A Lifestyle Segmentation Research Project Focused on Donor Motivation

1. Champions. Friends. Acquaintances.
Donor Motivation Defined
A Lifestyle Segmentation Research Project Focused on Donor Motivation
Presented by
Ann Oleson, Chief Visionary Officer

2. Our Time Together
Why we completed
this research?
The top 10 findings
Application of findings
to your alumni
communications

3. Changing Landscape of Fundraising

4. 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

5. A Lack of Written Communications Plans
Nonprofit Marketing Guide indicates that 70% of those
interviewed had no formally approved marketing or
communications plan

6. 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

7. 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

8. 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

9. • 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

10. 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

11. 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

12. Photo of all alums from one pager

13. 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

14. 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

15. 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?

16. Research Objectives
• 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

17. A Motivational
Segmentation of
College Alumni
Segmentation Method and Analysis

18. Questionnaire Development
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.
Demographics College Experience College Relationship Charitable Giving
• Age • Type of college • Personal identification • Personal values
• College prestige • Pride
• Gender • Perceived need • Religious values
• Professors
• Income • Campus/facilities • Benefits from giving • Political orientation
• Marital status • Activities • Uniqueness of college • Tax benefits
• Employment • Grades • Obligation or duty • Networking
• Education level • Time to graduation • Professional benefits • Life satisfaction
• Tuition • Current involvement
• Ethnicity • Trust • Perceived need
• Scholarships/grants
• Religious affiliation • Family legacy • Prioritization
• Academic major • Recognition
• Residence • Gratitude
• Placement
• Student loan balance
• Social experience

19. Sample Characteristics
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.

20. Segmentation Alternatives
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.
Do they donate
Does he donate
because they
because he is a
are married?
man?
Does she donate
because she is
over 65?
Does he donate
because he majored
in History?

21. Segmentation Alternatives
A Priori Segmentation
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.
= Alumnus with gratitude to the college
= Alumnus who wants peer recognition
= Alumnus who enjoys donor privileges Males
Alumni
Alumni with Segments
different motivations Females
are mixed within
segments defined by
gender.

22. Segmentation Alternatives
Post Hoc 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.
Gratitude
= Male = Female
Males and females Hypothetical
are mixed within Alumni
Recognition
segments sharing Segments
the same
motivations.
Privileges

23. Segmentation Alternatives
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.
College Different
Fundraising Messages
Gratitude
Program
Hypothetical
We’ll put your name on a brick! Recognition Alumni
Segments
Privileges

24. Segment Profiles
Three College Alumni Donor Segments
Segment
Size
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.

28. 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.

29. 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)

30. A First Glance
SEGMENT PROFILES

31. Segment Profiles
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.
Average Annual College Donations 2006 – 2010
(among alumni who donated)
$400
$354
$350
$300
$250
Mean
$197
$200
$150
$100
$45
$50
$-
Champions Friends Acquaintances
Sample Size = 708 Note: Alumni who only donated in 2011 are excluded in order to provide complete years.

32. Segment Profiles
Total Charitable Giving
Friends 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.
Q56. Please estimate the total dollar amount of your donations to charitable organizations during the past year.
$3,000
$2,750
$2,500
$2,000
$1,603
Mean
$1,500 $1,300
$1,000
$500
$-
Champions Friends Acquaintances
Sample Size = 2050

33. Segment Profiles
A Relationship Goes Both Ways
Champions are more likely to have a
reciprocating relationship with their college in Reciprocating
which they give and receive. Relationship
 Donating to my college is
more important to me
than donating to any
3.5 other charity.
3.1  I feel like I can influence
3.0 policy at my college.
 I enjoy the social
opportunities donating to
2.5
my college provides.
Mean Response
2.0  Financially supporting my
2.0 college is a priority to me.
 I have maintained
1.5 1.4 relationships with faculty
from my college.
 I like having others know I
1.0 contribute to my college.
 My college is one of my
0.5 favorite charities to
support.
0.0
Champions Friends Acquaintances
Sample Size = 2050

34. Segment Profiles
The Benefits of Donating
Champions believe that donating to charities can
advance their careers. Professional
Benefits
• My involvement in
charitable organizations
3.0 may someday lead to
3.0
advancement in my
career.
2.5 • People I met through
charitable giving have
turned out to be helpful
2.0
2.0 in my career.
Mean Response
1.7 • Making new business
contacts is a strong
1.5 benefit from charitable
giving.
• My employer expects me
1.0 to donate time and
money to charities.
• Other people will think
0.5
more highly of me if I
donate my time and
0.0 money to charities.
Champions Friends Acquaintances
Sample Size = 2050

35. Segment Profiles
Life is Good
Friends are very satisfied with their lives.
Research finds that happy people are more
Life Satisfaction
confident, outwardly focused, and willing to help
• I am very satisfied with
others. my life.
• My life has turned out
5.0 worse than I expected.
4.5 (Reversed)
4.5
4.0
3.5 3.2 3.2
Mean Response
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Champions Friends Acquaintances
Sample Size = 2050

36. College Donation Behavior
• Largest average donation • Frequent donor • Very small percentage
• Most frequent donor • Much smaller average have ever donated to the
• Motivated by external donation than Champions college
reinforcement such as • Internally rather than • Contacted as frequently
recognition, gifts, and externally motivated to as other segments for
privileges donate college donation requests
• Also intrinsically • Motivated to help college • Very unlikely to be
motivated to give solve important human influenced by any college
• College not in will and problems fundraising campaign
have no plans to include • College not in will and • College not in will and
their college in their will have no plans to include have no plans to include
their college in their will their college in their will
Champions Friends Acquaintances
Key Take-Aways…
Donation Behavior

37. Charitable Giving
• Value external • By far the largest donors • Donate the same percent
reinforcements for giving to non-college charities in of income to charities as
such as professional dollars and percent of Champions
networking , public income • Do not value external
recognition and tax • Much more passionate rewards for donating
benefits about human welfare • Internally motivated to
• Feel good when donating charities than they are donate to charities
to charities toward their college
• Religious beliefs often • Internally motivated to
contribute to donating improve the world
behavior • Religious beliefs often
contribute to donating
behavior
Champions Friends Acquaintances
Key Take-Aways…
Charitable Donations

38. Demographics
• The only segment with a • Female majority • Lowest income
male majority • Highest income • Least likely to hold a
• Youngest segment • Oldest graduate degree
• Most likely to be • Most likely to be married • Most likely to be agnostic
employed full-time • Most likely to be retired or atheist
• Second highest annual
income
• Most ethnically diverse
Champions Friends Acquaintances
Key Take-Aways…
Demographics

39. Targeting and Messaging
DISCUSSION

40. 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.

41. Champions are the most
important segment for colleges
Targeting Priorities 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.

42. Friends are the second most important target
for colleges.
Targeting Priorities – 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.

43. 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.

44. Messaging
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.

45. 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.

46. Messaging
Acquaintances
– No comments are
provided since
Acquaintances are
unlikely to respond to
fundraising requests
regardless of the
messages being
used.