Even before the pandemic brutalized their finances and undercut their fundraising efforts, many colleges and universities were struggling to raise money. This spring, the Chicago-based Leadership Story Lab published a study of current fundraising practices in higher education. It pinpointed some fundamental strategic errors in how most institutions engage with their donors.
That study’s conclusions resonate with our own decades-long experience as fundraisers, donors, and entrepreneurs.
It’s crystal clear to us that to survive and thrive colleges and universities must apply Entrepreneurial Thinking to their fundraising strategies.
Many of them have introduced entrepreneurship into their curricula. Now they must embrace it in their approach to raising money.
Entrepreneurship begins with this question: “What does my potential customer want?”
Developing a relationship with prospective donors should start with the question, “What does the donor want to accomplish?”
Unfortunately, it is far more common for fundraisers to begin by focusing on what the institution feels it needs. Changing this framing from “our needs” to “their goals” is a transformative shift in mindset — one that, our experience tells us, will both attract new donors and increase giving by current supporters.
How to accomplish this transformative change in perspective?
Fundraisers — notably including the Deans and Presidents who are engaging with the most significant donors — must be ready to provide compelling answers to four questions.
First: “Is the institution doing important work?” The answer must begin with an understanding of what a prospective donor considers important and what they want to accomplish through their philanthropy. With this understanding, the fundraiser can focus on work that the prospect finds motivating. And — this is important — present an opportunity for impact, for helping them achieve their philanthropic goals.
Second: “Is the institution well run?” An entrepreneur makes best use of every dollar, and fundraisers must be prepared to demonstrate that a donor’s gift will be used efficiently. Even before the pandemic, many donors were concerned about the value proposition for higher education. They are expecting financial transparency, so that they can feel confident that their gift’s impact will not be diminished because the program it supports is poorly managed.
Third: “Will my gift make a difference?” The answer to that question does not necessarily depend on the gift’s size or the institution’s reputation. As with the Importance question, it depends on the overall context and on what the donor seeks to accomplish. Being able to answer the Difference question with “Yes, and here’s why…” requires an investment of thought, creativity, and planning. Too few higher education fundraisers are making that intellectual investment in their donor relationships.
Fourth: “Will I derive satisfaction from supporting this organization?” This is a particularly personal question and the fundraiser needs to give an authentic answer, based on their knowledge of the prospect. But it can’t stop there: After the gift has been made, institutions must return and explicitly ask, “Have you been deriving satisfaction from your support?” We often think we are doing so by sending stewardship reports and having keep-in-touch conversations. Too often, however, the question is never truly asked or answered. And the opportunity for strengthening our understanding of the donor’s perspective is lost.
If it was not already clear before COVID-19, it is evident now that colleges and universities cannot stick with the old paradigm for interacting with their significant donors.
We must change our mindset, adopting a more entrepreneurial perspective: Starting by asking if we really understand our donors’ hearts and minds and goals.
How are you and your institution using Entrepreneurial Thinking concepts for fundraising?
We’d like to hear about it.