The Complete Guide to University Fundraising in 2023/2024
The Complete Guide to University Fundraising in 2023/2024
American colleges and universities rely on more than tuition to fund their fiscal requirements. The US has three types of postsecondary educational institutions: public, private nonprofits, and private for-profits. Most private and public institutions of higher learning rely on a combination of state or federal funding, tuition, and fundraising efforts to support their operations.
Universities involved with research have federal funding initiatives supporting laboratory expenses, faculty salaries, and other indirect costs. These funding programs assist with bolstering the university's global brand as a leading research institution.
However, the most significant difference between how American tertiary institutions operate compared to the rest of the world is regarding private philanthropy from private foundations and individuals, giving institutions more opportunities to broaden their scope of fundraising strategies and activities.
This guide looks at how university fundraising strategies can drive innovation, create research opportunities, and make higher education accessible for Americans who rely on financial support or a grant for their schooling.
We'll examine the origins of university advancement in US institutions, and the strategies and tactics colleges use in fundraising drives. We'll unpack how institutions attract donors and secure major gifts and donations in the private and public sectors to secure campaign success.
History of University Fundraising
Private philanthropy has long been the driver of fundraising success for private nonprofit universities and colleges in the United States. Many leading research universities were founded through financial contributions from wealthy private donors.
One excellent example of this phenomenon is railroad baron Leland Stanford. Leland and his wife founded Stanford University in 1885 to commemorate the life of his late son.
In 1876, Johns Hopkins dedicated a portion of his wealth to founding his university. It was the largest philanthropic donation in the education space at the time.
In 1880, wealthy individuals from the business community funded the founding of the University of Southern California with charitable giving.
During the nineteenth century, it was common for religious groups to make donations to educational institutions, but this practice waned in the 20th century, replaced largely by corporate contributions.
Over the last four decades, private philanthropy has significantly impacted higher education fundraising initiatives at private and public universities and colleges in the United States. Before then, the trend was that educational institutions didn't need any support from private philanthropy.
Pennsylvania State University was the first American institution to launch a fundraising campaign targeting private donors in 1980. The campaign successfully raised $300 million in capital for PSU.
During the 80s and 90s, there was discussion on the merit and benefit of private philanthropy for educational institutions. However, this discussion is no longer relevant in 2023 due to the shrinking support from federal funding resources.
Private philanthropic funding and support for private and public universities are commonplace today. The largest public university endowments belong to the University of Texas System, the University of Michigan, and the University of California, with endowments ranging in the tens of billions.
The leading private universities are Harvard and MIT, with massive endowments in excess of $50 billion. The private-sector philanthropy toward universities is the second largest in the country, only exceeded by fundraising drives for charitable causes.
In 2020, private donations to educational institutions in the United States were 15% of total countrywide giving across all sectors at $71.34 billion.
Types of University Fundraising
Private and public universities use similar strategies for donation campaigns. Most target the following prospects for donations, depending on the nature of the campaign and the funding goal.
Alums are the biggest support base for any educational institution. Private donations fund community spaces, educational opportunities like grants and scholarships, student activities and facilities, and much more. These individuals understand the impact universities and colleges have on American society.
A college fundraiser collects donations which are vital for developing the next generation of leaders and adults in communities throughout America. The generosity of alums and private donors helps institutions realize their fundraising goals for programs and resources.
Brands are willing to sponsor universities and colleges for the right to advertise on campus and promote their brand during events. For instance, college sports present ripe marketing opportunities for brands, so it's not surprising to see billions in inflows to institutions from some of the biggest brands in the world.
Some examples of the biggest brand sponsorships include major donors like Coca-Cola, with 128 deals, encompassing universities like Notre Dame, Ohio State, Clemson, UCLA, University of Texas, and the University of Kentucky.
Nike also significantly invests in college sponsorship programs, with 120 deals featuring partner university’s like Duke, Ohio State, University of Oregon, University of Georgia, and the University of Texas.
Grants and Scholarships
Grants and scholarships can come from private, corporate, state, or federal donors. Grants and scholarships from colleges are funds provided by the institution. Private scholarships are awarded by individuals or organizations outside of the institution.
The university and college development office can source private donations from single or multiple donors. They can also come from pooled funds from nonprofits or for-profits.
Fundraising Events and Campaigns
The most common social strategy to raise funds is through a "capital campaign." This involves a targeted challenge to reach a specific funding goal by a specified date to achieve a goal that benefits a university’s goals and fundraising directives.
All universities engage in capital campaigns. University and college fundraising campaigns are common and effective institutional advancement strategies. These campaigns involve the students and faculty working together to raise funds for new technology, developmental projects, and activities.
Strategies for Effective University Fundraising
Universities and colleges have several strategies and tactics available to help them enhance their fundraising results.
Build strong alumni networks
Developing relationships with successful alumni enjoyment through clubs and social events allows universities to expand their support base of annual donors. Typically, alumni donations occur annually, once during the spring.
However, most universities now use a year-round fundraising strategy to gather financial support throughout all semesters. By farming and growing the alumni contribution base throughout the year, universities and colleges increase financial inflows for initiatives and projects.
Leveraging social media and digital platforms
Universities are moving into the digital space to attract attention for capital campaigns by leveraging social media and digital tools. Institutions can launch campaigns with extensive reach and manage them using automated systems to track donations and target private donors and corporations.
Hosting impactful fundraising events
The success of a university’s campaign must lean on the following tactics to leverage the power of technology in capital campaigns.
- Organize a sales drive or eCommerce store to sell university merch.
- Plan a fundraising event or activity.
- Run an online raffle or auction.
- Crowdfunding through peer-to-peer (P2P) campaigns.
- Collect online donations with Fund-a-Need campaigns.
These ideas can involve students and faculty utilizing university resources to mitigate costs. Institutions can build credibility and camaraderie with the local community by rallying the local community on a giving day or in fundraising campaigns.
Collaborating with corporations and businesses
We've discussed how the largest brands in the world are willing to jump into sponsorship deals with universities. However, those institutions, particularly public colleges, don't have the reputation internationally to attract these brands.
Instead, these institutions can collaborate with local businesses and corporations for sponsorship deals at sporting events or other campus activities. It's possible to start long-term supportive relationships with these companies and companies, bringing a steady flow of annual funding.
Challenges in University Fundraising
Universities encounter fundraising challenges with campaigns due to specific factors. A university’s fundraising team has no control over these external threats to their fundraising efforts.
Economic downturns and their impact
Donations from private donors, corporations, and brands all weigh heavily on the health of the American economy. Donations peaked during periods of loose monetary policy over the last two decades.
However, with waning growth and rising inflation, the recent dire economic outlook for the American economy means donors are tightening their budgets, limiting financial inflows into university capital campaigns.
Changing donor priorities
As the economy shifts from expansion to contraction, donors shift their priorities to other business interests and projects that earn them a return. While donations can provide tax breaks, private donors, especially wealthy business leaders and investors, are more likely to apply their capital to other investments where they can protect their return and growth.
Donors may also engage in other nonprofit campaigns with other organizations, diverting funds from their other responsibilities, like a university’s donations. They might be chasing other philanthropic interests and no longer have enough capital to dedicate to their university funding commitments.
Regulatory and compliance issues
Red tape from state and federal laws may interfere with fundraising efforts or change the donor landscape. Legislation and industry compliance can be cumbersome to deal with, but it's essential to ensure optimal transparency in fundraising campaigns and the allocation and spending of the capital raised.
Compliance issues may put the brakes on fundraising campaigns. That's why it's essential for universities to understand local regulations and use compliance officers when building and managing campaign planning, execution, and progress.
Case Studies: Successful University Fundraising Campaigns
One of the most successful capital campaigns was launched in September 1995 at The University of Massachusetts, Boston. Chancellor Sherry Penney authorized $1.2 million for a significant fundraising drive and hired senior fundraising expert Michael Luck as Vice Chancellor for Development as stewardship for the campaign.
Over thirteen months, Luck raised $10 million of the $50 million funding goal. He formally announced the campaign at the John F. Kennedy Library, with the campus undergoing a significant change.
Luck hired staff, created and implemented procedures and policies, and laid the infrastructure for the campaign. He designed a newsletter to inform donors of campaign progress and improve communications between the university and its donor base.
He also created the speaker's bureau for faculty to make presentations, an advisory board, an alumni magazine and directory, campaign film, and promotional literature while scheduling leadership meetings with the academic community.
Luck organized alumni clubs in several cities, upgrading all giving societies before starting his prospecting research on possible donors. The $50 million goal for the fundraising campaign was calculated with the assistance of administrative staff and key faculty, with $15 million earmarked for faculty maintenance, $13 million to ensure access, and $12 million to bolster research and teaching.
$10 million of the goal was allocated to enhance the campus environment and improve students' educational experience. Initiatives included founding an art fund, modernizing, and upgrading facilities, and constructing a new campus center.
The university’s campaign cabinet included community members, faculty, and administrative staff. Luck also hired consultants to manage fundraising systems and assist in designing and developing a case statement and film.
Instead of targeting wealthy donors alone, the campaign focused on targeting prospects with a vested interest in seeing the university prosper. The campaign's primary goal was to build an endowment rather than raise cash for operating expenses.
In October 1996, 350 prospects were invited to a fundraising dinner at the Kennedy Library. Luck announced his campaign had raised $10 million to date (20% of the goal), intending to reach the funding goal of $50 million within the next five years, which the team achieved.
The Role of Technology in University Fundraising
Technology is changing how universities plan and execute capital campaigns for fundraising purposes. These tools and platforms offer universities more reach with their campaigns and specific targeting of prospects in particular sectors and demographics while managing their marketing budget.
Digital platforms and their impact
The impact of digital marketing platforms like Instagram, Facebook, and YouTube offers a technologically advanced fundraising platform with options to design and launch a giving page, donation form, and more.
It allows universities to connect with their supporter base and run giving pages and ad campaigns for their fundraising initiatives. Social media platforms provide the ideal space for rallying support and informing the community on campaign progress to drum up interest and excitement.
Data analytics and donor targeting
Platforms like Facebook and Google ads allow for comprehensive tracking of traffic visiting digital platforms and offers. This data is invaluable to campaign success, allowing managers to identify prospects and custom audiences and retargeting opportunities for social advertising campaigns.
Online fundraising tools and software
Fundraising campaigns can leverage several bespoke fundraising software tools to improve performance and results. A fundraising and volunteer platform can benefit the campaign through organizing strategies and tactics.
Collaboration tools can keep the fundraising team on track with their campaign progress and the tasks required to move things forward. These tools feature custom giving forms, education in peer-to-peer fundraising, and volunteer management.
Ethical Considerations in University Fundraising
Fundraising can involve capital campaigns with targets in the millions of dollars. Since money corrupts power in all industries and occupations, campaign managers must adhere to a fundraising ethics code.
Here are the five core values all fundraising campaigns and teams must adhere to to ensure a successful outcome
Fundraisers must act honestly to secure the community's trust and the institution's donor base. The fundraiser must not mislead donors or present inaccuracies to modify campaign results in their favor.
Fundraisers must act in the public trust, disclosing potential or actual conflicts of interest in capital campaigns and avoiding professional or personal misconduct.
Fundraisers must act with dignity towards their profession and the institution. The fundraiser must also show respect for beneficiaries and donors to ensure proper relations.
Fundraisers must project accurate forecasts and provide clear reporting on fundraising initiatives and the allocation of capital raised through fundraising initiatives and capital campaigns. There must be a full accounting of management and disbursement of donations, operational costs, and related expenses to the fundraising campaign.
Ethical dilemmas and their resolution
Fundraising departments must have protocols in place to handle disputes and ethical dilemmas with fundraising teams and managers. The goal is to provide a platform for accountability and communication combined with a transparent approach to reporting to limit the chance of ethical issues coming into view.
Future Trends in University Fundraising
The digital fundraising landscape for universities continues to change, bringing new strategies and methods for reaching their donor base.
The rise of crowdfunding platforms
Crowdfunding offers universities a fundraising platform to collect donations year-round instead of relying on the conventional model of legacy giving through annual donation collections. These fundraising platforms provide a steady flow of funding from peer-to-peer sources, with no intermediary in the transaction.
One of the most successful university crowdfunding models is Ohio State's "Buckeye Funder" platform, with donors funding it to the tune of $1.7 million and funds originating from the OSU community.
The innovations on the platform include opportunities for donors to create fundraising campaigns to show support for OSU and its fundraising initiatives.
Virtual and hybrid fundraising events
Fundraising events don't have to have geographical limitations. The rise of high-bandwidth streaming solutions allows fundraisers to leverage online platforms for virtual events alongside activities at physical locations.
For instance, screening a raffle at a fundraising dinner increases the engagement of benefactors who can't attend the dinner, but are willing to participate through digital channels, giving them more opportunity to achieve fundraising goals.
The increasing role of artificial intelligence and machine learning
2023 saw the introduction of AI systems to the general public. Marketers are furiously integrating these tools into fundraising campaigns to improve results. AI and machine learning systems allow fundraising initiatives to leverage data and intelligent marketing systems to capture more donations.
Some examples of how AI and machine learning can benefit donor engagement with capital campaigns include the following.
- Email campaigns that learn and deliver.
- Receive donor suggestions and key data directly to your email inbox.
- Create AI-powered email drafts and personalize them for increased donor recognition.
- Sync donors' data and activities to CRM systems and workflows.
AI and CRM systems can dramatically improve donor relations and communications, fully automating the process. Capture leads, send out automated communications, and capture more donations with systems designed to get more out of your fundraising opportunities and campaign management.
The Complete Guide to University Fundraising – FAQs
Q: What is the primary purpose of university fundraising?
A: Universities run capital campaigns to raise awareness of fundraising goals with donors and the community. Fundraising from private individuals, alumni, and corporate sponsors bridges the gaps in federal and state funding for university advancement projects.
Fundraising initiatives can take many forms, with several strategies available to attract donations. From digital platforms and crowdfunding to traditional rallies and dinners, there are plenty of options for campaign managers to consider when formulating their fundraising plan.
Q: How do universities approach potential donors?
A: 50 years ago, fundraisers would ask wealthy alumni and community members for donations via direct request. However, that strategy doesn't work in the modern era of fundraising. Some individuals might cut the university a check from direct outreach campaigns, but it's becoming less commonplace for campaign managers to use this approach.
Typically, direct fundraising requests are for individuals, not institutions. For instance, the donor might contribute to the dean, knowing they will be a good steward of the donation. Gaining donors' trust requires personalized campaigns and may require several interactions with the donor before they commit to a donation.
Q: What are the most common fundraising methods used by universities?
A: Universities use various strategies and tactics to support fundraising initiatives like research projects, scholarships, tech upgrades, and more.
Universities rely on constantly communicating with donors to build rapport and trust. Relationship building is a critical component of maintaining the donor base. Hosting alumni events to rally support for fundraising initiatives, get community and private funding support, and update the community via a newsletter on current fundraising ideas keeps everyone informed of progress.
Q: How do universities ensure transparency in their fundraising efforts?
A: Universities ensure transparency with donors through annual public reports on all accounting for the fundraising initiative. Universities can publish a newsletter updating alumni and donors on progress and current fundraising opportunities.
Q: What role do alumni play in university fundraising?
A: While alumni play a central role in fundraising initiatives, accounting for a significant number of annual contributions to these institutions, fundraising teams are adjusting their outreach programs to prospective donors to accommodate private donors who potentially have an interest in one specific aspect of the university.
For instance, football supporters who have an affection for the university's team may not have graduated. Still, they appreciate the team and are willing to donate to the school's football program to see it succeed.
Fundraising is a critical component of any university or college's financial prosperity. Fundraising is essential to find capital for programs and initiatives not qualifying for government funding.
These programs and initiatives can include renovating or constructing facilities, hiring faculty, providing financial aid and scholarships to students, and funding research teams and projects.
Fundraising campaigns also strengthen donor relationships, leading to future opportunities for gifts and donations.
Universities' fundraising initiatives are critical to improving and maintaining research and academic excellence, providing students with the best education available.
Universities need to maintain ongoing fundraising efforts to find support for their growth and innovation using assets at their disposal.