Rethinking Conventional Capital Campaigns?

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1 Rethinking Conventional Capital Campaigns? Darrow Zeidenstein, Vice President for Development and Alumni Relations Rice University CASE Webinar February 20, 2014 Take that, Stanford! 1

2 The Campaign Arms Race: One (Bad) Measurement of Campaigns $7,000,000,000 $6,000,000,000 $5,000,000,000 $4,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 $0 Harvard (goal) Stanford (actual) Columbia (actual) Cornell (actual) Yale (actual) Duke (goal) The Campaign Arms Race: Poll #1 Check the statement you agree with the most: The fundraising campaign arms race is, at best, silly and, at worst, harmful to our profession The fundraising campaign arms race is good for our profession because it challenges us to work harder, smarter, and bolder Both of these statements are partially correct Neither of these statements is correct 2

3 Digression I: The Mismeasure of Man (or a Man?) Percentage of Homo neanderthalensis Genes 4.00% 3.00% 2.00% 1.00% 0.00% Average Male Darrow The Measure of a Campaign: Three Degrees of Freedom Length of campaign Amount raised Counting rules 3

4 The Measure of a Campaign: Normalized Arms Race Institution Goal Operating Budget Years in Campaign Amount Raised Average Percent of Budget Raised Per Campaign Year Brown University $1,400,000,000 $618,989,000 8 $1,614,126,172 33% University of Virginia $3,000,000,000 $991,696, $3,022,000,000 30% Rice University $1,000,000,000 $491,096,000 8 $1,100,000,000 28% University of Notre Dame $1,500,000,000 $942,991,621 8 $2,014,742,463 27% Stanford University $4,300,000,000 $2,976,717,000 8 $6,200,000,000 26% Princeton University $1,750,000,000 $1,018,919,000 8 $1,880,000,000 23% Boston College $1,500,000,000 $502,753, $1,000,000,000 23% Brandeis University* $1,000,000,000 $294,261, $945,000,000 23% Harvard $6,500,000,000 $3,563,332,000 8 $2,800,000,000 23% Dartmouth College $1,300,000,000 $824,548,000 8 $1,308,000,000 20% Yale University $3,500,000,000 $2,499,875,000 8 $3,881,000,000 19% University of Pennsylvania $3,500,000,000 $2,524,202,000 9 $4,302,890,707 19% Oklahoma State University $1,000,000,000 $696,243,900 8 $1,000,724,453 18% University of California Berkeley $3,000,000,000 $1,840,756,000 9 $2,800,000,000 17% University of Texas at Austin $3,000,000,000 $2,003,647,814 9 $2,080,000,000 17% Tufts University $1,200,000,000 $728,648, $1,212,084,908 17% University of Louisville $1,000,000,000 $752,501,000 8 $823,110,381 17% Columbia University (anticipated close #) $5,000,000,000 $3,631,406, $6,000,000,000 17% Syracuse University $1,000,000,000 $892,010,032 8 $1,044,352,779 15% Emory University $1,600,000,000 $1,600,000,000 8 $1,690,000,000 13% Georgetown University $1,500,000,000 $1,053,832, $1,030,000,000 13% University of Cincinnati $1,000,000,000 $916,677,345 9 $1,041,748,571 13% Vanderbilt University $1,750,000,000 $1,190,887, $1,936,000,000 13% The Measure of a Campaign: Even Better The relationship between the wealth of a donor pool and the realized goal of the campaign speaks to relative mind share. 4

5 Digression II: Is Good Efficiency or Effectiveness? Efficiency is doing things right; effectiveness is doing the right things. --Peter Drucker Three Ways to Look at Effectiveness Did the gifts make a real difference? Did the donors believe their gifts made a difference? Did the campaign as a whole make a difference? 5

6 Campaign Giving and Criticality: Poll #2 What percentage of gifts during your current or recently completed campaign would you describe as mission critical? 100% 75% 50% 25% or less The Criticality of Gifts Must assume all gifts are not equal Development could work with president and/or board to create categories and assign weights Hierarchy of Gifts-illustration of a simple index Unrestricted gifts- 3x Restricted but fungible gifts- 2x Restricted gifts for strategic priorities ( critical path priorities )- x All other gifts-.5x 6

7 Gift Criticality: An Illustration Same institution, two campaigns Campaign B took place several years after Campaign A Campaign A = 1225 Campaign B = 1550 Result = 21% in effectiveness Do Donors Believe Gifts Make a Difference? Cornerstone of donor-centric philosophy of our profession Pragmatic point-of-view: Research: donors want to make a difference Impact: donors will give again and more if their gifts make a difference 7

8 Donor Belief: Using Net Promoter Score (NPS) NPS developed by Fred Reichheld at Bain & Co. Survey methodology Would you recommend to your best friend that she/he make a gift to X? Answers range 0 through 10 Scores of 9 or 10 are promoters Scores of 0-6 are detractors Scores of 7 or 8 are passives Score NPS Campaign Effectiveness Illustration N Illustrative NPS Survey Results Detractor 36% Passives 14% NPS = 14 Promoter 50% 8

9 Sample NPS Scores Company NPS Amazon.com 76 Costco 71 USAA 83 Trader Joe s 73 Did the Campaign Make a Difference? Campaigns are tremendously expensive and all-consuming How do we know it was worth the effort? Two approaches seemingly at odds It comes down to the faculty Culture of Philanthropy 9

10 The Campaign Difference: The Faculty NPS Metric Would your recommend to your President and Board to launch another campaign? "Joyful" Campaign "Joyless" Campaign Detractor 25% Promoter 33% Promoter 75% Detractor 67% Won the home front Faculty will engage in future efforts Mature Culture of Philanthropy Lost the home front Faculty cynicism Immature Culture of Philanthropy The Campaign Difference: Culture of Philanthropy 10

11 Effectiveness Measurement: Summary Donors: Promoters vs. Detractors Faculty: "Joyful" Campaign Detractor 40% Promoter 60% Detractor 25% Promoter 75% Poll #3: Who is Harder to Please? Select the answer you agree with the most: Raising the NPS for donors is more challenging Raising the NPS for faculty is more challenging They are both equally challenging 11

12 Part Two: DOES THE COMPREHENSIVE CAMPAIGN NEED REMODELING? What is the Impetus for Campaigns? Establish leadership identity for president, board chair, other major players Drive implementation of an institution s strategy plan Create coherence in priorities Arms race with competitors: physical plant, star faculty, athletic facilities, and so forth 12

13 Issues with Comprehensive Campaigns The gap between campaigns is about 1-2 years New presidents assume they must launch a campaign within 2 years of arriving Board nominations are driven by philanthropic potential Dollar goals drive and at times conflict with real priorities/institutional strategies Alumni relations and annual giving are in decline Expensive in a time when stakeholders are questioning the growth of administration Is it time to call timeout? Not so fast, VPs across the country believe that campaigns are still the best way to Bring our constituents into closer alignment with the university s goals (77%) Drive institutional investment into Advancement to build sophistication and expand capacity to grow revenues (89%) Coalesce all parts of the institution around the highest level themes and priorities (83%) Compel donors to their largest philanthropic commitments (65%) 13

14 But there are growing concerns Goal pressure results in accepting unacceptable gifts (47% agree) Inward obsession with campaign trappings (47%) Donor fatigue (36%) Campaigns are too long Comprehensive campaigns are not nimble Reframing the Question The comprehensive campaign model is not inherently good or bad The issue is: Is it an efficient andeffective way to achieve our broader, institutional strategies? We shouldn t default into a comprehensive campaign mode END THE HERD MENTALITY Strategy should be the starting point 14

15 Back to Campaigns: The Campaign Model in Context Institutional Strategy Vision, mission and positioning Competitive pressures Operational Readiness Maturity and capacity of advancement operation Breadth and depth of prospect pool Leadership buy in of development operation Campaign Model Fits with the institutional strategy Is optimal given opportunities and constraints Question: Why is there only the conventional comprehensive campaign? BROAD MOBILIZATION TARGETED MOBILIZATION Linking Institutional Strategy to Fundraising Models PARTICIPATION DRIVE Law School Campaign FOCUSED Opera CAMPAIGN Building Stanford Campaign for Undergrad Education COMPREHENSIVE CAMPAIGN Area of Innovation MD Anderson Moon MARKETING CAMPAIGN Shots TARGETED POSITIONING BROAD POSITIONING 15

16 Context At Rice: In Post-Campaign Just finished successful centennial campaign Some donor fatigue No new major strategic planning underway enhancements to plan from However, must maintain momentum At Rice: Post-campaign Strategy Broad Stakeholder Engagement Targeted Stakeholder Engagement Initiative for Rice Students Energy Scholarships/Fellowships Programs & Facilities Biomedical/Texas Medical Center Leadership Entrepreneurship Learning and Doing Arts Centrally managed, aimed at alumni/parents Broad marketing-communication strategy Goals may be outcomes and not dollars (like MD Anderson Moon Shots effort) Project-based management More than fundraising Engage limited, specific prospects 16

17 BROAD MOBILIZATION Linking Institutional Strategy to Fundraising Models PARTICIPATION DRIVE Initiative for Rice Students COMPREHENSIVE CAMPAIGN Area of Innovation TARGETED MOBILIZATION Arts FOCUSED Initiative CAMPAIGN Energy Biomedical MARKETING CAMPAIGN TARGETED POSITIONING BROAD POSITIONING Key Points in Summary Fundraising goals are symbolic and arbitrary but do they have to be so hopelessly arbitrary? There is a difference between efficiency and effectiveness our profession needs to develop better metrics for both! News flash: It is possible to create fundraising urgency and impact without the comprehensive campaign! 17

18 Thank you for your time and participation! 18