Champions. Friends. Acquaintances.Donor Motivation Defined

A Lifestyle Segmentation Research Project Focused on Donor Motivation

Presented by

Ann Oleson, Chief Visionary Officer

Why we completed this research?

The top 10 findings

Application of findings to your alumni communications

Our Time Together

Changing Landscape of Fundraising

The Rise of Non-Profits

Over 1.16 million non-profits competing for donated dollars

The 2009 report presented by the National Center for Charitable Statistics, number of 501 c 3 organizations risen 31% from 1999-2009

A Lack of Written Communications Plans

Nonprofit Marketing Guide indicates that 70% of those

interviewed had no formally approved marketing or

communications plan

Changing Face of Wealth - Younger Donors

Younger Donors are becoming more significant as they assume influential roles in their workplaces and communities

The Center on Philanthropy at Indiana University posits that donors between the ages of 18-30 are:

• More marketing savvy and more cynical than predecessors

• Less trusting• More service-driven• More interested in playing active and

consequential roles advocating causes in which they believe

Changing Face of Wealth- Younger Donors

2010 Study by Engagement Strategies Group

Many donors of this generation consider the cost of their tuition as well as the perceived overall wealth of the college or university that they attended to be perfectly valid reasons for lack of support

Changing Face of Wealth- Younger Donors

“Donors of the Future” by Growth Design (2009)

• Holding institutions accountable for their decision-making

• The timeliness of their decisions

• Partnering and engagement opportunities they offer - expected with organizations that they support

• Increases in the earning power of women, ability to give, and impact

• Women outnumber men on college campuses across the nation

• 60% of all master’s degrees awarded in the 2008-209 academic year went to women

• 30% increase of women with college degrees since the late 1970’s

2008 Center for Educational Statistics

Changing Face of Wealth - Women

Current IRS “Personal Wealth Tables”

43% of nation’s top wealth holders (those with assets exceeding 1.5 million) are women

Women have moved from “influencer” role to:• Being significant forces • Being established professionals,

financially independent, and offering support ON THEIR OWN TERMS.

• Viewing giving as Millennials: student- focused and supporting issues that impact the world

• Being inclined to focus efforts and resources on helping others

• Being disposed to give in relational ways through personal involvement in activities

Changing Face of Wealth- Women

Influence of Technology

Most critical factor that successful fundraisers will need tomorrow

77% of U.S. population now connected via the internet

Digital media is critical: few fundraisers have embraced social media, mobile applications, and other online spaces as a communications hub

Use to:• Inform thinking• Shape fundraising strategies• Measure success of online initiatives

Photo of all alums from one pager

Meet Jennifer

• 35 years old• Vice-President of Sales • Officer in Student

Government • Honors College with a

3.9 GPA• Full pay student• Not engaged with her

college

Meet Jennifer

• Future leader of her company• Married to an attorney• Volunteer of the year• Gives 10% of income to charity• Engaged with 3 networking groups• Serves on a number of community

boards• Has great feelings towards her

college but not engaged• Will inherit significant family

wealth• Gets 50 pieces of mail per week

from non-profits• No home phone• Never been asked to engage

Meet Jennifer

Just because Jennifer is able to give does not mean she is motivated to give

How do we understand who Jennifer is, what she cares about, and how to reach her?

• Develop a motivationally-based segmentation model

• Uncover the motivations that drive the different types of relationships

• Prioritize which alumni segments provide the best opportunities for colleges

• Provide recommendations on how these different alumni segments should be managed to optimize their individual likelihood of donating

• Develop a predictive model and applied tool to easily classify alumni into segments based on a minimum number of questions

Research Objectives

Segmentation Method and Analysis

A Motivational Segmentation of College Alumni

Secondary Research

Over 250 research articles concerning college donating and charitable giving were reviewed to identify current issues, trends, and alumni motivations.

– The following variables were identified in the literature and provided guidance for the questionnaire design.

Questionnaire Development

• Age• Gender• Income• Marital status• Employment• Education level• Ethnicity• Religious affiliation

• Personal identification• Pride• Perceived need• Benefits from giving• Uniqueness of college• Obligation or duty• Professional benefits• Current involvement• Trust• Prioritization• Recognition• Gratitude

• Type of college• College prestige• Professors• Campus/facilities• Activities• Grades• Time to graduation• Tuition• Scholarships/grants• Family legacy• Academic major• Residence• Placement• Student loan balance• Social experience

Demographics College Experience College Relationship

• Personal values• Religious values• Political orientation• Tax benefits• Networking• Life satisfaction• Perceived need

Charitable Giving

Who answered the questionnaire?• 2,050 college alumni participated in a web-based survey during July, 2011.• Participation criteria were established to correspond with known college

population estimates– Female: 56%– Advanced Degrees: 31%– Institutional Type: 65% Public– Married: 59%– Employment Status: 25% Retired– Ethnicity: 87% White/Caucasian– Average Household Income: $74,285 – Religious Orientation: 67% Christian

• Sample estimates across numerous variables of interest in this research are consistent with statistics found in the US Census or other published surveys.– These findings provide us with confidence that inferences drawn in this sample are

valid for the overall college alumni population.

Sample Characteristics

A Priori Segmentation

A priori segments are usually based on college major or demographic variables. However, descriptive variables such as these are known for being poor predictors of behavior.

Does he donate because he is a

man?Does she donate

because she is over 65?

Does he donate because he majored

in History?

Do they donate because they are married?

Segmentation Alternatives

Some researchers discourage a priori segmentation because it produces segments in which members often have very diverse motivations. As a result, members of a segment respond differently to marketing programs.

Males

Females

= Alumnus with gratitude to the college= Alumnus who wants peer recognition = Alumnus who enjoys donor privileges

AlumniSegmentsAlumni with

different motivations are mixed within

segments defined by gender.

Segmentation Alternatives

A Priori Segmentation

Post hoc segmentation indentifies groups of people who share motivations and are likely to respond similarly to a marketing program. Segment members might vary in demographics but have similar motivations.

= Female= MaleGratitude

Recognition

Privileges

Hypothetical Alumni

Segments

Males and females are mixed within segments sharing

the same motivations.

Segmentation Alternatives

Post Hoc Segmentation

Tailor Strategies to What Motivates Alumni

Colleges using post hoc segmentation develop strategies specific to the motivations of their alumni segments. Fundraising programs become more successful because they target what motivates different groups of alumni.

CollegeFundraising

Program

Don’t forget who helped you along!

We’ll put your name on a brick!

You are invited to…

Gratitude

Recognition

Privileges

DifferentMessages

Hypothetical Alumni

Segments

Segmentation Alternatives

Three College Alumni Donor Segments

Champions• Strongest advocates for the college.

• Value the professional and social benefits• Most likely to donate and the largest average

donations.

Friends• Proud graduates who regularly donate to the college.

• Much more committed to other philanthropies. • Very satisfied with their lives.

Acquaintances• Had a passing relationship with their college.

• Minimal attachment as students and even less now. • Provide little to no financial support.

SegmentSize

Segment Profiles

Summary of Findings

Implications– Colleges are better at managing relationships with Champions than

they are with Friends.– Colleges ineffectively manage the Friends segment.– Colleges spend as much money contacting Acquaintances as they do

either Champions or Friends. This is a waste of scarce resources that would be better spent enhancing programs targeting other segments.

Summary of Findings If a College could identify the proportion of individuals who are Champions who don’t give and Friends who give to non-profit organizations but don’t give to their colleges, they could realize opportunities for:

• Additional Prospects for Major Gift Solicitations

• Additional Prospects for Planned Giving Opportunities

• An opportunity to increase Annual Fund Participation Rates

If a College could identify Acquaintances who will likely not give to their college or university, they could spend limited and precious resources on Champions and Friends.

Overall impact= Smart Marketing (Better ROI, Better Results)

SEGMENT PROFILESA First Glance

Sample Size = 708 Note: Alumni who only donated in 2011 are excluded in order to provide complete years.

Average Annual College Donations 2006 – 2010(among alumni who donated)

Champions Friends Acquaintances $-

$50

$100

$150

$200

$250

$300

$350

$400 $354

$197

$45

Mea

n

Average Donation Size Among Donors

The average donation from Champions is over 75% greater than donations from Friends and over eight times larger than donations from Acquaintances.

Segment Profiles

Sample Size = 2050

Q56. Please estimate the total dollar amount of your donations to charitable organizations during the past year.

Champions Friends Acquaintances $-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$1,603

$2,750

$1,300

Mea

n

Total Charitable GivingFriends donate substantially more to charities than Champions donate. College donations are part of Friends’ giving program rather than the focus. Earning a larger share of Friends charitable giving budget could provide considerable rewards for colleges.

Segment Profiles

Sample Size = 2050

A Relationship Goes Both Ways

Champions are more likely to have a reciprocating relationship with their college in which they give and receive.

Champions Friends Acquaintances0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.53.1

2.0

1.4

Mea

n Re

spon

se

Reciprocating Relationship

Donating to my college is more important to me than donating to any other charity.

I feel like I can influence policy at my college.

I enjoy the social opportunities donating to my college provides.

Financially supporting my college is a priority to me.

I have maintained relationships with faculty from my college.

I like having others know I contribute to my college.

My college is one of my favorite charities to support.

Segment Profiles

Sample Size = 2050

The Benefits of Donating

Champions believe that donating to charities can advance their careers.

Champions Friends Acquaintances0.0

0.5

1.0

1.5

2.0

2.5

3.03.0

2.0

1.7

Mea

n Re

spon

se

• My involvement in charitable organizations may someday lead to advancement in my career.

• People I met through charitable giving have turned out to be helpful in my career.

• Making new business contacts is a strong benefit from charitable giving.

• My employer expects me to donate time and money to charities.

• Other people will think more highly of me if I donate my time and money to charities.

Professional Benefits

Segment Profiles

Sample Size = 2050

Life is GoodFriends are very satisfied with their lives. Research finds that happy people are more confident, outwardly focused, and willing to help others.

Champions Friends Acquaintances0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

3.2

4.5

3.2

Mea

n Re

spon

se

• I am very satisfied with my life.

• My life has turned out worse than I expected. (Reversed)

Life Satisfaction

Segment Profiles

College Donation Behavior

• Largest average donation • Most frequent donor• Motivated by external

reinforcement such as recognition, gifts, and privileges

• Also intrinsically motivated to give

• College not in will and have no plans to include their college in their will

Champions

• Frequent donor• Much smaller average

donation than Champions• Internally rather than

externally motivated to donate

• Motivated to help college solve important human problems

• College not in will and have no plans to include their college in their will

Friends

• Very small percentage have ever donated to the college

• Contacted as frequently as other segments for college donation requests

• Very unlikely to be influenced by any college fundraising campaign

• College not in will and have no plans to include their college in their will

Acquaintances

Key Take-Aways…Donation Behavior

• Value external reinforcements for giving such as professional networking , public recognition and tax benefits

• Feel good when donating to charities

• Religious beliefs often contribute to donating behavior

Champions

• By far the largest donors to non-college charities in dollars and percent of income

• Much more passionate about human welfare charities than they are toward their college

• Internally motivated to improve the world

• Religious beliefs often contribute to donating behavior

Friends

• Donate the same percent of income to charities as Champions

• Do not value external rewards for donating

• Internally motivated to donate to charities

Acquaintances

Key Take-Aways…Charitable Donations

Charitable Giving

• The only segment with a male majority

• Youngest segment• Most likely to be

employed full-time• Second highest annual

income• Most ethnically diverse

Champions

• Female majority• Highest income• Oldest• Most likely to be married• Most likely to be retired

Friends

• Lowest income• Least likely to hold a

graduate degree• Most likely to be agnostic

or atheist

Acquaintances

Key Take-Aways…Demographics

Demographics

DISCUSSIONTargeting and Messaging

Why Target?

Most college fundraising programs are not tailored to address different market segments. As a result, colleges make similar investments using similar strategies targeted to all alumni regardless of their likelihood of responding to particular fundraising efforts.

Targeting PrioritiesChampions are the most important segment for colleges to target and manage.

– These alumni donate the most frequently and make the largest average donation. They are the foundation for alumni giving programs.

• Although we did not focus on major gifts, financially able Champions have the passion that drives alumni to make major donations.

– Champions are the low hanging fruit for fundraising programs. Colleges who already have proactive alumni relations programs are likely enjoying at least some success with these alumni through self-selection.

Friends are the second most important target for colleges.

– Like Champions, Friends donate frequently, but their average donation is much smaller.

Friends provide outstanding opportunities for revenue growth.

– Friends donate much more to charities than any other segment but only devote 7% of their charitable giving budget to their college.

– Even small improvements in the proportion of Friends’ total charitable budget being allocated for their colleges would provide substantial rewards.

Friends are already in the habit of giving to their college and other charities.

– Colleges need to do a better job of persuading Friends that their college deserves more of their support relative to other charities which they currently support.

Targeting Priorities

Messaging

• On the surface, it appears that all segments responded similarly in regard to the donation appeals that they most prefer.

• Namely, messages communicating tax benefits, giving back to the college, and solving an important human problem generated the most enthusiasm.

• However, there are important nuances that should be noted within each segment.

Champions– Champions agree with Friends and Acquaintances that messages based on tax

benefits, giving back to the college, and solving an important human problem are the most compelling.

– In contrast to other segments, Champions also find messages based on donor recognition, special donor benefits, improvements to facilities, and personal satisfaction to be nearly as compelling.

– The key is that Champions have complex relationships with the college that are not dependent upon any one benefit. Colleges should not ignore benefits such as recognition and donor privileges. These appeals provide opportunities to strengthen relationships with Champions.

– Removing these benefits could endanger a college’s relationship with Champions since these alumni already enjoy and expect to receive these benefits.

Messaging

Friends– The most compelling appeal for Friends is that the college needs help to solve

an important human problem or create opportunities for current students. – Friends do not seek more contact with the college or value recognition for their

gifts.– Appeals to Friends that focus on external reinforcement for giving are likely fail.

Similarly, messages that do not identify benefits or focus on helping people are also more likely to fail. Finally, Friends are not motivated to increase their college donations to support abstract academic research.

– Fundraising messages directed toward Friends should prominently feature and focus on the college’s accomplishments that improve the world in general and help people.

Messaging

Acquaintances– No comments are

provided since Acquaintances are unlikely to respond to fundraising requests regardless of the messages being used.

Messaging