Characteristics and institutional factors related to young alumni donors and non-donors

Throughout the history of American higher education, colleges and universities have continually searched for ways to raise money from alumni donors. Many institutions rely on alumni donations for a sizeable portion of the overall budget and to keep the expenses down for current students. Some institutions go to great expense in soliciting alumni of all ages, but what makes recent college graduates decide to start making financial contributions in the first place? What is it about the institution or an individual's experience while being a student that causes an alumnus to become either a donor or non-donor? With many colleges and universities experiencing financial difficulties due to declines of the government appropriations and the overall economic climate, questions regarding how to effectively solicit new donors are being asked by advancement offices across the country.

Charitable contributions to colleges and universities in the United States grew by 6.2 percent in 2008, reaching a record high of $31.6 billion (Council for Aid to Education, 2009). Although many groups including foundations, corporations and other organizations contributed to these institutions, a college or university's alumni base still remains the largest group of contributors, which again saw an increase over past years. However, even with the amount of money that alumni are giving continues to increase, the actual number of alumni who contribute is steadily declining. In 2008, institutions reported an 11 percent decline in overall alumni participation over the past year. A large portion of this decline may be attributed to the lack of support from an institution's recent graduates, also referred to as young alumni.

Research into alumni giving has focused on different factors that may increase an individual's willingness and ability to donate back to their alma mater. Factors such as age (Lindahl and Winship, 1992; Bruggink and Siddiqui, 1995; Weerts and Ronca, 2007) and income level (Bruggink and Siddiqui, 1995; Taylor and Martin, 1995; Clotfelter, 2003) have been found to increase the likelihood of an alumnus making a gift. Other more abstract variables including satisfaction with one's institution (Tom and Elmer, 1994; Clotfelter, 2003; Gaier, 2005) and still being involved in institutional activities (Lindahl and Winship, 1992; Bruggink and Siddiqui, 1995; Taylor and Martin, 1995; Gaier, 2005; Weerts and Ronca, 2007) have also been found to increase the likelihood of making a donation. With this type of data available, college and university development officers are able to customize their solicitation efforts in ways that will maximize the amounts they receive from alumni donors.

Some research conducted on alumni giving has focused specifically on recent graduates also known at some colleges and universities as young alumni. Although the criteria for who is considered a young alumnus varies between institutions, many categorize them as those who have graduated between 10 and 15 years of the present date and fall between the ages of 25 through 35 years. Many studies have found that younger donors typically give less to their alma maters when compared with older generations (Bruggink and Siddiqui, 1995; Willemain et al, 1994; Weerts and Ronca, 2007). Those who do give make modest donations usually less than $200 in a given year (Monks, 2003). Even if the gifts of this generation are smaller than others, cultivating young alumni should still be a priority of university development offices especially since it has been found that past giving is the strongest single factor in predicting future giving (Lindahl and Winship, 1992). The purpose of this study is to build upon the previous research covering the giving behaviors of recent graduates specifically what student characteristics and institutional factors may exist that cause young alumni to be either donors or non-donors.

Relevant literature on alumni giving to colleges and universities has identified many variables that positively affect a person's willingness to make financial contributions. Several studies have found that the age of an alumnus has an effect on giving rates. Bruggink and Siddiqui (1995) found that for every 1-year increase in a donor's age increases their gifts to the institution by 5 percent. Although these results were taken from a survey of private college alumni, similar results were found by Weerts and Ronca (2007) at an extensive research university. Their study found that for each unit increase in age, alumni were more likely to be financial contributors.

Beyond age, other factors have been found to be positively correlated to alumni giving. One factor that stands out is the relationship between an alumnus’ satisfaction with their undergraduate experience and their willingness to give back to their institution. Clotfelter (2003) found that donations made by alumni were highly correlated to their expressed satisfaction with their own college experience. A similar study by Gaier (2005) at a large public university also found that there were significant increases in alumni giving based on the degree of alumni satisfaction with the undergraduate academic experience. A possible explanation for this could be that donors to colleges and universities typically have derived great benefits from their education and are thankful for the experience (Tom and Elmer, 1994; James III, 2008).

One area related to undergraduate satisfaction with a college or university, and also related to alumni giving, is the level of interest someone at the institution showed the individual while they were a student. This relationship was first identified in Clotfelter's (2003) study when he noted that those who had a person take interest in him or her during college had twice the odds of reporting that they were very satisfied with their college experience and were related to higher levels of contributions. Gaier (2005) also found this when his results suggested that interpersonal relationships during college were the most significant academic variables associated with alumni participation. These studies suggest that how and to what degree an individual student is engaged during their undergraduate years can affect their donation behaviors many years after graduation.

Other factors have been found to affect alumni giving. Involvement in the institution after graduation has been demonstrated in several studies to positively impact the giving rates of alumni (Lindahl and Winship, 1992; Bruggink and Siddiqui, 1995; Taylor and Martin, 1995; Gaier, 2005; Weerts and Ronca, 2007). The perceived need of financial support for the institution can also impact an alumnus’ intentions on making a gift (Taylor and Martin, 1995; Weerts and Ronca, 2007). Both of these factors suggest that getting alumni involved in institutional activities and expressing financial need may cause them to start donating or continue to donate regularly.

Up until recently, most research conducted on alumni giving to colleges and universities did not consider generational differences in their analysis. Alumni were studied as a whole entity instead of being broken into different categories based on age. Clotfelter (2003) attempted to study the difference between alumni by graduation year but had to omit the youngest group from the analysis due to lack of donor information. Recent studies by Monks (2003), Marr et al (2005) and Laguilles (2008) have highlighted some of the factors that affect the giving behaviors of younger alumni. Many factors including financial aid, student residential status, belonging to student organizations and undergraduate satisfaction have all been found to have effects on an individual's willingness to donate.

Financial aid, and especially student loan debt, has become a major factor in the ability for an alumnus to make donations to a college or university. With the average college student graduating with over $20,000 in debt (Baum and Payea, 2008), it is understandable why the recent graduates are less willing to make gifts compared with older alumni. Marr et al (2005) surveyed over 2,800 college graduates and found that all quantities of need-based loans lower the probability of giving during the first eight years after graduation. Similarly, Monks (2003) found that graduating with $10 000 in debt caused alumni to give 10 percent less compared with those who did not have that financial burden after college. These two studies suggest that student loan debt may be causing college and university alumni to either put off giving back until their financial situations improve or possibly never make gifts to the institution at all.

Not all financial information is negatively related to young alumni giving. In the study mentioned above, Monks (2003) found that alumni who reported receiving financial aid in the forms of scholarships or grants from their institution had average gifts 5 percent higher than those who did not receive the same aid. Also in Marr et al's (2005) study, receiving need-based scholarships and/or grants raise the probability of alumni giving between 5 and 13 percent. Merit-based scholarships also increased the likelihood of an alumnus making a donation to the institution. This suggests that college and universities may see a positive return through future alumni giving by investing in scholarships and grants for both merit and lower income students.

Much like the literature presented above on overall alumni giving, satisfaction with one's experience during their undergraduate years also positively affects young alumni giving. Monks (2003) reported that the most significant determinant of alumni giving levels is the individual's satisfaction with his or her undergraduate experience. In Monk's survey, those alumni who reported that they were ‘very satisfied’ with their undergraduate experience gave over 2.6 times more to their institution. Similar to the results found by Clotfelter (2003) and Gaier (2005), Monks also found that the development of personal relationships while being a student had a positive effect on giving in young alumni. Results from his survey found that alumni who had high levels of contact with faculty outside of class, contact with their major advisor or contact with campus staff made higher average donations compared with those who did not report the same connections.

Other factors have been found to increase the likelihood of a young alumnus making donations to their college or university. A study conducted by Laguilles (2008) found that young alumni who resided in the same state. As the instituting were band members, or reported staying up-to-date with current school news and information are more likely to give. Academic success has also been found to have an impact on young alumni giving rates. Marr et al (2005) found that students who enjoyed academic success donated slightly more often than others who may not have done as well. All of these findings suggest that experiences during college can have an impact on the willingness for this new generation of recent graduates to make financial contributions years after they graduate.

Data for this study come from a survey conducted by the annual giving office of a large public, land-grant university in the Midwest. The population used for this survey consisted of alumni who had graduated from the university between 1997 and 2007 and were under the age of 35 years. The survey was administered online during the spring of 2008 by sending e-mail invitations to all alumni in the selected population who had an e-mail address on file with the university development office.

Overall, 2,273 individuals completed the survey which is equal to an 8.7 percent response rate out of the 26, 088 successfully delivered e-mails. Although the response rate for this survey may seem low compared with other studies, several factors must be taken into consideration. Electronically delivered surveys have been found to yield lower response rates when compared with surveys that were mailed (Shannon and Bradshaw, 2002). Not only is the delivery method used in this survey known to produce lower responses, the giving rates of college and university annual giving offices should also be taken into consideration. While response rates can vary significantly between institutions, a 2 to 5 percent response rate on a large mailing through an annual giving office is considered successful (Worth, 2002). In the case of young alumni at the institution where this survey was administered, during the 2007–2008 fiscal year, only 3.8 percent of alumni under the age of 35 years made a donation to the university. In a practical sense, the response rate received for this survey can be considered an adequate sample of the population used in this study.

The purpose of this study was to examine the results of an institutional survey on young alumni donors and non-donors to determine whether certain student characteristics exist between the two groups. The survey also sought to examine what factors within the university may cause a young alumnus to make financial contributions. The survey assessed many factors including, but not limited to demographics, residential status, financial aid and giving behaviors along with experiential factors such as satisfaction with one's educational experience. It should be noted that this was a non‐experimental study using existing data provided by the institution's annual giving office.

Data for this study were analyzed using two different methods in order to show existing relationships between the assessed variables in the survey and to utilize the survey results as a way in determining the probability of the future giving behaviors in the young alumni population. The first method used in the data analysis displayed select descriptive statistics using cross-tabulation of variables. The survey software used to collect the data was utilized to cross tabulate the question, ‘Have you made a donation to the university’ with several other key questions in the survey. A Chi-Square analysis was employed to test for significant correlations between the cross-tabulated variables.

The second method used for the analysis focused on the participants who indicated that they were non-donors. As mentioned in the data section, only 3 percent of the selected institution's young alumni made donations during the year in which this survey was administered. It seemed appropriate to focus on the respondents who answered that they had not made a gift to the university and were more likely to represent the overall population. To determine the probability of a young alumni not giving, a stepwise maximum likelihood binary regression model was used. This particular model was chosen because of the dichotomous nature of the predictive variable (alum did not donate). Using both the previous literature completed on young alumni, as well as general knowledge of alumni giving, we focused on select variables that addressed institutional experiences and other alumni characteristics. The variables used in the regression model are listed in the Appendix.

The first results depicted in Figure 1 examine the percentage of donors versus non-donors with their year of graduation. As expected, those alumni who graduated in the more recent years gave significantly less than those who graduated at an earlier time. According to these results, over 82 percent of those who graduated in 2007 indicated that they had not made a donation to the university, which is the highest level of non-donors throughout the survey. When looking at the number of donors, the respondents who graduated in 1997 had the highest level of donors. Over 74 percent of that class indicated that they had made a donation to the university.

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Overall, a larger percentage of respondents and a larger percentage of those who had donated to the university also made gifts to other organizations. On all categories, university donors gave more than non-donors to each type of non-profit or charity organization listed on the survey. One interesting result was the amount of university donors versus non-donors who had also made gifts to other college or universities. Out of 231 respondents who made gifts to other colleges or universities, over 86 percent also made gifts to the institution in this survey.

For the regression analysis, the results of the Hosmer and Lemeshow test show that the model adequately fits the data. The corresponding P-value was 0.379, and the null hypothesis failed to reject. The Omnibus tests of model coefficients also shows that the model in Step 4 was better than the model in Step 3. The −2 log-likelihood statistic also confirms that Step 4 is a better fitting model than Step 3.

Table 4 can be used for the interpretation of the different factors that determine whether or not an alumnus will be a donor. Higher scores on all variables decrease the probability of an alumnus not giving or increase the probability of the alumnus giving. This is because the corresponding exp(β) values are less than one; meaning as the value of the variable increases, the probability of not giving decreases. These results show that there is a significant relationship between an alumnus choosing to not donate and their overall experience at the university, their opportunity to choose this university again, whether or not they were an in-state student and whether they have given to other charities.

The purpose of this study was to investigate whether differences in student characteristics and institutional factors cause young alumni to be either donors or non-donors at a large Midwestern university. The results show that many differences do exist between donors and non-donors in many categories including the age of the respondent, whether they were an in-state student, whether they received financial awards and whether they had made donations to other charitable organizations. Regression results show that having a positive experience at the university, being an in-state student, or making gifts to other charities are significant predictors for a young alumnus to make a donation to the university.

The strongest predicting variable related to young alumni donations to this university is those respondents who indicated that they had made gifts to other charities or non-profit organizations. This variable also had the strongest correlation with alumni who made donations to the university. One consistency found in the literature was a study conducted by James III (2008) who found that educational donors gave twice as much to charities as non-educational donors. James’ analysis also found that educational donors gave one-half times more to religious organizations. Although a large number of donors in our survey did make gifts to religious organizations, it was not the largest category that received gifts from this institution's young alumni. Other colleges and universities had the largest percentage of young alumni donors. Although no definite conclusions could be drawn from this finding, possible explanations may include that the respondent's household also made gifts to a spouse's institution or that they make gifts to an institution where they themselves sought further education. Whatever the explanation, this is an interesting finding seeing that some university donors may be dividing their gifts to other institutions.

In-state students at the university were also found to be a significant predictor of whether or not an alumnus will make a financial contribution after graduation. According to the regression results, students who were categorized as in-state during their college years were more likely to be donors to the university. These findings are consistent with previous research on young alumni donors conducted by Laguilles (2008). The most obvious explanation regarding the discrepancy between donors and non-donors and residential status may be the large increase in tuition that is charged for students who are considered out-of-state at most public institutions. In these cases, many out-of-state students are forced to take out large student loans in order to finance their education. In our analysis, receiving student loans was not found to be a predicting variable of alumni giving. However, according to the results of the survey, more respondents who had not taken student loans made gifts to the university. Although not conclusive, this pattern is consistent with research conducted by both Marr et al (2005) and Monks (2003) who found receiving student loans to be negatively correlated with donating to the institution.

Those respondents who indicated that they had a good experience while attending this university were more likely to be donors. Another way of saying it may be that these alumni were generally satisfied with their university experience. Although this survey did not test separate measures of satisfaction with one's university, Clotfelter (2003) described ‘satisfaction with one's undergraduate experience is a mark of approval that would be expected to induce feelings of gratitude or a desire to enhance the institution's chances of future good influences’ (p. 114). Clotfelter's study on alumni giving and one conducted by Monks (2003) found similar results that satisfaction with the university experience leads to higher giving levels as an alumnus.

It is worthwhile to discuss the set of results found in this study regarding the variables of financial awards and student loans. Neither of those variables was found to be a predictor of giving to the university even though financial awards were positively correlated with making a donation. This is highly inconsistent with previous research by Marr et al (2005) who found that alumni who had taken student loans were less likely to be donors. Similar results were found by Monks (2003) who also revealed that those who had received financial awards were more likely to make gifts. This may suggest an overall shift in student mentality regarding college financing seeing how students today can expect large debt loads after graduation as an inevitable part of the college experience. Data from both studies mentioned above comes from college graduate cohorts between 1988 through 1990, which suggests that the mindset of today's graduates regarding financial obligations may be different from those who graduated 20–30 years ago. More research into the effects of student loans and financial awards is needed before any conclusions can be drawn about the effect on alumni giving.

This study adds to a growing body of research on the newest generation of college graduates and their willingness to make financial contributions to their alma maters. With the overall number of college and university donors falling consistently every year, development officials should take heed of the recent findings and use them to assist in their gift solicitations. Many colleges and universities already go to great lengths to secure donations from alumni, so the cultivation efforts for the most recent set of college graduates should not be different.

Research for this study and others have consistently shown that certain characteristics do correlate with charitable giving including being an in-state student and expressing an overall satisfaction with their college experience. The experience variable has been found at both a large public institution in this study as well as private institutions, such as those studied by Clotfelter (2003). These consistencies suggest that alumni cultivation has to begin before graduation in the form of creating a meaningful collegiate experience for students. More research is needed in order to determine what areas of the college experience translate into higher expressed satisfaction and more willingness for the alumni to donate. It would also be meaningful to know what areas of higher education are the least meaningful and may cause alumni to never want to make a charitable contribution in the first place.

In an era of financial uncertainty, it is important for colleges and universities to not lose out on alumni donations even from the youngest generation of graduates. These institutions need to continue seeking new ways of solicitation that meet the needs of young alumni and encourage them to give back. Although new research is starting to shed light on why these alumni either choose to be donors or not, the need for new major donors to come out of the younger generations is quickly approaching. It is time for college and university development offices to think seriously about their young alumni and start cultivating them into the future of these institutions.