The Ross-CASE Survey 2016 - Philanthropic Support from Individuals: A Harbinger and Hallmark of Growth

In our previous Ross-CASE blog, my colleague Adrian Salmon highlighted some key top-level trends from the Ross-CASE Survey report. In this blog post, we are going to look at the ‘clusters’ in more detail. The clusters are a very welcome addition to the last three Ross-CASE Surveys. Grouping institutions into Fragile, Emerging, Moderate, Established, and Elite categories allows for some truly illuminating comparisons and shows clear pointers towards success.

Income from Organisations vs Individuals

The Ross-CASE results from the last three years show that, overall, institutions’ dependence on income from organisations is dropping, in favour of income from individuals. In 2014/15, for the first time more than half of the cash income reported came from individuals. As the UK sector matures, it is moving more in line with what we see in the Giving USA Survey, where income from individuals makes up 71 percent of sector income. A hallmark of mature and robust university advancement programmes is having a significant percentage of monies raised from individuals, and in particular alumni.

At GG+A, one of the patterns we often see in nascent development programmes is an overreliance of development staff on organizations (including foundations, trusts, and companies) to raise major gifts due to an under-cultivated and under-solicited alumni base. This is due, in part, to a historic lack of investment in advancement by the university.

With limited budgets and dormant, inactivated, and shallow major gift prospect pools, university development shops often turn to organizations as a more expedient way to raise funds and to demonstrate quick results in order to justify new budget investments in their development programmes.

Often with inadequate budgets, advancement departments become stuck in a transactional framework of securing funds from organisations, as they lack the investment to develop robust prospect research/management systems, alumni relations, and regular giving programmes, which are the backbones of strong development shops.

Contributing to this trend is that growing programmes often end up having shallow major gift prospect pools because they have relatively new regular giving programmes, which lack leadership regular giving programmes that can be an effective tool when it comes to feeding major gift and legacy prospect pools. A side effect of all of this is that major gift fundraisers in such a context can often become more adept at transactional fundraising and lack the best practice skills around relational fundraising that are essential to secure major and transformational gifts from alumni and other individuals.

Income from Organisations vs Individuals, by Institution Group

When we look across the Ross-CASE Survey clusters, you can see that the more mature and by and large, the more established programmes are much less reliant on income from organisations.

This is not unexpected – it takes time to fully embed an integrated fundraising programme from individuals, and nascent programmes are often reliant on trusts, foundations, and corporate gifts for initial wins.

However, given the far greater long-term potential in fundraising with individuals, institutions should try to avoid getting trapped in a position of high dependence on organisational gifts. It is not a recipe for long-term success.

Investments are Important Drivers of Growth but the Right Mix is Key

Investments by UK universities in advancement over the years appear to indeed be paying off. As we mentioned in our first blog post, the mean investment is 0.4 percent of institutional expenditure, which amounts to less than 0.5p for every £1 a university spends overall.

Institutions in the Moderate and Established clusters are investing at or around this level and seeing returns of between £5 for every £1 spent and 7:1.

Emerging and Fragile institutions, which are investing around half the mean percentage of institutional expenditure, are seeing correspondingly lower returns – between 0.6:1 and 2:1.

Moreover, elite institutions, which have decided to invest substantially more than the mean ( nearly 2p per £1 of institutional expenditure) are seeing returns of nearly 10:1 – and philanthropic income represents nearly 16 percent of their overall institutional expenditure.

Although investments are important, it is the right mix of investment (programmatic versus staffing) and the right mix of programmes, combined with best practices, that truly help universities develop their alumni major gift prospect and donor pools. The importance of this can be seen when we look Ross-CASE data in the chart below that show the level of programmatic budget investments staff have at their disposal across the Fragile to Established clusters.

Programmatic Investment vs Staffing Investment

Fragile and Emerging institutions do have fewer contactable alumni on average than the other clusters, but the amounts they have available to spend on programmatic elements are nowhere near enough to communicate effectively with their alumni. The Fragile institutions do not even have enough to send one alumni relations communication to all alumni once a year.

It is only the Moderate institutions upwards who appear to have anywhere near the level of programmatic resource to deliver even a ‘minimum viable’ alumni relations and fundraising programme.

The data suggests that some institutions will be stuck in a vicious cycle of being appropriately resourced when it comes to staffing yet under-resourced programmatically at the outset to achieve results, and then not being able to secure additional, much-needed investment because results are not forthcoming. This cycle can be broken only by institutional leaders who have the long-term vision to holistically invest more in the advancement function.

Time and the Clusters

Image: Ross-CASE Survey 2016.

Is the length of establishment of a programme a factor? Yes and no. Four of the five Fragile institutions reported starting their development and alumni relations programmes after 2005. All barring one institution from the Established cluster started their development and alumni relations programme before 2005, but 22 institutions where programmes began before 2000 are still classed in the ‘emerging’ or ‘moderate’ clusters.

It does take time to establish a programme, but strategies and frameworks are also key, and those require resources to build and strengthen as noted earlier.

As advancement operations continue to seek to develop mature advancement operations, keeping the momentum up will require developing even more robust prospect management systems, better reporting structures, sound stewardship, and robust regular giving and alumni relations programmes, while ensuring that major gift staff are skilled to meet the challenges and opportunities that are involved in relationship building fundraising models.

Which programmes to add at what juncture are important considerations when planning future growth. A robust alumni relations programme is a key pillar that leads to a strong regular giving programme and robust major giving programmes. I hope you have found this journey through the clusters, and what we can learn from them, both interesting and useful. In the final blog post of this series, my colleague Andy Shaindlin will unpack what we can learn about building solid alumni relations programmes from the Ross-CASE Survey and GG+A’s five decades of experience in the field.

Click here to watch the GG+A Webinar Series: Ross-CASE Survey 2016 on YouTube.