundraising has become a top priority for the presidents of virtually every small and medium-sized college and for some large school presidents as well.

A quick glance at the Top 50 schools in alumni donations shows those with high alumni donation rates are also well loved by their alumni and rank high on the lists of many other key attributes we’ve analyzed. The Top 50 schools in alumni giving, nearly all of them among the finest colleges in the US, have long-standing traditions of alumni support based on the college’s historic reputation for excellence and a campus life that binds students to the institution and to one another. Alumni financial contributions are one of the best indicators of a graduate’s esteem for their school. As is often the case, money follows the heart.

The Top 10 schools in alumni donations are a uniquely accomplished group. While each of these schools has a long history of loyal and passionate alumni support, the tough economy of the last few years challenged the fundraising effectiveness of every institution in America, including these Top 10. Despite the difficult economic times, these ten schools continue to distinguish themselves for having graduates who demonstrate enduring alumni love and financial support:

 

But what are the driving factors that make these schools and the other leaders so successful at generating alumni support for their school, while others watch as alumni deny their request for money? By carefully analyzing data from tens of thousands of college graduates and comparing it to the donation rates by college, we are able to develop a few hypotheses as to the key factors driving alumni donations.

In Figure 7.1, we list the top five factors in our database that are correlated to alumni giving. After looking at many combinations of alumni giving and other data, from happiness and political leaning to gender and financial success, we were able to pinpoint five measures that are the most highly correlated to alumni giving. This is not the complete answer, as none of them can fully explain the difference in giving rates among colleges. However, we’re excited to uncover these relationships, and we’re sure colleges will be as well. In short, colleges that provide strong intellectual development and allow for the development of deep friendships are most likely to have higher percentages of alumni donations.

The Ultimate Outcomes of Friendship & Intellectual Capability

Being fully developed intellectually, making deep friendships during one’s undergraduate years and staying in close touch with those friends are the largest correlating factors in alumni giving, according to our research. The schools that rank highest in alumni giving are able to create campus environments where students are academically challenged while developing deep bonds with each other and ties to their college community. These ties bind them for what appears to be a long-term, consistent level of financial support for their college. Smaller schools, with smaller class sizes and communities where students get to know other students, faculty and administrators, are best positioned to deliver these benefits to students – and likely a reason that the list of the Top 50 schools is dominated by small, private institutions. In fact, 40 of the Top 50 schools in alumni giving have fewer than 3,000 undergraduate students, and 48 of the Top 50 schools have less than 10,000 students (University of Southern California and University of Pennsylvania being the exceptions).

To create this kind of close, collegial environment on a larger scale, across a larger campus with more students and a less personal touch, takes a unique effort, and only a handful of select schools are able to do it. Let’s take a look at these successful larger schools and the special touches they use to defy the “law of large numbers” when it comes to alumni giving.

Which large schools create environments that encourage alumni financial support?

To begin, there are only three schools within the Top 25 for alumni giving percentage that have more than 3,000 students – each of these three schools hurdled the very difficult bar of having 40% or more of their alumni donate:

This is an extraordinary accomplishment for these three schools, and a good indication that they develop and shape their graduates in ways that create a strong, long-term bond. There are eight other schools in the Top 50 with more than 3,000 undergraduates. These schools are listed in the chart below, and each one has had an alumni giving rate above 30% in the 2008 to 2011 period. This is an indication of the long tradition of alumni financial support for these schools, and of the high regard in which alumni hold these colleges.

Finally, of the 71 schools in our database with more than 10,000 undergraduates, there are only nine schools among the Top 100 for alumni giving that achieve an alumni giving rate of 15% or greater. These schools are well known, popular universities that, despite being very large, generate high levels of alumni support and correspondingly high revenue from alumni giving. These nine schools each have a unique advantage that allows them to counter the penalty of size. Three of them are Ivy League schools (Cornell, Penn and Harvard) whose gold-plated reputations help them offset large student body size. The rest all share another trait – that magic combination of a strong academic reputation and a high-profile athletic program. Even the Ivy League schools have relatively strong and well-followed athletics (Cornell’s strong showing in the 2010 NCAA men’s basketball tournament serves as an example). And some, such as Harvard may be helped on the margin by the fact that their full-time, residential undergraduate populations are substantially smaller than their total undergraduate populations, helping them replicate that smaller school feel.

Having taken a broad look at some of the many factors that are correlated to alumni giving, and having examined the schools that excel in it versus all others, it is clear that the path to a high percent of alumni givers is easier to explain than it is to accomplish. Simply put, for many graduates their college experience is an important part of their identity, and the higher the regard they have for their college, the more likely they are to donate to it. The best path to that high regard is through strong intellectual development and deep friendships. For larger schools, intellectual development and deep friendships are also critical. However, where sheer numbers make delivering consistent intellectual excellence, deep friendships and a close tie to the community a tougher task, activities that unify the college community and their alumni (like strong athletic programs) can significantly increase the level of alumni support. There are, of course, many other ways large universities galvanize and unify their communities beyond athletics, but very few can do it like athletics can. The magic combination of high academic reputation and a strong athletic program is sure to increase alumni support at larger schools (in fact, it does so at smaller schools as well.)

In many ways, alumni donations are the definitive test of a graduate’s love for their alma mater. Schools with high levels of alumni participation in annual fundraising tend to be schools that have served their graduates well by delivering on their promise of excellence in virtually all areas. The chart below compares the graduates of the Top 10 schools in giving percentage versus all college graduates on the key attributes of college experience, success and happiness. This data further confirms the link between alumni giving and a graduate’s overall view of their school. Intellectual Development and the two Friendship Development attributes stand-out as the attributes in which these Top 10 shools put the most distance between themselves and others.

Summary

The percent of alumni who annually donate to their college is a measure closely watched by college administrators and other observers of higher education. Smaller, private colleges tend to excel in this measure versus other larger, publicly funded colleges for a number of reasons.

Small schools with high academic standards and a close-knit community do a better job than larger schools in creating an environment where intellectual development can occur and deep friendships can develop – these two factors appear to have the strongest correlation to alumni giving. Graduates of large, publicly funded schools are less likely to donate, since they feel that government already supports their schools. Smaller, private schools more heavily rely upon the donations of alumni, and hence have become skilled at convincing alumni to support them.

However, there are small, private schools that do not fare well, relative to others, in alumni giving. There are also large schools that do relatively well on this measure because they have managed to provide strong intellectual development to their graduates while creating a bond to the university through athletics or some other means. The schools that excel in alumni giving also tend to be schools with excellent reputations that rank highly on virtually every list we’ve generated in this study. Therefore, the percent of alumni who give to a school is a very good measure of a school’s excellence. In fact, if prospective students had to limit themselves to one or two data points upon which to compare a list of schools, or finally choose their school, we believe this criterion would be an excellent choice, along with the results on our Ultimate Outcomes.