It’s no secret the old unrestricted annual fund hasn’t fared well in recent years. Unrestricted revenue has barely held steady in the past decade—in fact, after factoring in inflation, it’s declined—all while donor-designated giving has surged.
These trends come as no surprise to my EAB colleagues and me. Much of our research has focused on how today's donors seek impact when they give. Donors now want to know what their gifts do on campus and they want to be involved in making those gift-use decisions by restricting their gifts. Few give based on loyalty alone.
What's surprising is how profoundly these trends have been influenced by developments elsewhere in the economy. In nearly every transaction, people are expecting control and customization. One-size-fits-all no longer fits anyone.
The internet has increased consumer choice
This phenomenon first came to the public’s attention thanks to the pioneering work of Chris Anderson, Wired magazine’s former editor-in-chief. His 2004 article on what he called the economy's "long tail" argued that consumers have always desired products that fit with their highly individualized interests, but they never used to have access to them. Movie theaters only had so many screens, bookstores so many shelves. With their choices constrained, they opted for common-denominator offering.
The internet changed all that. The economics of the web made it possible for organizations to stock millions of products for as long as they needed before someone bought them. And when you give people limitless choice, they take advantage of it. As Anderson pointed out, Amazon makes more revenue from books beyond its top 130,000 best-sellers than within it—while the average Barnes and Nobles is limited to just those top titles.
What the long tail phenomenon means for giving
What does this have to do with giving? A lot, if you look at today's donors’ expectations. Just as it did with books, movies, music, and more, the internet has made it so anyone can connect with any of the millions of nonprofits operating around the world. At the same time, it’s easier for those organizations to market themselves to donors.
With so much choice, donors want to find the perfect organization for themselves. No two individuals’ passions are identical and the long tail of giving means everyone can find something that feels tailor-made to their philanthropic interests.
When it comes to higher ed fundraising, the long tail brings both good news and bad news. The good news is every single college or university is home to thousands of distinct causes, projects, initiatives, and more. There’s undoubtedly something for every one of your constituents. Those colleges and universities who connect their constituents with causes that matter to them can win supporters for life.
The bad news is, historically, advancement hasn’t been great at marketing all of those causes. Many live behind burdensome drop-down menus three clicks into a giving page, which means these designations can’t do any of the heavily lifting required to convince non-donors to give.
"People now expect personalization from their alma mater. They expect us to keep track of their interactions and preferences, and tailor our offerings to meet their needs. It’s not just about changing how we talk to people. We have to create more customized offerings to begin with."
-Jennifer Campbell, Associate Vice President, College Relations and Communications, Ithaca College
While crowdfunding has helped make some progress to win over today's selective donors, we’re still far short of the goal line. My colleagues and I are currently sharing research with chief advancement officers on how best-practice colleges and universities are meeting these expectations for personalization.